In order to act reasonably for the purposes of unfair dismissal law, an employer should consider whether it could achieve the redundancies it needs by inviting volunteers for redundancy, unless it has good reasons for not doing so.
Before asking for volunteers, however, a company needs to bear in mind that it may receive applications from employees whom it does not want to lose, and that the number of volunteers may exceed the number of redundancies needed, particularly if attractive financial terms are on offer. Employees who apply for redundancy but are not accepted may conclude that they have been treated unfairly and so become demotivated. It is therefore advisable for the company to clarify in advance the criteria that it will be using to decide whether an application for redundancy will be accepted, and to ensure that employees are aware both of those criteria and of the fact that they are not guaranteed to be made redundant if they volunteer.
An employee who volunteers for redundancy is not resigning, he or she is volunteering to be dismissed. Although he or she is unlikely to do so, a volunteer could theoretically claim unfair dismissal. A company should therefore ensure that, before volunteers are dismissed, the employees are aware of the options available to them and are sure that they want to volunteer, and that the statutory minimum dismissal procedure is followed ( minimum dismissal procedures ).
An employer may be in a position to offer employees who volunteer for redundancy an early retirement option that includes enhanced pension benefits. Depending on the circumstances, an employee who opts for early retirement may be terminating his or her contract by agreement with the company, rather than being dismissed. This means that he or she is not entitled to a redundancy payment under the statutory scheme or to claim unfair dismissal. In practice, however, the financial package that the employee is offered is likely to take account of the value of the statutory redundancy payment.
Because of the uncertainty that can surround whether an employee is genuinely agreeing to a mutual termination of his or her contract, it would be advisable for a company to treat an employee who is opting for early retirement as if he or she was being dismissed for redundancy. The company should therefore not only follow the statutory minimum dismissal procedure, but also consult with the employee fully about the redundancy and his or her options, in order to be in a position to show that it has acted reasonably should the employee later bring an unfair dismissal claim.