A hidden danger when offering enhanced redundancy pay

10 Feb 2021

Is there a danger that, when offering enhanced voluntary redundancy packages, a business is inadvertently committing to accepting all expressions of interest?

In certain circumstances, and if language is not chosen carefully, yes.
 
When faced with the prospect of making compulsory redundancies, a business will often offer enhanced voluntary redundancy packages to its workforce, in order to reduce the number of, or eliminate the need for, compulsory redundancies.
 
The employer will normally have an ideal number of volunteers in mind – enough to stave off the need for compulsory redundancies. The business will also know the areas where it would be best to make cuts and managers will likely have in mind the members of staff they’d like to keep and those they could afford to lose.
 
Problems can arise when offering enhanced voluntary redundancy packages. For example too many can put themselves forward. The employer then rejects the expression of interest from a particular employee, who may then be unhappy about the decision. As long as the offer was not binding on the employer, the employee will have to be content to continue in their role.
 
However, in a recent case a former employee of British Airways (BA), Mrs Stoate, successfully argued that the company was bound by its offer of an enhanced redundancy package.
 
BA was looking to make cost savings in relation to staff who handled the on-boarding and off-boarding of passengers from its aircraft. A meeting was held at which proposals for a restructure involving the loss of 40 jobs and an enhanced voluntary redundancy package were discussed. The evidence of Mrs Stoate and her former colleagues was that it had been made clear in the meeting that anyone who wanted voluntary redundancy would get it.  BA managers denied this, but, with there being nothing included within the slide presentation given to the staff to make it clear that an enhanced package would not be available to anyone who requested it, alongside BA’s pressing need to implement the restructure, the Tribunal preferred the evidence of the staff over the managers.
 
Therefore, having requested it, Mrs Stoate was entitled to the enhanced redundancy package. Her claim for constructive unfair dismissal failed. She had delayed too long after the promised enhanced redundancy pay failed to materialise to rely on it as a breach of contract. The Tribunal indicated that, had she been quicker to resign, the constructive unfair dismissal claim may have succeeded as well, entitling her to potentially significantly more compensation.
 
Employers need to be extremely careful in documenting exactly the nature of any offer of enhanced voluntary redundancy. Care should be taken to ensure that all communication is clear, that those involved are informed appropriately, and understand  that any expressions of interest will be considered, but it is ultimately at the discretion of the business to accept or reject. Ideally this should then be further documented in written form.

Further reading

CMA fines pharmaceutical company more than £100m

Blog
02/08/2021
Drug pricing policies under scrutiny as CMA comes down hard on inflated prices and supernormal profits
Read more Read

5 data protection changes to be aware of

Blog
02/08/2021
Commercial law specialist Liz Gillingham provides a summary of recent developments in data protection law
Read more Read

Destination: office?

Blog, News & PR
29/07/2021
Emily Wood considers the results of our recent survey and the implications for the future of the post-pandemic workplace
Read more Read

Commercial lease renewals and pandemic clauses

Blog
28/07/2021
Will commercial reality trump the law when leases are up for renewal? Property expert James Picknell takes a look
Read more Read
  • Brighton Office

    1 Jubilee Street

    Brighton

    East Sussex

    BN1 1GE

  • Gatwick Office

    Griffin House

    135 High Street

    Crawley

    West Sussex

    RH10 1DQ

  • Guildford Office

    Wonersh House

    The Guildway

    Old Portsmouth Road

    Guildford

    Surrey

    GU3 1LR

  • Horsham Office

    Ridgeland House

    15 Carfax

    Horsham

    West Sussex

    RH12 1DY

  • London Office

    6 New Street Square

    New Fetter Lane

    London

    EC4A 3BF

  • Get in touch