Voluntary redundancy (VR) is a financial incentive offered by an organisation to encourage employees to voluntarily resign, typically in
downsizing or restructuring situations. The purpose is to avoid compulsory redundancies or layoffs.
Reasons
A voluntary redundancy programme is not always driven by short term revenue goals. It can also be motivated by the strategic choice to change the age structure within the company. According to research, people who accept voluntary redundancy may at times return to the company after changes in the company's prospects, strategic vision, or economic climate and, in doing so, may bring new ideas.
Examples
LM Ericsson
(lit. "Telephone Stock Company of LM Ericsson"), commonly known as Ericsson, is a Swedish multinational networking and telecommunications company headquartered in Stockholm. The company sells infrastructure, software, and services in informa ...
implemented a VR programme in the spring of 2006. It offered the programme to 17,000 employees in
Sweden between the ages of 35 and 50. Those who voluntarily left were given between 12 and 16 months of
severance, 50,000
kronor, and a course in
entrepreneurship coupled with job placement services. The goal was to have a maximum of 1,000 employees volunteer for the programme.
Delta Air Lines, in the aftermath of its
bankruptcy
Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debto ...
filing, offered a programme that included limited flight benefits for a set period after
voluntary resignation. In light of rising fuel prices, it turned back to a VR programme. The particulars of that severance package are unknown.
Delta to cut jobs as costs surge
''BBC News'', 18 March 2008
See also
*Compromise agreement
In the United Kingdom, a compromise agreement is a specific type of contract, regulated by statute, between an employer and its employee (or ex-employee) under which the employee receives consideration, often a negotiated financial sum, in exchang ...
*Golden boot compensation Golden boot compensation, also known as the Golden Boot, is an inducement, using maximum incentives and financial benefits, for an older worker to take "voluntary" early retirement. See also
* Compromise agreement
*Golden handcuffs
*Golden parachute ...
* Golden parachute
*Layoff
A layoff or downsizing is the temporary suspension or permanent termination of employment of an employee or, more commonly, a group of employees (collective layoff) for business reasons, such as personnel management or downsizing (reducing the ...
* Restructuring
*Severance package
A severance package is pay and benefits that employees may be entitled to receive when they leave employment at a company unwillfully. In addition to their remaining regular pay, it may include some of the following:
* Any additional payment base ...
References
{{reflist
Human resource management
Termination of employment
Organizational conflict
nl:Ontslagvergoeding