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. 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 implemented a VR programme in the spring of 2006. It offered the programme to 17,000 employees in
Sweden
Sweden, formally the Kingdom of Sweden, is a Nordic countries, Nordic country located on the Scandinavian Peninsula in Northern Europe. It borders Norway to the west and north, and Finland to the east. At , Sweden is the largest Nordic count ...
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
Entrepreneurship is the creation or extraction of economic value in ways that generally entail beyond the minimal amount of risk (assumed by a traditional business), and potentially involving values besides simply economic ones.
An entrepreneu ...
coupled with job placement services. The goal was to have a maximum of 1,000 employees volunteer for the programme.
Delta Air Lines
Delta Air Lines, Inc. is a Major airlines of the United States, major airline in the United States headquartered in Atlanta, Georgia (U.S. state), Georgia, operating nine hubs, with Hartsfield–Jackson Atlanta International Airport being its ...
, 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 deb ...
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
To compromise is to make a deal between different parties where each party gives up part of their demand. In arguments, compromise means finding wikt:agreement, agreement through communication, through a mutual acceptance of terms—often involvin ...
* Golden boot compensation
*Golden parachute
A golden parachute is an agreement between a company and an employee (usually an upper executive) specifying that the employee will receive certain significant benefits if employment is terminated. These may include severance pay, cash bonuses, ...
*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 an organization ...
* Restructuring
*Severance package
A severance package is pay and benefits that employees may be entitled to receive when they leave employment at a company unwilfully. In addition to their remaining regular pay, it may include some of the following:
* Any additional payment based ...
References
{{reflist
Human resource management
Termination of employment
Organizational conflict
nl:Ontslagvergoeding