Voluntary redundancy

Voluntary redundancy

Voluntary redundancy (VR) is a financial incentive offered by an organisation to its employees with the purpose of attracting volunteers to leave the organisation, due to downsizing or restructuring situations. The purpose is to circumvent union employee regulation laws.

Reasons

A Voluntary Redundancy Programme is often not driven by short term revenue goals. On the contrary it is rather a question of strategic choices to change the age structure within the company. It is quite often said that Voluntary Redundancy is a consequence of a company’s lack of structural capital which is a part of the intellectual capital (IC). According to research, people who accept voluntary redundancy tend to return to the company after a while and influence the company with new ideas.

The difference between voluntary redundancy and other programmes is that VR often is offered to a selected age group. For example, everyone between 40-50 years with at least 5 years experience.

Real world instances

A world wide company which recently used a VR programme is LM Ericsson, also known for the partnership with Sony, in Spring 2006. They offered the programme to 17,000 employees in Sweden between the age of 35-50. They received 12-16 months full payment, 50,000 Swedish kronor and a course in entrepreneurship and/or job hunting support. The goal was that a maximum of 1,000 employees would accept the programme. Fact|date=March 2008

Delta Airlines, in the aftermath of its bankruptcy filing, offered for a time a program that included limited flight benefits for a set period after the separation. In light of rising fuel prices, they again have a VR program. The particulars of that severance package is unknown. [ [http://news.bbc.co.uk/2/hi/business/7303341.stm Delta to cut jobs as costs surge] ,"BBC News", 18 March 2008]

ee also

*Severance package
*Restructuring
*Layoff
*Compromise agreement

References


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