In business terminology, redundancy is the condition of having more employees—specifically, more man-hours of labor—than there is work that needs to be done. Though desirable in some sense, as it can be the consequence of improved efficiency particularly if demand does not increase enough to take up the slack, from the employee’s point of view it is a workplace bogeyman, leading to the dreaded layoffs.

Changes to a company can also lead to redundancy—even if the company is expanding, it may find itself with employees it no longer has work for, such as if a merger results in combining departments or middle management positions. Restructuring often follows a leveraged buyout of a company, especially with the aim to improve efficiency and profitability—nearly always leading to lost jobs. Because the collective bargaining agreements of labor unions may include clauses restricting layoffs, companies may try to attract volunteers for “voluntary redundancy.”

Like the passenger bumped off an overbooked flight in exchange for free tickets another time, voluntarily redundant employees are given financial incentives in exchange for terminating their employment. The financial incentive will usually be a reasonable severance package, and in some cases there may be pension benefits awaiting; voluntary redundancy is often offered to the older employees, for much the same reason that early retirement is encouraged. As the average age of the company decreases, so—as a broad rule of thumb—does its average wage. Voluntary redundancy severance packages may include a continuation of pay over a certain period, a bonus payment, and assistance in job searching. Benefits specific to the company’s industry may also be included—when Delta Airlines offered a voluntary redundancy package to some of its employees, one benefit was free airfare on Delta flights for a limited period of time. Positive letters of recommendation are, of course, to be expected as well, and there is no particular stigma attached to having left a job because of voluntary redundancy.

Restructuring often leads to renegotiating labor contracts while retaining—even rewarding—upper management, which can make involuntary layoffs an option even at companies where the collective bargaining agreement previously limited them. This is the sort of redundancy that is typically referred to by one euphemism or another: downsizing, smart sizing, rightsizing, simplification, workforce optimization. Thanks to euphemism drift—the process by which one term after another is introduced to replace the one that has become sullied by its associations with a negative thing, like recession replacing depression, which replaced panic—these terms have become as reviled as layoff and redundancy. The term attrition, on the other hand, specifically indicates that the positions being vacated will be eliminated.

Workers who are laid off involuntarily may or may not be offered a severance package, though it is typical and traditional to do so. The severance package typically includes an extension of benefits coverage (health and life insurance) for several months to a year after termination of employment; a balloon payment based on length of employment; and compensation for unused vacation or sick days. Additional payments may be made to employees in some cases in order to compensate for a lack of notice before termination; this becomes common when companies worry about morale and performance of employees aware that they are being forced out of the company. Layoff severance packages may be predetermined by company policy or labor union agreements. Employees who are involuntarily laid off are eligible for state unemployment benefits; voluntary layoffs usually are not.

Bibliography:

  1. Kenneth De Meuse and Mitchell Lee Marks, Resizing the Organization: Managing Layoffs, Divestitures, and Closings (Pfeiffer, 2003);
  2. Louis Uchitelle, The Disposable American: Layoffs and Their Consequences (Vintage, 2007).