Adding the word “voluntary” in front of separation, retirement, and severance packages seem to be the new, empathetic way for companies to handle layoffs whether it’s the tech industry or higher education.
These programs, also broadly known as voluntary incentive separation programs, have been around for decades. They first gained traction in the ’80s and ’90s and saw a resurgence of popularity during the COVID-19 pandemic.
Voluntary layoffs are programs that offer employees incentives to leave. These incentives may include extra pay for a few months, healthcare coverage, and other employment services such as career counseling.
Why is this beneficial for employers?
Typically, voluntary programs are offered in order to avoid involuntary layoffs down the line.They allow for employees to retire early or make a career change. Christopher Nickson, vice president and senior consultant for HR firm Segal, explains that voluntary layoffs are often beneficial for companies looking to downsize their highest paid employees.
“Oftentimes you are taking somebody who has worked for the organization for many years, and as time has gone on, their wages have gone up steadily as a factor of increased experience,” Nickson said. He points out they’ll typically be replaced by someone with less experience. “The result is they come in, typically at a [lower] compensation rate that’s beneficial to the company,” Nickson said.
Essentially, companies view the voluntary programs as a more empathetic and transparent approach to cost savings than layoffs where employees are given no choice.
But not all who are offered these programs agree.
In April, Duke University announced a voluntary layoff program in order to cut 10% of the university’s costs, or roughly $350 million. The offer included compensation for one week of regular pay multiplied by years of service, maxing out at 26 weeks.
In response members of the Duke community wrote a letter entitled “Duke, Don’t DOGE” to the university’s administration and president, Vincent E. Price, pointing out that cuts could be made elsewhere.
The letter calls the voluntary layoffs “institutional hoarding.” It notes that some of the highest paid members of the institution (those making over $1 million), including Price, could take a 25% pay decrease, and those earning $500,000 to $1 million, could take a 10% decrease voluntarily and save Duke $6.6 million.
“Duke is one of the first major universities in the country to enact sweeping layoffs across its workforce. This is a historic and devastating move,” the letter states. “And while workers are losing their jobs, housing, healthcare, and immigration status, Duke’s top administrators and athletics personnel continue to pull six-and seven-figure salaries. There are no cuts at the top. There’s no shared sacrifice. Just more for them—and less for everyone else.”
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More companies are offering voluntary layoffs. Here’s what you need to know.