When your employer announces a round of redundancies, you may be offered the option of volunteering. Voluntary redundancy can be a genuine opportunity — a chance to leave on your own terms with a financial package — but it requires careful thought. This guide helps you weigh the decision objectively.
What Is Voluntary Redundancy?
Voluntary redundancy is when an employer invites employees to put themselves forward for redundancy, rather than selecting people compulsorily. It's still a genuine redundancy — the role is going away — but the employee chooses to be the one to go. Employers prefer voluntary redundancy because it reduces conflict, avoids the legal risks of an unfair selection process, and generally results in a smoother transition. Employees who volunteer often receive enhanced packages as an incentive.
The Financial Package
Voluntary redundancy packages typically exceed the statutory minimum. Common enhancements include a higher multiplier (for example, 2 or 3 weeks' pay per year of service instead of the statutory 0.5–1.5 weeks), using actual salary rather than the capped weekly pay, or a fixed lump sum. Use our enhanced redundancy calculator to compare any offer against your statutory minimum.
Remember the tax position: the first £30,000 of any redundancy payment is tax-free, and amounts above this are taxed as income. A generous enhanced package might push you above the £30,000 threshold, so factor in the net amount after tax. Read our guide on redundancy pay tax for full details on the tax treatment.
Pros of Taking Voluntary Redundancy
- Better financial terms: Enhanced packages are usually more generous than statutory redundancy pay.
- Control and choice: You decide to leave rather than being selected. Many people find this psychologically easier.
- Time to plan: Because you're volunteering, you often have more time to prepare for the transition, update your CV, and start job hunting.
- Clean exit: Voluntary redundancy avoids the stress and uncertainty of a compulsory selection process.
- Career reset: If you've been thinking about changing direction, this can be the push (and the financial cushion) you need.
Cons and Risks
- Job market uncertainty: There's no guarantee you'll find equivalent work quickly. The redundancy payment needs to bridge the gap.
- Benefits and pension: You lose employer pension contributions, private health insurance, and other benefits from the day you leave.
- No going back: Once you accept and sign a settlement agreement, the decision is typically irreversible.
- Not always truly voluntary: Sometimes employers make the working environment difficult for those who don't volunteer. If you feel pressured, seek legal advice.
- Impact on mortgage applications: Being unemployed can complicate mortgage applications. If you're planning to move house, consider the timing.
Your Rights When Volunteering
Volunteering for redundancy doesn't reduce your employment rights. You're still entitled to at least the statutory redundancy pay, your full notice period (or pay in lieu), any outstanding holiday pay, and the right to be considered for suitable alternative employment within the organisation. Your employer is not obliged to accept your application for voluntary redundancy — they can decide which volunteers to accept based on business needs.
Settlement Agreements
Most voluntary redundancy packages come with a settlement agreement (formerly called a compromise agreement). By signing, you waive your right to bring certain employment tribunal claims against your employer. In return, you receive the enhanced package. You must receive independent legal advice before signing — your employer should contribute toward the cost of this advice. Take the time to understand what you're signing, and don't feel pressured to sign immediately.
How to Decide
Start with the finances: use our calculator to understand the minimum you're entitled to, then assess the enhanced offer against your monthly outgoings. How many months of expenses does the package cover? Do you have other savings? What are realistic job prospects in your field? Consider speaking to a financial adviser, especially if the numbers are significant. Think about your career trajectory — is this role still the right one for you, or is the redundancy an opportunity you might not get again?
Frequently Asked Questions
Can I claim Jobseeker's Allowance after voluntary redundancy?
Yes. Voluntary redundancy is still redundancy, so you can claim Jobseeker's Allowance or Universal Credit without any waiting period for voluntarily leaving a job (the "sanction" for leaving voluntarily doesn't apply to genuine redundancy situations).
Can my employer reject my voluntary redundancy application?
Yes. The employer decides which applications to accept. They might reject your application if your skills are critical to the business or if they need to retain certain roles. They must apply fair and non-discriminatory criteria when deciding which volunteers to accept.
Is voluntary redundancy the same as resignation?
No. Resignation is your choice to leave with no redundancy payment. Voluntary redundancy means the role is genuinely disappearing and you're volunteering to be the person who goes — you still receive redundancy pay and have the full rights of a redundant employee.