What voluntary redundancy is
In voluntary redundancy, your employer is cutting jobs and invites staff to put themselves forward instead of selecting people. If your employer accepts your application, you are dismissed for redundancy, not treated as having resigned. That matters, because it protects your right to redundancy pay. Compare it with resigning, where that right normally falls away.
What you are paid
- Statutory redundancy pay if you have at least 2 years' service: half a week's pay for each year under 22, one week for each year aged 22 to 40, and 1.5 weeks for each year from 41, up to 20 years, with weekly pay capped at £751 (maximum £22,530, 2026/27). See how it is calculated.
- Enhanced terms if your employer offers them, such as a multiple of the statutory amount, a fixed number of weeks per year, or uncapped weekly pay. Voluntary packages are often more generous than the statutory minimum, because employers want volunteers.
- Notice pay and holiday pay, which are separate from redundancy pay. See redundancy notice periods.
Work out the statutory floor with the redundancy pay calculator, so you can see how much of the offer is extra.
A worked example
Aisha is 43, with 12 years' service on £800 a week. Her weekly pay is capped at £751. Statutory pay is 12 × 1.5 weeks × £751 = £13,518. Her employer offers a voluntary package of 3 weeks' pay per year of service at her actual pay: 12 × 3 × £800 = £28,800. That is £15,282 more than the statutory minimum, and still under the £30,000 tax-free limit, so she pays no tax on it.
Tax on voluntary redundancy
Redundancy payments are normally tax-free up to a total of £30,000, and anything above is taxed as income. Notice pay and holiday pay are taxed as earnings. Pay in lieu of notice that is written into your contract can also be taxed in full. Our £30,000 rule explainer and tax guide go through the cases.
Questions to ask before you volunteer
- Is the offer in writing? Do not resign or sign anything on a verbal promise.
- What is my leaving date? A few weeks can change your service years or your age band.
- How is the payment worked out? Ask for the weekly pay figure used and whether it is capped.
- Is there a settlement agreement? If so, you will be giving up legal claims, and you usually need independent advice, often paid for by the employer.
- What happens to my pension? Ask how leaving affects contributions, and whether you can take it early if you are near retirement age.
- What about benefits? A large lump sum can affect means-tested support.
Risks and traps
Your employer can refuse your application, so do not hand in a resignation in the hope of being accepted. If you are offered a suitable alternative role, turning it down without good reason can cost you your redundancy pay. Some people are protected from being picked for redundancy first, for example those on maternity leave, so check your position.
Claiming what you are owed
You have 6 months from the date your job ends to claim statutory redundancy pay. If your employer does not pay, Acas offers free advice and you can take the claim to an employment tribunal.