Redundancy
Voluntary redundancy: volunteering, offers and the legal minimum
Putting your hand up does not change what the law guarantees; it changes what you can negotiate on top.
Checked by Radif Partners · Editorial policy · Method and sources
Voluntary redundancy means putting yourself forward, or answering your employer’s call for volunteers, before anyone is selected. It is still a dismissal by reason of redundancy, so with two years’ continuous service the statutory payment is owed exactly as for a compulsory redundancy: half a week, one week or one and a half weeks’ pay per complete year depending on age, up to 20 years, on a week’s pay capped at £751. The employer does not have to accept a volunteer, and it may not limit the scheme to an age group. What volunteering usually buys is an enhanced package: a multiple of the statutory weeks, the cap lifted, a lump sum, or pension terms. Any enhancement must at least match the statutory figure, shares the £30,000 tax threshold with it, and is often paid under a settlement agreement, which only binds you if you have taken advice from a named, insured, independent adviser. Early retirement is a different route and does not carry statutory redundancy pay.
The legal floor under a voluntary redundancy offer
No offer can be lower than
£14,269
| Statutory weeks | 19.0 |
| Same weeks on your actual pay | £18,050 |
| Twice the weeks on your actual pay | £36,100 |
How volunteering works
An employer that expects to cut jobs will often ask for volunteers first, because it reduces compulsory dismissals and the disputes they bring. You can also volunteer without being asked, ideally in writing (Acas). The employer then picks from the volunteers using its own business needs: a volunteer in a team that is not shrinking, or with skills the business wants to keep, can be turned down. GOV.UK’s employer guide adds that the selection among volunteers must be fair and transparent, and that volunteers should be told they will not be chosen automatically (Making staff redundant).
Volunteers still count. Where 20 or more redundancies are proposed at one establishment, the people who volunteer are included in the number that triggers collective consultation, so a scheme does not escape the consultation rules by filling its quota with volunteers.
The floor that cannot be negotiated away
Whatever is offered, the statutory amount is the minimum for anyone with two years’ service who is dismissed for redundancy. A package described as “generous” can still fall short if it is a flat sum and you have long service at an older age. Work out the statutory figure first with the calculator, then compare.
The same goes for notice. A volunteer is dismissed, so statutory notice of up to 12 weeks, or pay in lieu, is due on top of the redundancy payment unless the contract gives more. Holiday accrued and not taken is paid as well.
Comparing enhanced offers
Enhanced schemes usually take the statutory formula and improve one or more of its three limits: the weekly cap, the multiplier per year, or the 20-year count. Some ignore it and pay a set number of weeks per year. The table compares common shapes for a volunteer aged 52 with 18 complete years on £1,100 a week.
| Offer | Amount | Above statutory |
|---|---|---|
| Statutory only | £17,649 | £0 |
| Statutory weeks, cap removed | £25,850 | £8,202 |
| Twice the statutory weeks, cap removed | £51,700 | £34,052 |
| Four weeks’ pay per complete year | £79,200 | £61,552 |
Lifting the cap matters most to higher earners: at £1,100 a week it adds £8,202 before any multiplier. For someone on £500 a week, removing the cap adds nothing and only the multiplier helps.
What else to put in the comparison
- Notice: is it worked, paid in lieu, or folded into the lump sum? Pay in lieu is taxed as earnings either way.
- Pension: an employer contribution into a registered scheme is not taxed as a termination payment, within your annual allowance.
- Timing: a later last day may move you past a birthday at 41, an anniversary of your start date, or the April uprating of the cap.
- Conditions: confidentiality, references, and the claims you give up.
Tax on a bigger package
Statutory and enhanced redundancy pay share one £30,000 threshold. In the four-weeks-per-year offer above, £30,000 falls inside it and £49,200 is taxed as income, with Class 1A National Insurance paid by the employer on that excess. If the notice is not worked and not paid in lieu, part of the enhanced sum is reclassified as post-employment notice pay and taxed like salary. Redundancy pay and tax sets out the split.
Settlement agreements
Many voluntary packages are paid under a settlement agreement, in which you agree not to bring specified tribunal claims in exchange for the money. Acas sets out the conditions for one to be legally valid (Acas, Settlement agreements):
- it is in writing;
- it relates to a particular complaint or proceedings;
- you have received advice from a relevant independent adviser on its terms and effect;
- the adviser is insured and is named in the agreement;
- it states that these conditions are satisfied and names the claims it covers.
A clause settling “all claims” in general terms does not meet the test. Before you sign, check that the statutory redundancy amount, notice and holiday pay are identified, and that the payment date is stated.
If the offer is withdrawn or you are not chosen
If your application is turned down you remain employed and may still be selected compulsorily later; the normal rules on fair selection, consultation, alternative jobs and time limits then apply. If you are chosen, you have 6 months from the relevant date to claim any statutory redundancy pay that is not paid.