Voluntary redundancy: What is voluntary redundancy? How is it calculated?

Redundancy is an option many employers have to explore when a business needs to reduce its costs. Some employers decide which staff are made redundant based on length of service, with the ‘last in, first out’ method commonly used to determine which staff to let go. However sometimes an employer will offer voluntary redundancy.

What is voluntary redundancy?

A business may ask employees to volunteer for redundancy, and an employee may decide to put themselves forward.

However, according to the Government website, the decision of who is made redundant lies with the employer even if an employee volunteers.

If your employer asks if anyone wants to take voluntary redundancy, it is important to think about how voluntary redundancy will affect you.


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Citizens Advice explain: “Your employer might ask if anyone wants to take voluntary redundancy.

“You should think carefully about whether voluntary redundancy is right for you, including whether you’ll get any redundancy pay and how it will affect things like claiming benefits or your mortgage.

“If you volunteer, it’s up to your employer if they select you for redundancy.”

There is no obligation for you to accept the terms of your voluntary redundancy offer.

How do you calculate voluntary redundancy?

If you are selected for voluntary redundancy, your employer will offer you a redundancy package.

Your employer may offer incentives for voluntary redundancy such as extra pay, or not having to work your notice period.

However it is really important to check the terms of your redundancy offer very carefully.


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Your offer should detail how much redundancy pay you will receive, and a lot of the time a voluntary redundancy package will offer a larger payment than statutory redundancy pay.

If you wish to calculate statutory redundancy pay, you can do so via the Government website HERE. 

You will usually be entitled to statutory redundancy pay if you have worked as an employee for at least two years with your current employer.

If you were made redundant on or after April 6, 2020, weekly pay is capped at £538.

The maximum statutory redundancy pay you can receive is £16,140, and these payments will be lower if you were made redundant before April 6.

The Government website explains when calculating statutory redundancy pay, you’ll get:

  • half a week’s pay for each full year you were under 22
  • one week’s pay for each full year you were 22 or older, but under 41
  • one and half week’s pay for each full year you were 41 or older

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