Redundancy Explained: Voluntary vs Compulsory
- Robinson Grace HR
- 21 hours ago
- 4 min read
What is ‘redundancy’?
Redundancy is a form of dismissal that can occur when employers need to reduce their workforce, when a role or position is no longer required, or when there is a closure of business. Redundancy affects job roles or posts, not specific people.
When considering making redundancies, employers will engage in consultation with affected employees to communicate the business rationale and to share the criteria that will be used in selecting those for redundancy. During this consultation period, the employer may also offer employees the option of applying for Voluntary Redundancy, but what does this mean? In this blog, we explain the difference between Voluntary and Compulsory Redundancy.
What is ‘Voluntary Redundancy’?
Voluntary redundancy is offered during the consultation process to allow employees to put themselves forward for redundancy rather than facing what can sometimes be a difficult selection process. It is completely optional, and it can allow employees to feel more positive if they have the choice to leave without having to engage in a formal process.
It is important to note that employees can withdraw from the voluntary redundancy process just as much as employers can deny an application for voluntary redundancy. Before any decisions are made, an employee who applies for voluntary redundancy should be provided with information about their redundancy package.
What is ‘Compulsory Redundancy’?
Once all options to avoid job losses have been explored, making employees redundant may be the only remaining option if the organisation cannot offer any alternative employment, but only after a fair redundancy process has been followed and appropriate selection criteria have been used in selecting employees for redundancy.
The Pros and Cons of Each
| Voluntary Redundancy | Compulsory Redundancy |
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Redundancy Pay
Statutory redundancy pay is a minimum amount set by the UK Government that an employer must pay to any employee who is selected for redundancy, whether compulsorily or voluntarily. To qualify for statutory redundancy pay, employees need to have completed at least two years continuous service, and the amount they receive is based on length of service, age and average weekly pay.
Statutory redundancy pay is calculated as follows:
Half a week’s pay for each full year served under the age of 22
One week’s pay for each full year served aged 22 or older, but under 41
One and a half week’s pay for each full year served aged 41 or older
Statutory redundancy pay is capped when length of service exceeds 20 years, and when weekly pay exceeds a set amount (this amount is reviewed in April each year). To find out more about redundancy and your rights as an employee, visit the Government website.
When offering Voluntary Redundancy, some organisations may offer to pay an enhancement to statutory redundancy pay in an attempt to incentivise employees to apply and accept, however this isn’t a legal requirement and depends on the financial position of the business.
If you are an employer who is considering making redundancies but you’re not sure how the process works, or you want someone else to handle it all for you, we’re here to help! Simply pick up the phone to discuss what you might need 01793 311937 or email us via clientservices@robinsongracehr.com.
Frequently Asked Questions:
1. Can employees refuse voluntary redundancy in the UK?
Answer: Yes, employees can refuse voluntary redundancy in the UK. Voluntary redundancy is entirely optional, meaning employees are not obligated to apply or accept an offer. Even if an employee initially expresses interest, they may be able to withdraw their application before a final agreement is reached.
However, refusing voluntary redundancy does not guarantee job security. Employers may still proceed with a compulsory redundancy process if roles are at risk and no suitable alternatives are available. In such cases, employers must follow a fair redundancy procedure and consult with employees. This is why it is essential for employees to fully understand their redundancy rights in the UK before making a decision.
2. What is a fair redundancy process in the UK?
Answer: A fair redundancy process in the UK requires employers to follow a structured and transparent approach. This includes identifying a genuine redundancy situation, carrying out a meaningful redundancy consultation, and applying clear, objective selection criteria.
Employers must also consider alternatives to redundancy, such as redeployment, reduced hours, or voluntary redundancy. Failure to follow a fair process can lead to claims of unfair dismissal. For employers, getting this right helps reduce legal risk and protects employee trust during organisational change.
3. Do employers have to offer voluntary redundancy first?
Answer: Employers are not legally required to offer voluntary redundancy before making compulsory redundancies. However, many organisations choose to do so as part of a fair and compassionate redundancy process.
Offering voluntary redundancy can help reduce the need for compulsory job losses and may improve employee morale by giving individuals more control over their situation. That said, employers can decline applications if releasing certain employees would negatively impact the business.
Check out other blogs in our series:
The content of our blogs is intended for general information and not to replace legal or other professional advice.
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