By Team SalaryCalculate · 1/7/2026
Voluntary vs Compulsory Redundancy: Understanding the Differences
When a company needs to reduce its workforce, it often faces two main options: voluntary and compulsory redundancy. Both come with their own benefits and drawbacks, and it's essential to understand the differences to make the best decision for your circumstances.
Voluntary Redundancy
Voluntary redundancy occurs when the employer asks the staff if anyone would like to leave in exchange for a financial incentive. It's often considered as a more favourable option as it allows employees to leave on their own terms, often with a larger redundancy payment than if they were made compulsorily redundant.
Pros and Cons of Voluntary Redundancy
Voluntary redundancy comes with a number of benefits:
Higher redundancy payout
Opportunity to leave a job you were planning to leave anyway
Less stigma compared to compulsory redundancy
However, there are also some downsides:
It might be harder to claim unemployment benefits
Risk of financial instability if a new job isn't found quickly
Compulsory Redundancy
Compulsory redundancy is when the employer has to let staff go due to lack of work, business closure, or reorganisation. The decision is made by the employer and the employee has no say in it.
Pros and Cons of Compulsory Redundancy
Compulsory redundancy has its own set of advantages and disadvantages:
You are entitled to [redundancy pay calculator](/tools/uk/england/redundancy-pay-calculator) if you've been with the company for two years or more
Possible eligibility for unemployment benefits
On the flip side:
It can come as a shock and cause emotional distress
Less time to prepare for job loss
Redundancy Pay
Both voluntary and compulsory redundancies come with redundancy pay, but the amount can differ. As of April 2025, the maximum weekly pay cap is £719, and the maximum total payment stands at £21,570 (£719 × 20 years × 1.5). These limits are reviewed annually in April.
Deciding Between Voluntary and Compulsory Redundancy
When facing redundancy, consider your financial situation, career goals, and personal circumstances. Use our [redundancy vs resignation calculator](/tools/uk/england/redundancy-vs-resignation-calculator) to help with your decision.
FAQ
**Q: Can I refuse compulsory redundancy?**
A: Generally, you cannot refuse compulsory redundancy. However, you can appeal the decision if you believe it's unfair.
**Q: Can I ask for voluntary redundancy?**
A: Yes, you can ask your employer for voluntary redundancy, but they are under no obligation to offer it.
**Q: What happens if I take voluntary redundancy and then get a new job?**
A: You can start a new job immediately after taking voluntary redundancy. There's no rule that prevents you from working after redundancy.
**Q: Does voluntary redundancy look bad on my CV?**
A: Not necessarily. How it's perceived depends on the circumstances and how you explain it to potential employers.
Remember, redundancy doesn't have to be the end of your career. It can be a fresh start. Explore [redundancy-alternatives](/blog/redundancy-alternatives) for ideas on how to move forward.
Understanding the differences between voluntary and compulsory redundancy can help you make informed decisions about your future employment. Whether you're an employee facing redundancy or an employer considering downsizing, it's important to know your rights and obligations under the UK employment law.
