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November 15, 2025
Key Takeaways
Voluntary and compulsory redundancy are two different routes employers may take when reducing staff. Knowing the distinction helps you understand your rights, make informed choices, and plan your next steps confidently.
Any mention of redundancy in the workplace can be scary. If your job is on the chopping block, you might find yourself panicking about what this means for your future. Redundancies aren’t that common, so you might only face this once or twice in your lifetime. This is why it is often looked upon with such fear; it’s the unknown that makes us feel unsafe.
One of the best ways to navigate through redundancy is through education. The more you know about redundancy – including why it’s happening, what your rights are, and what you can do if something isn’t right – the more you will feel in control of the situation.
The purpose of this guide is to help you to understand the difference between voluntary and compulsory redundancy, so you can navigate each process with ease.
Redundancy is when a company is downsizing, shifting focus, or closing, and they need to adjust their workforce to reflect this. To be eligible for redundancy benefits, you need to be legally recognised as an employee. This would typically mean that you have an employment contract.
Redundancy often takes place in multiple stages. If the organisation is restructuring or there is a reduced demand for your role, there may be an offer of voluntary redundancy. This is when you are given the option to leave your role, usually in exchange for a redundancy package. You should get statutory redundancy pay as a minimum, but you could be offered more than this.
It’s your choice to decide if you want to accept the voluntary redundancy package. However, it’s worth noting that there are no guarantees that your job will be safe if you decide to stay. This is because a voluntary redundancy consultation is often followed by a second round of cuts.
Voluntary Redundancy
Gives you greater control over your exit, financial settlement, and future career direction — often a positive choice during restructuring.
Compulsory Redundancy
Occurs when the employer decides roles are no longer needed. Employees still have legal rights to consultation, notice, and fair compensation.
Compulsory redundancy is when an organisation decides that your role is no longer required for operations. This could be because the company is closing down, shifting focus to another area, or looking for ways to cut costs.
Companies often follow a round of voluntary redundancies with compulsory redundancies, but this isn’t always the case. Whether your redundancy is compulsory or voluntary, you should still be treated with fairness and respect.
You are well-protected during the redundancy process, but it’s important that you understand what is happening so that you can speak up if something is wrong. First, you need to know your rights. You are generally entitled to:
Your redundancy pay is calculated based on your age and how long you have been working for the company. You are entitled to statutory redundancy pay, as a minimum, but your employer may offer a more generous package.
You are also entitled to a notice period, which means your employer cannot terminate your contract without notice. If they would like you to stop working sooner, then they will have to offer pay in lieu of notice. If you do work your notice period, this should also be paid and will include all of the benefits that come with your contract.
This is a personal decision that should be made following a consultation with your employer. As mentioned above, rejecting voluntary redundancy will not mean that your job is necessarily safe. You could still face redundancy further down the line.
By accepting voluntary redundancy, you put yourself in control of your future. If your employer is using redundancies to cut costs, you might wonder about the longevity of the company. You might find more job security elsewhere.
Redundancy can be an opportunity to review your career goals and pivot to a new direction. With a buffer of redundancy pay, you might be able to retrain in a different role, or enhance your skills to boost your employability.
It might feel daunting, but voluntary redundancy can be an opportunity for growth. It can also be a sad time, particularly if you have been working for the same company for a long time. Give yourself time to properly process your feelings and make a considered decision about whether voluntary redundancy is right for you.
If you’re facing redundancy or exploring new career paths, CMD Recruitment can help you take your next step with confidence. Contact us today or browse current job opportunities.
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