Voluntary redundancy is often presented as a take-it-or-leave-it option, but in practice that is rarely the full picture. While employers may start with a standard package, the terms are not always fixed. In many cases there is scope to negotiate, particularly where the employer is seeking to encourage employees to leave on agreed terms.

Understanding how voluntary redundancy works, and where negotiation fits in, can make a significant difference to the outcome.

What Is Voluntary Redundancy?

Voluntary redundancy is a process where an employer asks employees to volunteer to leave their role, usually as part of a wider restructuring or cost-cutting exercise. Employees who volunteer and are accepted leave under agreed terms, rather than being selected for compulsory redundancy.

Unlike statutory redundancy, voluntary redundancy packages are not set by law. This flexibility is precisely what can open the door to negotiation.

Is a Voluntary Redundancy Package Fixed?

In most cases, no. Employers often present a standard offer so the process feels consistent and manageable. However, that does not mean the offer is legally fixed or non-negotiable.

Employers use voluntary redundancy to reduce risk, avoid compulsory dismissals, and maintain morale. If you are a suitable candidate to leave, the employer may be willing to improve the terms to secure agreement.

That said, some employers do impose internal limits or approval thresholds. Negotiation is therefore possible, but not guaranteed.

When Negotiation Is Most Likely to Succeed

Negotiation tends to be more realistic where the employer benefits from you leaving on voluntary terms. Common examples include:

- Employees with long service or higher salary costs
- Roles the business is actively trying to remove
- Situations where compulsory redundancy would be complex or risky
- Employees with potential legal claims the employer wants to avoid
- Where an employer has discretion over who is accepted for voluntary redundancy, negotiation leverage often exists

What Parts of a Voluntary Redundancy Package Can Be Negotiated?

The scope for negotiation will always depend on the individual circumstances, but voluntary redundancy packages are often more flexible than employees expect. Because these arrangements are discretionary rather than statutory, employers usually have room to adjust the terms if it helps achieve their wider restructuring aims. As a result, several elements of a voluntary redundancy package may be open to discussion.

One of the most commonly negotiated areas is redundancy pay itself. Employers may be willing to offer an enhanced payment above the statutory minimum, particularly where they want to encourage take-up or reduce the risk of compulsory redundancies later. Payment in lieu of notice is also frequently negotiable, allowing employees to leave immediately while still receiving notice pay.

Additional compensation payments are often one of the most flexible parts of a voluntary redundancy package. These ex-gratia sums are not legally required and are usually offered to secure agreement, which makes them a common focus for negotiation. Holiday pay calculations can also be reviewed, particularly how accrued but untaken leave is valued and paid as part of the exit.

The proposed termination date may sometimes be adjusted to suit both parties, for example to align with bonus cycles, pension milestones, or practical handover needs. Employer pension contributions can also be negotiable in certain cases, especially where contributions go beyond the statutory minimum or involve discretionary elements.

Where a settlement agreement is proposed, there is frequently further scope to negotiate contributions towards legal costs and the scope of confidentiality and non-derogatory clauses. These terms are rarely final at the first draft stage and are commonly adjusted before agreement is reached.

Statutory Rights Still Apply

Voluntary redundancy does not remove basic legal protections. Employees remain entitled to statutory redundancy pay if eligible, notice or pay in lieu of notice, and payment for untaken statutory holiday. Protection from discrimination and unfair dismissal continues to apply to the way the process is handled.

Any offer that falls below statutory entitlements, or attempts to contract out of them, should be treated with caution. Voluntary redundancy should improve the overall exit terms, not place the employee in a worse position.

How to Approach Negotiation

Negotiation should be conducted in a measured and professional way. Employees should not assume the first offer is final and can reasonably ask whether the terms are open to discussion. Requests are more likely to be successful when they are framed around business logic rather than personal circumstances.

It is important to be realistic about what is being asked for and to understand any limits on the employer’s discretion. Employees should avoid resigning, withdrawing from the process, or agreeing to terms informally before everything has been confirmed in writing.

The Role of Settlement Agreements

Employers commonly use settlement agreements for voluntary redundancy exits. These are legally binding agreements under which employees waive potential claims in exchange for agreed compensation and other benefits.

The requirement for a settlement agreement often indicates that negotiation is possible. Employers usually expect some discussion and may improve the terms to secure a final and clean break. Independent legal advice is mandatory, and that advice frequently supports further negotiation.

Risks to Be Aware Of

Negotiating voluntary redundancy is not risk-free. An employer may refuse to enhance the offer, particularly where there are budget constraints or many volunteers. In some schemes, volunteering may remove the option of later receiving compulsory redundancy terms if you change your mind.

There may also be limits on how many volunteers are accepted, meaning delays could result in the offer being withdrawn. Understanding the scheme rules, deadlines, and withdrawal rights is essential to ensure negotiation strengthens your position rather than undermines it.

For more information please contact us on 01524 907100, info@pre-law.co.uk or through our online enquiry form.