Can I claim benefits if I take voluntary redundancy? (7 Pointers) 

This blog addresses the question of whether one can claim benefits if they opt for voluntary redundancy. It details the different benefits one may be entitled to and the conditions attached to their receipt. It also addresses some recurrent questions on the matter. 

Can I claim benefits if I take voluntary redundancy? 

Yes, you should be able to claim benefits after you have taken voluntary redundancy. These benefits will provide support during the period of unemployment by covering various living costs, in addition to other extra provisions as well. 

Of course, the eligibility, the entitlement and the amount you receive will depend upon the conditions under which you have taken voluntary redundancy and your unique life circumstances as well. These will be explored in the following sections. 

What is voluntary redundancy? 

Voluntary redundancy is a process by which companies offer a bigger financial incentive/package for employees to voluntarily resign from their organizations instead of having to launch a mandatory lay-off program or sack people on a large scale. 

This could happen if the company is restructuring business operations, if there are mergers happening, or if the company is making losses such that it needs to cut down on its labour costs and hence needs to downsize the labor force. 

These could be due to multiple reasons either within the industry itself or due to economy wide pressures.  

So if the employee volunteers to be made redundant in exchange for this financial incentive i.e. voluntary redundancy package then, if they are chosen by the employer, they are said to have become redundant of their own volition i.e. voluntary redundancy. 

What is important to note is that despite the additional financial incentive which is given to employees as a lump-sum payment when they opt for voluntary redundancy, there are also some aspects which have to be approached with caution when you choose this option. 

The pros and cons along with the short and long term impact have to be weighed up if voluntary redundancy is going to be beneficial for you.

These aspects will affect the benefits you get because they affect your life circumstances and your financial stability. So they need to be considered carefully before a decision is made. 

Crucial aspects to consider before taking voluntary redundancy 

For all intents and purposes, voluntary redundancy is considered on par with other forms of redundancy as well and so you should be able to access the same kind of benefits. 

But at the same time, it is a tricky situation because the access to benefits depends on a number of circumstances that accompany any decision to take voluntary redundancy. 

First off, you need to make sure that a lump-sum payment will be able to hold you in the short-to-medium term. 

Finding alternative employment can be tougher than you anticipated, unless you have already managed to find one or have an offer in the pipeline.  Benefits themselves might not cover all your living costs. 

The voluntary redundancy package will be based on a number of factors like your age, the number of years you have worked for the company and the baseline salary that you have been receiving. 

If you do choose to take voluntary redundancy, other than the government benefits, you must be aware that some private benefits may cease. 

For example, in terms of insurance- be it mortgage, credit card, vehicle or life insurance, voluntary redundancy does not qualify for any payout. So if these are a very significant part of your expenses, make sure you can meet them with the redundancy package and benefits. 

Otherwise your financial situation may become precarious. 

In terms of benefits you can claim if you choose voluntary redundancy, this also requires some thought. Your level of income and savings after you receive the redundancy package and any other sources of earnings will affect the benefits you can receive. 

The means-tested components of some benefits, particularly Universal Credit, will depend to a fairly large extent on the payout you receive as well. 

So this factor needs to be taken into consideration when you assess your regular earnings and whether the elevated package will compensate for lower Universal Credit for the following months until you are employed. 

This can be different for people belonging to various income strata. This matter will also be described in detail in the sections below. 

Benefits I can receive if I take voluntary redundancy 

‘New Style’ Job-seeker’s Allowance

This is a contributory benefit which means that if you have been employed at some point in the duration of the past two to three years and have made sufficient National Insurance contributions or have accumulated adequate National Insurance credit , then you can qualify for the new style JSA. 

You must be unemployed or working less than 16 hours a week to qualify for this benefit. If you have taken voluntary redundancy then you are eligible to claim this benefit. It will  tide you over until you find another job. 

But the onus of finding another job and providing evidence for an active employment search is on you i.e. the claimant . You need to illustrate that you are searching for a job as per the Claimant Commitment to your work coach at the local job center. 

Since the JSA is a contributory benefit, your or your partner’s income and savings are not taken into consideration. You must be under State Pension age to be able to claim this benefit. 

‘New-Style’ Employment and Support Allowance


If you have taken voluntary redundancy and you suffer from a disability or illness that restricts the amount that you can work or your capacity to work to your full potential then you can claim the new style  Employment and Support Allowance (ESA). 

This allowance can be claimed when you lose your job even if it is through voluntary redundancy and you are too sick to look for alternative work or too ill to work itself. 

You must be below the State Pension age and you must have made sufficient National Insurance contributions or received National Insurance credits up to the required amount. 

Your income and savings do not affect this entitlement but pensions may affect the amount you receive or even your eligibility. 

You will have to undergo a Work Capability Assessment so that a registered doctor can understand your health condition and the limitations it imposes on your ability to work. This is then used for the application. 

Universal Credit 

A person who has taken voluntary redundancy can also claim Universal Credit along with the new style JSA or ESA, whichever is applicable. 

The universal Credit benefit is means-tested so your income and savings will be added to the calculation of how much you are entitled to.  The calculation will also take  into account any other benefits you receive. 

So the receipt of Universal Credit along with other benefits is subject to a ‘benefit cap’. 

It is a benefit that is meant for people who have low income or  who are unemployed presently. It will assist with living costs. The Universal Credit benefit replaces several other means-tested benefits and other entitlements. 

For example, it replaces Housing benefits, Child and Working Tax Credits, income-based Jobseekers Allowance and income-based Employment and Support Allowance. 

So if you had been receiving other benefits before you took voluntary redundancy, e.g. If you have been receiving some working tax credits or Housing benefit etc. then you will have to move to Universal Credit after you have taken voluntary redundancy.

This is because there is a change of circumstance according to the Department of Work and Pension (DWP) and so you can not continue claiming these benefits. You will have to move to the new Universal Credit system which encompasses these benefits within it. 

Pension Credit 

Another benefit that you can be entitled to, if you take voluntary redundancy when you have reached or have crossed the State Pension age, is Pension Credit . It is an additional allowance if you are above the State Pension age. 

This helps people with low incomes or who are unemployed to pay for some living expenses and also certain housing expenses such as rent or other service charges. Your income will be taken into consideration. 

But if you don’t have an income i.e. in a situation where you have taken voluntary redundancy and are unemployed, your pension or savings and any benefits you claim can be counted as income. Any disability benefits or child benefits do not count as income. 

This blog has detailed all the benefits you can claim if you have opted to take on voluntary redundancy. It has laid down some points of caution before taking the decision and the benefits that one is entitled to in the event that you do take this decision. 

It also emphasizes the limitations placed on benefits in the context of voluntary redundancy. If you have any queries , comments or suggestions please feel free to contact us and leave a message. We welcome your input. 

Frequently Asked Questions (FAQs)- Can I claim benefits if I take voluntary redundancy ?  

How much ‘New-Style’ JSA will I receive if I take voluntary redundancy ?

As previously stated in the blog, voluntary redundancy is considered to be equivalent to normal redundancy for all intent and purposes except in certain circumstances. 

So, even in this case the JSA amount that will be received depends mainly on your National Insurance contributions and any pension you may be claiming. For example a standard or flexible private pension from your employer etc.

For more information on the eligibility and criteria and structure of the ‘New-Style’ Job-seeker’s Allowance, please refer to – New Style Jobseeker’s Allowance – GOV.UK (

What if my employer refuses to give me redundancy pay after I take voluntary redundancy ? 

If you have chosen to volunteer for redundancy in a situation where the employer has requested employee volunteering during downsizing, then make sure that your voluntary suggestion is recorded in formal documentation. 

This to ensure that in  case your employer refuses to remunerate you accordingly, you can file a complaint with the Employee Tribunal in your local area. Hopefully the issues can be sorted through negotiation or conciliation using third party mediators. 

But if it fails, the Employee Tribunal should most likely assist you in claiming your rightful redundancy compensation. The rules are also different for remuneration or redundancy packages in case of employer/company insolvency. 

For more information on the entire context of voluntary redundancy and payouts, you could read – Redundancy: your rights – GOV.UK (

How much ‘New-Style’ ESA will I get if I take voluntary redundancy ? 

The amount of new style Employment and Support Allowance (ESA) you receive will depend on what you intend to do in the future as a consequence of your disability/chronic illness. 

If you are intending to rejoin the workforce and are taking active steps to seek out work then you will be placed in the ‘work-related activity ‘ group where you will receive a fixed amount until you go back to work. 

If your disability or illness prevents you from working in the foreseeable future or you don’t intend to work further because you cannot, due to your illness,  then you will be placed in the support group which offers a different amount and for a different period of time. 

Under what conditions will voluntary redundancy not qualify or get less Universal Credit ? 

Universal Credit is means-tested so your income, savings, capital and investment will all be taken into consideration when calculating your entitlement. This is the case for any benefits you receive such as new style JSA, ESA or disability benefits. 

They are also counted as income for the purpose of calculating your Universal Credit benefit amount. 

So it stands to reason that if you take voluntary redundancy and don’t face the same monetary pressures and difficulties that others do when they are unemployed , that your benefits will be reduced in tandem. 

For example, if you use the voluntary redundancy measure as a way to retire with a decent compensation package then it could jeopardise your entitlement to benefits. 

Similarly, if your redundancy package is larger than the statutory requirement and it leads to your savings crossing the 16000 pound limit, then your financial situation does not warrant as much assistance from the government. 

Universal Credit being dependent on income, will certainly be affected by the terms of your redundancy and your life circumstances. Essentially, if you are financially well off, then the chances of being eligible for Universal Credit.

Even if you are, the benefits amount you receive could be curtailed keeping in mind your income and savings , the value of your redundancy package and any other contributory benefits you may be receiving JSA, ESA etc. 

To figure out whether your voluntary redundancy could lead to such a situation, you are encouraged to read- Can I Claim Benefits If I Have Volunteered for Redundancy? (

Will voluntary redundancy affect my State Pension ? 

It depends. State Pension income depends on how many years of National insurance contributions you have made and the credits you receive. If you become voluntarily redundant, then you may have periods of unemployment. 

If these periods stretch into years, you are losing time that could have been added to the National Insurance kitty. 

To qualify for the minimum State Pension amount, you need to have contributed for 10 years and to get the maximum  amount your contributions need to span at least 35 years. 

So depending on the period of unemployment, the amount of pension you receive may be lower. 

But you can still maintain your contribution by making voluntary payment and through the credits you receive from your benefits. For further guidance please refer to – What happens to my pension if I am made redundant? (

References : 

  1. Government Digital Service. (2012, October 12). Universal Credit. GOV.UK.
  2. Voluntary redundancy. (n.d.). MaPS. Retrieved November 6, 2021, from
  3. Redundancy. (n.d.). Understanding Universal Credit. Retrieved November 6, 2021, from
  4. New Style Employment and Support Allowance. (n.d.). GOV.UK.
  5. Department for Work and Pensions. (2016, December 6). New Style Jobseeker’s Allowance. GOV.UK; GOV.UK.
  6. Gov.UK. (2012, January 25). Redundancy: your rights. GOV.UK.
  7. Can I Claim Benefits If I Have Volunteered for Redundancy? (n.d.). Retrieved November 6, 2021, from
  8. What happens to my pension if I am made redundant? (n.d.). Retrieved November 6, 2021, from
  9. Choosing voluntary redundancy. (2019).
  10. Should I take “voluntary redundancy”? | Jobsite. (2021, February 9). Jobsite.