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Can I Claim Benefits If I Have Volunteered for Redundancy?

By: Emma Eilbeck BA (hons) - Updated: 9 Aug 2020 | comments*Discuss
 
Redundancy Redundant Claim Jobseeker’s

Being able to claim benefits after you have been made redundant is often a vital part of financial survival if you are short of funds.

Taking voluntary redundancy should not hinder your chances of being able to claim benefits, but there are some circumstances in which your redundancy may be affected.

There are mountains of benefits on offer to newly redundant employees and these few questions should help you decide what you are entitled to.

1) How Much Was Your Voluntary Redundancy Pay?

  • A) Under £16,000
  • B) Just under £16,000
  • C) Over £16,000

2) Does Your Partner Work?

  • A) No
  • B) Yes but less than 24 hours a week
  • C) Yes, more than 24 hours a week

3) Are You Able to Work?

  • A) No, I took voluntary redundancy because of my health
  • B) The work I can do is limited
  • C) Yes I am fully capable

4) Do You Plan to Retire?

  • A) No
  • B) I am considering retiring
  • C) Yes, I plan to use voluntary redundancy as a means for retirement

Your Answers

Mostly A – Your Benefit Claims Will Not Be Affected

Voluntary redundancy is normally classed just the same as normal redundancy and you will be viewed the same by the government. Although you have volunteered for redundancy there was still the need to make redundancies by your employer, so in most cases it will be treated the same.

You sound like you would benefit from being able to claim some benefits and this is exactly what you should do. If you did not receive a large lump sum when you took voluntary redundancy or this was less than £16,000 and you don’t have a lot in savings, you should be able to claim jobseeker’s allowance. Even if you are not eligible for contributions based you will be eligible for incomes based.

If you are eligible for jobseeker’s allowance you will also be eligible for employment and support allowance, providing you meet all the necessary criteria. This is normally awarded to households that have no income coming in and those that have a “limited capability for work”.

This benefit works in the same way to jobseeker’s allowance. You may also be eligible for housing and council tax benefit if you are in dire straits with your finances and cannot meet your rental payments.

Mostly B - Your Benefit Claim Could Be Affected

To claim most kinds of benefits you will need to have savings of less than £16,000. Problems often arise when employees opt for voluntary redundancy and receive a substantial payout.

If this combined with your savings means you have savings of over £16,000 you will not be eligible for income based jobseeker’s allowance and you will need to rely on contributions base jobseeker’s allowance, which relies on you having contributed enough national insurance.

If you are considering retiring or giving up work altogether your voluntary redundancy decision will not impact this but you will have to prove to the government that you are unable to work in order to claim any benefits. If you plan to retire your voluntary redundancy package may be taxable if you do not plan to work again.

Mostly C– Some Benefits May Be Off Limits

From your answers it sounds like you may have trouble claiming some types of benefits. This is not necessarily because you have chosen to take voluntary redundancy but it could be because of the impact voluntary redundancy has. If your redundancy pay is over £16,000 this will automatically rule out some types of jobseeker’s allowance. Also if you are planning to use your voluntary redundancy money towards retirement it will be taxable.

If you are financially well off then it is unlikely that you will qualify for any other benefits even if you are facing retirement.

Voluntary redundancy will in most circumstances be classed as any other type of redundancy when it comes to claiming benefits. You should be able to start claiming benefits from the day you are made redundant. What you need to take into consideration is that voluntary redundancy will often result in a heftier payout which could make you financially better off, which in turn could limit the benefits that are available to you. Have a glance at our case study about what happened after one reader took voluntary redundancy.

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[Add a Comment]
Thecompany I work for are making 300 people redundant .i have worked for them for 13 year they will pay me 26 wks pay plus holudays I have not taken the only problem I have is I have worked from the last 43 year so I have paid my stamp but my husband is on a good salary so will he have to keep me or can I claim JSA and will I be able to claim the policy to pay my mortgage will this effect my JSA
Judd - 9-Aug-20 @ 10:51 AM
Where I work, we have all been advised we are 'At Risk of Redundancy'. They are going through thecorrect procedures of choosing who this will affect. I am 2 years away from Retirement. Obviously, other younger staff want to keep their jobs. I had intended continuing to work for at least another 2 years past Retirement in November 2022. But now I feel I should jump ship to save someone else's job. I have savings, my mortgage is paid, I have worked for the same firm for over 40 years. But Redundancy pay according to the Government Website will be at most £11,150. This works out at approximately£397 per month until I reach retirement age & can collect my pension. This is obviously going to be a huge shock! I live with my partner, who cannot work due to severe back problems, but who does not sign on. Our only income is my wage to cover all bill. I am concerned about offering to be Volentarily layed off, as I really don't know what sort of position this is going to leave me in financially. Would you suggest I wait & see if I am made Redundant? The process has already started with people in other departments being made redundant. Thank you.
Pelican - 17-Jul-20 @ 6:24 PM
Sorry but so much of the information given above is incorrect. I am a full time welfare benefits adviser and I'd be happy to go through it for you. For examplejobseekers allowance is NOT affected by savings or redundancy pay; if you dont have an N.I. record, you cant get income-based jsa anymore. It has to be universal credit. ESA is not paid on top of jsa for those who dont have enough money. It's an alternative to jsa. Those were the mistakes in the first paragraph alone.
GaryV - 16-Jul-20 @ 8:24 AM
I’m taking voluntary redundancy and will receive after tax approx £50k. I am looking to carry working. Can I claim any benefits.
Blakey - 15-Jul-20 @ 8:20 PM
I'm about to take v r and need to know if paying off loans and credit cards will count against me when claiming benefits. Obviously once I'm unemployed I wldnt be able to meet the payments on these debts. I am 63 years old and it is unlikely I will work again. Thank you
Steve - 2-Jul-20 @ 7:22 AM
hi, I have been offered VR , savings including redundancy would be well under 16k , can I claim for both jobseekers & universal credit? thanks Mike
micky - 30-Jun-20 @ 12:10 PM
I'm 44. Been working FT since i was 18 after college. I have worked at my current company for nearly 8 years. We have been advised that redundancies are on the cards. I live alone in a council flat. I would expect less than 10k redundancy, probably mire like 6k. I havr CC debts of around 4k, 0% for the nnect 2 years. I have about that in savings. Should i use all my savings to pay off my card before i get made redundant? My concern is having this money in the bank will prevent me from getting any benefits while i look for a new job , and will still have to pay full rent and council tax until its gone.. And pay some off card, it wont last long. Normally i wouldnt be too concerned about re employment, but now so many people are seeking work, and so many companies are doing under it has become harder. Thanks
Leo - 18-Jun-20 @ 12:21 AM
I ve been made redundant, my partner works 35hr week, we have 1 15 yr old daughter. My payout is more that £16,000 can I claim benefits
CJ - 25-May-20 @ 2:29 PM
hi my company offer me for vr if i get that can i get benfit? im allowed to claim for universal credit?? thank you
baz - 2-Apr-20 @ 5:57 PM
Good Morning I have taken VR at my current employer, I took VR as I am setting up my own business, due to Covid-19 I can no longer pursue my business (for time being).I will technically be unemployed with no income form April 10th.My VR is less than £16000 (alot less).Am I entitle to anything with the current situation going on? Thanks
Nikki - 30-Mar-20 @ 11:45 AM
Hi, If I get a VR of around £30k & use this to pay Towards mortgage and debts, would I still get benefits and which ones? Thanks.
Ml - 6-Mar-20 @ 2:57 PM
Hi I am opting for VR, my payout is just over £16k but I have no savings. Am I entitled to any benefits? Thanks
S - 7-Jul-19 @ 6:40 PM
I live on my own (mortgaged house) and I have 2 days left of a trial in a merged position.I'm unhappy and want to take the redundancy, which is under £10k ... can I still claim JSA?
Fayet - 30-Jan-19 @ 4:16 PM
I have been put told my job is at risk but am the only one in my team (we all have the same job title and do the same work) that has been selected and it is fairly obvious from their comments that they won't be finding me any other work.My boss has already informed the team i won't be returning to the team. I'm told they've followed the proper process for selecting me over anyone else but i was under the impression that the process should only be starting now if our area has been selected at risk. Isthat correct?
B - 17-Jan-19 @ 11:39 PM
Hi. I have the chance of taking vr and the amount is over £16,000. I'm tempted to take the figure and pay off my loans which wouldn't leave much money afterwards, maybe a £2,000. would I be entitled to any benefits? I am married but my wife doesn't work.
Mike - 10-Dec-18 @ 10:03 AM
Kiki - Your Question:
Im a single girl living in council accommadation. I have worked all my life but im 20 years off retiring age. My company has asked for voluntary redundancies. My figures are les than 16k.What benefits am I entitled to whilst actively seeking work?

Our Response:
You should be entitled to apply for Jobseekers Allowance, please see the link here .
RedundancyExpert - 2-Aug-18 @ 2:48 PM
Im a single girl living in council accommadation. I have worked all my life but im 20 years off retiring age. My company has asked for voluntary redundancies. My figures are les than 16k. What benefits am i entitled to whilst actively seeking work?
Kiki - 31-Jul-18 @ 4:24 PM
Joo - Your Question:
I have just taken voluntary redundancy and I cannot claim jobseekers as my husband works over 24hrs a week and even though my redundancy was under £16000. Can I claim free prescriptions as I wasn’t told anything at jobcentre apart from help looking for jobs

Our Response:
You can see whether you can claim free prescriptions via the link here . The Turn2Us site may help, please see link here .
RedundancyExpert - 21-Jun-18 @ 10:52 AM
I have just taken voluntary redundancy and I cannot claim jobseekers as my husband works over 24hrs a week and even though my redundancy was under £16000. Can I claim free prescriptions as I wasn’t told anything at jobcentre apart from help looking for jobs
Joo - 20-Jun-18 @ 6:11 PM
Hi I'm taking M.A.R.S from work mutually agreed resignation through Ill health I have been off work so far 15 weeks and when my chemo starts another 8 months all I'm getting at no is child tax and child benefit and sick pay my resignation layout it only a thousand pound but I have cancer and am bringing up 2 sons one of who h is on the spectrum I have been told that I can't claim d.l.a for him am I entitled to claim any benefits as bills need paying I've been told I'm not allowed I font know where else to go for help
Eggy - 15-Mar-18 @ 2:25 PM
Hi I'm considering taking voluntary redundancy, mainly due to ill health,however my husband is disabled and receives PIP,we are making enquiries as to we would stop receiving these payments if I was to take the redundancy.We also need to know what benefits we would get as an income to live on . I do possibly plan on continuing to work,on a part time basis,so once again would need to know how we'd stand financially. Thanks
Tina - 8-Mar-18 @ 11:26 AM
Goochie - Your Question:
Can you help.i was made redundant it the begining of the year.my redundancy is almost gone.my wife does not work.can I claim job seekers or Esa?

Our Response:
You would have to speak to the JobCentre Plus regarding this and much depends upon your circumstances and whether you are looking for work etc. JSA is a non-means-tested benefit, so it is not affected by the amount of savings that you have, redundancy settlements or your partner's earnings/savings.
RedundancyExpert - 21-Nov-17 @ 3:48 PM
Can you help...i was made redundant it the begining of the year ..my redundancy is almost gone...my wife does not work...can i claim job seekers or Esa?...
Goochie - 21-Nov-17 @ 11:44 AM
Rufas - Your Question:
I was forced to resign after11 years my boss has two companys one is a subsady and I was working for that one I refused to do a job one day as it was not safe I went home my boss then rang me up gave me an ultimatum I either go back or iwas I going to resign I said id do other jobs but not that one he replied it was all there was to do so what was I going to do so I said well I will have to resign then. So am I able to take him to a tribuneral to get my redundancy money or have I got no chance ?

Our Response:
Usually, you have three months less one day from when the event happened to make a claim to the tribunal. You can see more via the CAB link here , which will tell you all you need to know. I advise you give ACAS a call in order to see whether you have any options. If you were dissatisfied with the way your employer was acting, prior to your employer asking you to resign, you could have raised the issue as a grievance instead of accepting the resignation.
RedundancyExpert - 3-Nov-17 @ 12:24 PM
I was forced to resign after11 years my boss has two companys one is a subsady and i was working for that one i refused to do a job one day as it was not safe i went home my boss then rang me up gave me an ultimatum i either go back or iwas i going to resign i said id do other jobs but not that one he replied it was all there was to do so what was i going to do so i said well i will have to resign then . So am i able to take him to a tribuneral to get my redundancy money or have i got no chance ?
Rufas - 2-Nov-17 @ 8:24 PM
I am looking to request VR March 2018. I am concerned that if the date is put back to later in 2018, that due to new government legislation, the whole amount could be taxed, rather than just the amount over 30000 as it is at the moment. Please confirm this information. Thanks
JY - 20-Oct-17 @ 10:00 PM
Hi im due to be made redundant just before christmas ive been tild my redundancy will be 2027.50 for 10 years of work for the company i have 3 children and my partner isnt currently working hes a stay at home dad as we have small children and nobody who can help us with childcare the rendancy money wont last us long with paying bills and living could you please tell mewhat help will i be entitled to thank you Worried mother
Northampton - 28-Sep-17 @ 9:26 AM
Jacsel - Your Question:
The department I work in is closing in Dec. I was given the option of 1 redeployment and if I didn't get a job by oct it would turn to compulsory and leave in Dec. 2 voluntary which would mean I still leave in Dec.I opted for 2 as I didn't want to risk the chance of loosing the 22k payoff as this will pay off our dept. Now I have concerns about signing on, there will be nothing left to live off, will I be able to claim job seekers?

Our Response:
If you have paid National Insurance for the past two years, you should be able to claim Jobseekers Allowance regardless of how much savings or redundancy you have. You can use the benefits calculator here to see whether you are eligible.
RedundancyExpert - 1-Sep-17 @ 11:18 AM
Kj - Your Question:
Taking voluntary redundancy. Will get approx 13k. I worked 21 hours a week and was claiming working and child tax credits. I am wanting to work immediately after either temping or if I am lucky gettin a part time job straight away. Will I still be able to Claim working and child tax credits if I get a redundancy pay out ? I am married and my hubby works full time.

Our Response:
You can see more via the Turn2Us link here, which should help answer your question.
RedundancyExpert - 31-Aug-17 @ 12:51 PM
The department I work in is closing in Dec. I was given the option of 1 redeployment and if I didn't get a job by oct it would turn to compulsory and leave in Dec. 2 voluntary which would mean I still leave in Dec. I opted for 2 as I didn't want to risk the chance of loosing the 22k payoff as this will pay off our dept. Now I have concerns about signing on, there will be nothing left to live off, will I be able to claim job seekers?
Jacsel - 31-Aug-17 @ 7:03 AM
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