Employment Law2026-08-23

Voluntary Redundancy Scheme: Should You Accept the Severance Offer or Turn It Down?

Your employer is offering you severance as part of a voluntary redundancy scheme. What the offer is really worth — and what to check before you sign.

Your employer is cutting jobs and puts a “voluntary” offer in front of you: give up your job and, in return, receive a severance payment. Sometimes there is an added “fast-track bonus” for signing quickly. On paper, it sounds like a good deal. In practice, the devil is in the detail. A hasty signature can cost you more in lost unemployment benefit than the severance is actually worth.

In brief

A voluntary redundancy scheme is exactly that: voluntary. You are not obliged to sign anything. The offer is negotiable — on the amount of severance, the end date, and the surrounding terms. The biggest trap is not the money but the disqualification period (“Sperrzeit”) for unemployment benefit under § 159 SGB III. It looms whenever you bring the employment to an end yourself, by way of a termination agreement, without good cause. So before you sign anything, work out whether the offer actually adds up. Keep an eye on the tax position and on the possible drawbacks for your unemployment insurance.

How I can help you

Reviewing the offer: is the severance fair, and are the notice period and any garden leave correctly dealt with?
Negotiating better terms — voluntary schemes are almost always open to renegotiation
Assessing the risk of a disqualification period or a suspension of benefit at the employment agency (“Agentur für Arbeit”) before you sign
Drafting clauses that protect you against the disqualification period (reason for ending the employment, notice period, garden leave)
Comparing the offer with the rights you would have instead under a redundancy dismissal on operational grounds
Checking whether a social compensation plan (“Sozialplan”) exists and whether your individual offer falls short of it

Voluntary means: the decision is yours — and you can negotiate

A voluntary redundancy scheme is not an offer you are obliged to accept. Unlike a dismissal, here it is you who decides whether the employment ends. That sets the situation apart from an operational redundancy dismissal in a fundamental way. With a dismissal, a three-week clock starts running as soon as it reaches you. Within that period you must bring an unfair-dismissal claim (“Kündigungsschutzklage”), otherwise the dismissal takes effect. You are then under time pressure that the employer has set. With a voluntary scheme it is the other way round: the employer needs your consent. That gives you a stronger negotiating position than it may first appear.

This is all the more true when many colleagues receive a similar offer. Stated signing deadlines or “fast-track bonuses” for acting quickly are negotiating pressure, not legal obligations. As a rule you can:

ask for a higher severance payment, particularly if you have long service, are older, or would find it hard to secure a new job in the current market,
request a longer run-off period instead of an immediate end,
push for garden leave, with holiday and overtime set off against it, rather than having them forfeited,
agree a detailed reference (“qualifiziertes Zeugnis”) with an agreed form of wording.

The biggest trap: the disqualification period under § 159 SGB III

Anyone who signs a termination agreement brings the employment to an end themselves. From the employment agency’s point of view, that generally counts as conduct contrary to the interests of the insurance scheme. The consequence can be a disqualification period of, as a rule, twelve weeks. During that time no unemployment benefit is paid. The law allows for reductions — for instance to six weeks, where the employment would have ended soon in any event or where there is particular hardship. The disqualification period can be avoided entirely, however, only if you can show good cause for ending the employment yourself.

Whether good cause exists depends crucially on how the termination agreement is worded. If the agreement states expressly that the employer initiated the ending of the employment on operational grounds — for example because of a looming dismissal due to the job cuts — the risk of a disqualification period falls considerably. That holds good, though, only if you also observe the ordinary notice period. Where this wording is missing, or where the notice period is shortened, further drawbacks loom. I explain the detail, and how to draft the agreement accordingly, in full in my article on termination agreements and the disqualification period.

The second trap: suspension of benefit under § 158 SGB III

Quite apart from the disqualification period, there is a second pitfall. Where a severance payment is made and the employment ends without observing the ordinary notice period, your entitlement to unemployment benefit is suspended. It is suspended for the period by which the notice was cut short — but for at most one year. In practice this means: if, under your contract or notice period, your employment should have ended only in four months’ time, but you leave straight away, your entitlement is suspended for those four months. The suspension ends sooner if your notional regular salary over that period would have reached 60% of the severance that counts towards it. It also ends sooner if the employer could in any case have given notice within the proper period.

Important: the disqualification period and the suspension are two separate mechanisms. They can bite alongside one another. That is precisely why how you word the reason for ending the employment and the end date in the termination agreement matters so much — it is the lever for reducing both risks.

Tax: making use of the one-fifth rule

Severance is taxable in the ordinary way. It does, however, count as extraordinary income within the meaning of § 34 EStG and can therefore be taxed under the so-called one-fifth rule (“Fünftelregelung”). In simple terms: the tax is calculated as if the severance flowed in spread over five years. That softens the impact of progressive tax rates. Whether it is worthwhile, and by how much, depends on the rest of your income for the year. If the employer pays it out in a year in which your salary is high anyway, the rule brings little benefit. But if the payment falls in the year you lose your job, when your other income is lower, it can ease your tax burden considerably. The timing of the payment — for instance deferring it to the following year — can therefore matter for tax purposes. You can negotiate this as part of the termination agreement.

Where the business has a works council and the employer carries out a major operational change, such as extensive job cuts, the two sides often negotiate a social compensation plan (“Sozialplan”) under § 112 BetrVG. It governs how the workforce’s economic disadvantages are compensated or cushioned, for example through a severance formula. An individual voluntary scheme may offer more favourable terms than the social plan. It should not, however, offer worse ones — check this carefully. Where the employer departs from an already agreed reconciliation of interests (“Interessenausgleich”) without compelling reason, or fails altogether to make the required attempt at one, affected employees can claim compensation for the resulting disadvantage (“Nachteilsausgleich”) under § 113 BetrVG. That is a further lever for the negotiation.

A typical case from practice

A mid-career employee, with the company for more than ten years, receives a severance offer as part of a group-wide voluntary redundancy scheme. The acceptance deadline is short, and signing within two weeks brings an added bonus. The agreement she is given provides for an immediate departure, with no reference to any operational grounds. On legal review it becomes clear that, without adjusted wording, she faces both a disqualification period and a suspension of her unemployment benefit running to several months. That drawback comfortably outweighs the bonus on offer. After negotiation, the agreement is supplemented with an express clause on the operational grounds. In addition, the agreement now observes the ordinary notice period, and the severance amount rises slightly. The result: the overall financial package improves, and the risk of a disqualification period falls considerably.

Common mistakes

Signing under time pressure without having the wording on the reason for ending the employment reviewed
Agreeing an immediate end instead of observing the ordinary notice period — without knowing the consequences for the suspension of unemployment benefit
Fixating on the stated severance figure without also negotiating the notice period, garden leave, and reference
Failing to register as a jobseeker with the employment agency in good time before the employment ends — which can lead to reductions on top of the disqualification period
Assuming the offer is “group-wide standard” and therefore not open to negotiation
Leaving tax questions such as the timing of payment and the one-fifth rule entirely to the employer

Frequently asked questions

Am I obliged to accept the offer under the voluntary redundancy scheme?

No. A voluntary redundancy scheme rests on a mutual agreement. Until you sign, nothing happens. If you decline, it is for the employer to decide whether to issue an operational redundancy dismissal instead. You can then challenge that dismissal with an unfair-dismissal claim (“Kündigungsschutzklage”).

Can I negotiate the amount of the severance?

Yes, as a rule. The figure named in the scheme is usually an opening offer, not a fixed sum. Especially with long service or a difficult job market, there is often room to renegotiate. The same goes for the notice period, garden leave, and the reference.

Will I receive unemployment benefit straight away after signing?

Not necessarily. Where the employment is ended by a termination agreement, the employment agency will consider a disqualification period under § 159 SGB III. If the employer also pays a severance and does not observe the notice period, your entitlement may in addition be suspended under § 158 SGB III. Both risks can be reduced considerably through a carefully worded agreement.

Which is better: a termination agreement, or waiting to be dismissed?

It depends on the individual case. A well-negotiated termination agreement gives you certainty and usually a higher severance than a contested dismissal would. But it carries the risk of a disqualification period. An operational redundancy dismissal, by contrast, opens up the three-week window for an unfair-dismissal claim and often gives you a stronger negotiating hand. Which route works out better for you is something you should have worked through before deciding.

Do I have to register as a jobseeker before the employment ends?

Yes — and this matters regardless of the termination agreement. Your duty to register with the employment agency begins as soon as you know the end date. It is separate from the disqualification and suspension rules described here. If you miss the registration, further drawbacks loom.

Your next step

A voluntary redundancy scheme often seems more harmless than it is. Precisely because it says “voluntary” on the label, people sign too quickly. Before you decide, you should have the offer worked through. The severance, the tax, the notice period, and the risk of a disqualification period and a suspension of benefit all belong in one combined calculation. I will review your specific offer, renegotiate with your employer, and ensure wording that does not needlessly put your unemployment benefit at risk. You will find more on your options around dismissal, severance, and termination agreements on my topic page Employment Law. Get in touch before you sign — not afterwards.

This article provides general information and does not replace individual legal advice. Every case turns on its own facts. If you would like your situation assessed, please get in touch.

This article provides general information and is no substitute for legal advice in an individual case. Last updated: 2026-08-23.

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