‘Voluntary Buyouts’ seem to be getting in the news these days.
In February 2025, President Trump offered a generous (?) offer of a flat 8-month salary package to any Federal Worker who voluntarily resigns in an effort to cut staffing at an already bloated Government workforce.
As of the writing of this article, more than 60,000 have reportedly accepted this offer, representing 2% of the total number of federal workers.
In the same week, Google made a similar offerto 25,000 their staff in certain Business Units in the US. No news yet on the uptake of this deal.
But what is a ‘Voluntary Buyout’ (also known as a ‘Voluntary Separation Package’) and should you take one? Today, I try to answer your questions.
#1. What is a Voluntary Buyout and how is it different from a ‘Retrenchment Exercise’
A voluntary buyout is when an employer offers employees an attractive financial incentive package to voluntarily leave their position.
Unlike a Lay-off or Retrenchment exercise, it is open to all employees in the company/division on an ‘opt-in basis’.
Many companies have tried this before with varying degrees of success – I once chatted with a CEO of a Fortune 50 company who said this was ‘The Chicken’s way out of a tough downsizing decision’ – that instead of deciding who stays and who leaves, a ‘general offer is made and all the good talents with marketable skills would “take the money and run, leaving the riff-raffs behind to hold the fort”. (His words, not mine).
Throughout my career, I have seen some banks and pharmaceutical companies do this, but most was before 2010.
#2 What is included in a Voluntary Buyout? Can I negotiate?
Usually, it’s a severance package of X number of months, often depending on the number of years you’ve been with the company.
Sometimes, there’s a sweetener thrown in, like an extra month or two, to incentivise new-joiners to take the package.
If the company is feeling generous, they might even extend your medical/health benefits/insurance for another 12 months!
And you could try negotiating for more, but whether or not you achieve your desired outcome is anyone’s guess.
#3. What are the Pros and Cons of accepting a Voluntary Buyout?
Pros:
- Kaching!! Money Money Money!
- You might have been wanting to quit anyway, so this is a nice ‘farewell gift’
- The Voluntary Buyout is sometimes a ‘Precursor Event’ to a larger retrenchment exercise down the road, and the package offered then might not be as generous.
Cons:
- You might not find a job so quickly in a tough market like today
- The timing could be bad – you might be missing out on that HUGE Long-term incentive bonus that’s only 6 months away.
- You might not be emotionally or psychologically ready for a period of ‘fun-employment’.
#4. What happens if I Decline a Voluntary Buyout?
- Well, you’ll get to keep you job….for now!!
- Get ready for an increased workload, especially if many folks in your department decide to fly the coop.
- You might not be getting a better exit package down the road, so you could be missing out on the ‘best deal the company the company can offer’
#5. Should I accept a Voluntary Buyout?
So, that’s the million-dollar question, isn’t it?
My advice? Take it …
- If the payout is EXTREMELY GENEROUS (caveat…this definition is highly subjective!)
- If you already have another job in hand, or an offer baking in the oven.
- If you have been thinking of quitting anyway.
- If you have a nagging feeling your job is at risk already
- If you are near retirement age and want to ‘cash out’ quickly
- If it aligns with your Career Strategy or Financial Strategy
- You hate your Boss/Colleague/Company/Toxic Environment