NHS Redundancy Calculator 2025/26 – Calculate Your AfC & Statutory Pay Instantly

Read Guide: NHS Pay Bands 2025/26

✓ Updated for 2025/26 tax year

✓ Based on NHS Employers guidance

✓ Includes £719 statutory weekly cap

✓ Both AfC contractual + statutory calculations

✓ Referenced against NHS Terms and Conditions Handbook

Whether you’re going through a consultation, considering voluntary redundancy, or simply planning, this tool provides a clear breakdown of your entitlement based on the latest 2025/26 rates. You’ll see both calculation methods side-by-side, understand tax implications, including the £30,000 tax-free threshold, and get your estimated net take-home amount—all based on verified NHS Employers guidance and the Employment Rights Act 1996.

What you’ll need: Your date of birth, NHS employment start date, expected redundancy date, contracted hours, and annual salary (or weekly pay). The calculator handles everything else automatically.

Read Guide: NHS Pay Bands 2025/26

How NHS Redundancy Pay Is Calculated

NHS redundancy pay can be calculated using two different methods: the NHS contractual scheme under Agenda for Change (primarily for England) or the UK statutory scheme, which applies nationwide. Most NHS staff receive the contractual amount as it’s typically more generous—but understanding both helps you verify your entitlement.

The calculation depends on several factors, including your age, length of reckonable service, salary, and whether you work full-time or part-time. The NHS Terms and Conditions of Service Handbook (Section 16) governs contractual payments, while the Employment Rights Act 1996 sets out statutory minimums.

Read Guide: NHS Band 5 Pay 2025/26

NHS Contractual Redundancy (Agenda for Change – England)

Under the NHS Agenda for Change terms in England, redundancy pay is calculated as one month’s pay for each complete year of reckonable service, up to a maximum of 24 years.

Key parameters for 2025/26:

Parameter	Value
Formula	1 month’s pay per year of reckonable service
Maximum years counted	24 years
Salary floor (FTE)	£23,000
Salary cap (FTE)	£80,000
Maximum total payment	£160,000 (pro-rata for part-time)
Minimum qualifying service	2 years continuous

How “month’s pay” is calculated:

The NHS uses whichever method produces the higher figure1:

• • 1/12 of annual salary, OR

• • 4.35 × weekly pay

This ensures you receive the most beneficial calculation regardless of how your pay is structured.

If your full-time equivalent salary falls below £23,000, the calculation uses £23,000 as the floor. If your salary exceeds £80,000, the calculation is capped at that amount. These floors and caps are applied to FTE salary first, then prorated for part-time staff.

Read Guide: NHS Band 6 Pay 2025/26

UK Statutory Redundancy Pay

UK statutory redundancy pay is the legal minimum your employer must provide. It’s calculated based on your age during each year of service, your weekly pay (capped), and your length of service.

Age-based multipliers:

Age During Year of Service	Multiplier
Under 22	0.5 week’s pay per year
22 to 40	1 week’s pay per year
41 and over	1.5 weeks’ pay per year

Statutory limits for 2025/26:

Parameter	Value
Weekly pay cap	£719
Maximum years counted	20 years
Maximum statutory payment	£21,570

The calculation works backwards from your redundancy date, applying the appropriate multiplier based on your age during each year of service.

Read Guide: NHS Band 7 Pay 2025/26

NHS Contractual vs Statutory: Which Is Better?

For most NHS employees, the contractual scheme pays significantly more than statutory. Here’s a direct comparison:

Factor	NHS Contractual (AfC)	UK Statutory
Basis	Monthly pay	Weekly pay
Formula	1 month per year	Age-based weeks
Maximum years	24	20
Pay cap	£80,000/year	£719/week
Typical result	Higher	Lower
Who it applies to	AfC England staff	All UK employees

Example comparison:

A 45-year-old Band 6 nurse with 15 years’ service, earning £40,000:

• • NHS Contractual: £50,000 gross

• • UK Statutory: ~£15,000 gross

The NHS contractual payment is over 3x higher in this scenario.

Read Guide: NHS Band 3 Pay 2025/26

Who Is Eligible for NHS Redundancy Pay?

Not everyone automatically qualifies for redundancy pay. Understanding eligibility criteria ensures you know your rights before entering consultation.

Read Guide: NHS Band 2 Pay 2025/26

Minimum Service Requirements

To qualify for either NHS contractual or statutory redundancy pay, you must have at least 2 years (104 weeks) of continuous service with the NHS immediately before your redundancy date.

Continuous service means unbroken employment with one or more NHS organisations. If you’ve moved between NHS trusts, Integrated Care Boards (ICBs), or other NHS employers without a break exceeding one week (excluding statutory leave like maternity), your service remains continuous.

Employment Status Requirements

Eligible:

• • Direct NHS employees on permanent contracts ✓

• • Staff on fixed-term contracts (if genuinely redundant) ✓

• • Part-time and full-time staff ✓

• • Staff on Agenda for Change terms ✓

Not typically eligible:

• • Agency staff ✗

• • Contractors ✗

• • Some bank staff (varies by arrangement) ✗

If your fixed-term contract simply expires without renewal, this is generally not considered redundancy unless the non-renewal is due to the role becoming redundant.

What Counts as Genuine Redundancy?

Redundancy must be genuine to qualify for payment. Under the Employment Rights Act 1996, genuine redundancy occurs when:

• • Your role is no longer needed due to organisational change

• • Restructuring eliminates your position

• • Budget cuts reduce staffing requirements

• • Service changes make your role obsolete

• • Facility or department closure affects your position

Redundancy is NOT applicable when dismissal relates to:

• • Performance or capability issues

• • Misconduct

• • Personal reasons unrelated to the role

If you believe your redundancy isn’t genuine (sometimes called “sham redundancy”), you have the right to challenge it through grievance procedures, your union, or an employment tribunal.

Understanding NHS Service Calculations

One of the most confusing aspects of NHS redundancy is the difference between continuous service and reckonable service. Getting this right is crucial for an accurate calculation.

Continuous Service vs Reckonable Service

These two terms are often confused but serve different purposes:

Continuous service:

• • Determines your eligibility (minimum 2 years required)

• • Means unbroken NHS employment

• • Breaks under one week generally don’t affect continuity

Reckonable service:

• • Used to calculate your payment

• • May differ from continuous service

• • Can be reduced by previous redundancy payments or MARS

• • Maximum 24 years counts for the NHS contractual

Your HR department can confirm both figures—always request written confirmation before finalising any calculations.

How Breaks in Service Affect Your Pay

Breaks in NHS service affect your redundancy entitlement differently depending on length.

Break Duration	Impact on Continuous Service	Impact on Reckonable Service
Under 1 week	No effect	No effect
1 week to 12 months	May break continuity (check specifics)	Previous service still counts as reckonable
Over 12 months	Breaks continuity	Previous service may not count

Exceptions that don’t break continuity:

• • Maternity, paternity, or adoption leave

• • Approved career breaks (if you return as agreed)

• • Secondments

• • Sickness absence

If you’ve moved between NHS organisations without a break exceeding 12 months, your previous NHS employment should count as reckonable service for redundancy calculation, even if continuity was technically broken.

Previous Redundancy Payments (Paragraph 16.6)

This is a critical provision many people overlook. Under Paragraph 16.6 of Section 16 in the NHS Terms and Conditions Handbook:

Service already taken into account for a previous redundancy or loss of office payment cannot be counted again in a new redundancy calculation.

Example: If you received redundancy pay covering 10 years of service in 2020, then returned to the NHS and worked another 8 years before facing redundancy again, only those 8 new years count as reckonable service—not 18 years total.

Similarly, if you received a MARS (Mutually Agreed Resignation Scheme) severance payment, Paragraph 20.18 of the NHS TCS Handbook states that service covered by that payment is excluded from future redundancy calculations.

Part-Time NHS Staff Redundancy Calculation

Part-time NHS employees are absolutely entitled to redundancy pay, calculated proportionally based on contracted hours.

How Part-Time Pro-Rata Works

For part-time staff, the calculation follows these steps:

1. 1. Determine your FTE (Full-Time Equivalent) ratio
      • • FTE = Your contracted hours ÷ 37.5 (standard NHS full-time hours)
      • • Example: 18.75 hours = 0.5 FTE

1. 1. Apply the salary floor/cap to the FTE salary first
      • • If your FTE salary is below £23,000, use £23,000
      • • If your FTE salary exceeds £80,000, use £80,000

1. 1. Calculate the full-time redundancy amount

1. 1. Pro-rate the result by your FTE ratio

1. 1. Maximum payment is £160,000 × your FTE ratio

Part-Time Calculation Example

Scenario: Band 5 Healthcare Assistant working 18.75 hours (0.5 FTE), 8 years’ service, £32,000 FTE salary

Calculation:

• • FTE ratio: 18.75 ÷ 37.5 = 0.5

• • Monthly pay (FTE): £32,000 ÷ 12 = £2,667

• • Full-time redundancy: £2,667 × 8 years = £21,336

• • Pro-rated amount: £21,336 × 0.5 = £10,668

This part-time employee would receive approximately £10,668 gross under NHS contractual terms.

Tax on NHS Redundancy Pay

Understanding tax implications helps you know your actual take-home amount rather than just the gross figure.

The £30,000 Tax-Free Allowance

The first £30,000 of statutory redundancy pay is completely tax-free. You don’t pay income tax or National Insurance on this portion.

This applies to:

• • NHS contractual redundancy payments

• • UK statutory redundancy payments

• • Enhanced redundancy packages

The £30,000 threshold covers redundancy pay only—other payments may be treated differently.

Tax on Amounts Over £30,000

Any redundancy pay exceeding £30,000 is taxed as income. It’s added to your earnings for that tax year and taxed at your marginal rate.

Tax bands for 2025/26:

• • Basic rate (20%): £12,571 to £50,270

• • Higher rate (40%): £50,271 to £125,140

• • Additional rate (45%): Over £125,140

Important: The taxable portion may push you into a higher tax band for that year, potentially resulting in more tax than expected on the excess amount.

PILON (Pay in Lieu of Notice)

Pay in Lieu of Notice (PILON) is usually taxable separately and is not included in the £30,000 tax-free redundancy allowance.

If your employer pays you instead of having you work your notice period:

• • PILON is typically treated as normal earnings

• • Subject to income tax and National Insurance

• • Check your contract for specific terms

Some contracts may have provisions that affect PILON taxation—consult your HR department or a tax advisor for your specific situation.

Example Tax Calculation

Scenario: NHS redundancy payment of £50,000 gross

Component	Amount
Gross redundancy pay	£50,000
Tax-free portion (first £30,000)	£30,000
Taxable portion	£20,000
Estimated tax (at 20% basic rate)	£4,000
Estimated net take-home	£46,000

Note: Actual tax depends on your total income for the year and applicable tax band.

Special Circumstances

Several situations require additional consideration beyond standard redundancy calculations.

Over 55? NHS Pension Access Options

If you’re aged 55 or over when made redundant, you may be able to access your NHS pension immediately without the usual actuarial reduction that applies to early retirement.

Key benefits:

• • Immediate pension access from the redundancy date

• • No actuarial reduction in many cases

• • The combined package value (redundancy + pension) can be substantial

• • Applies to 1995 Section, 2008 Section, and 2015 Scheme members (different rules apply)

The NHSBSA uses specific redundancy factors to calculate capitalised costs for employers when early pension access is triggered.

Action required: Contact NHS Pensions directly to request a personalised quote showing your pension options if made redundant. This helps you understand the true value of your total package before making decisions.

MARS Scheme (Mutually Agreed Resignation Scheme)

MARS (Mutually Agreed Resignation Scheme) is NOT the same as redundancy. It’s a separate voluntary scheme that has become particularly relevant for staff at NHS England, Integrated Care Boards (ICBs), and Commissioning Support Units (CSUs).

Key differences from redundancy:

Factor	Redundancy (Section 16)	MARS (Section 20)
Legal basis	Section 16 NHS TCS Handbook	Paragraph 20.18 NHS TCS Handbook
Nature	Dismissal by employer	Mutual agreement
Triggers AfC Section 16	Yes	No
Affects future redundancy	Previous service excluded	Previous service excluded
Calculation	1 month per year (up to 24)	Negotiated terms

Critical warning: If you accept a MARS payment, any service covered by that payment is excluded from future NHS redundancy calculations under Paragraph 20.18.

Who it applies to: MARS has been offered primarily to staff in NHS England, ICBs, and CSUs undergoing organisational change. If you’re in these organisations, ensure you understand whether you’re being offered MARS or actual voluntary redundancy—the implications differ significantly.

Voluntary vs Compulsory Redundancy

A common question is whether voluntary redundancy (VR) pays more than compulsory redundancy. The answer: the calculation method is identical.

Under the NHS Agenda for Change terms:

• • Voluntary redundancy uses the same formula as compulsory redundancy

• • 1 month per year of reckonable service applies to both

• • Maximum 24 years counts for both

However:

• • Some NHS trusts offer enhanced packages for voluntary redundancy

• • Local policies may provide additional incentives

• • Always check your trust’s specific VR terms before deciding

The RCN advises members to carefully review any VR offer and consider seeking advice before accepting, as the terms can vary between organisations.

Clawback: Partial Retirement Impact

If you’ve already taken partial retirement or drawn pension benefits while continuing to work, this significantly affects your redundancy entitlement through a mechanism called “clawback”.

Paragraph 16.6 states:

Employment already taken into account for the purpose of calculating pension benefits cannot be counted as reckonable service for redundancy pay purposes.

What this means:

• • If you took partial retirement at age 55, covering 20 years of service

• • Then worked another 5 years before redundancy

• • Only those 5 new years count for redundancy—not 25 years

Recent HSJ reports have highlighted that MARS terms for NHS England and ICB staff have faced criticism for applying the “toughest ever” clawback provisions, with unions describing them as “grossly unfair.

Before deciding on partial retirement, consider the potential impact on future redundancy entitlement. Once pension benefits are drawn on specific service, that service is permanently excluded from redundancy calculations.

Enhanced Redundancy Packages

Some NHS organisations offer enhanced redundancy terms beyond the standard Agenda for Change provisions.

Potential enhancements include:

• • Additional months’ pay per year of service

• • Higher salary caps

• • Extended maximum years counted

• • Outplacement support

• • Extended notice periods

Where to check:

• • Your employment contract

• • Staff handbook

• • Local redundancy policies

• • HR department

Enhanced terms are typically offered during specific organisational changes or as part of voluntary redundancy schemes. Always confirm what applies to your situation in writing.

Regional Differences in NHS Redundancy

This calculator is optimised for the NHS Agenda for Change (England) terms. Other UK nations have different arrangements.

England (Agenda for Change)

Full AfC contractual terms apply as detailed throughout this page:

• • Section 16 of the NHS Terms and Conditions Handbook

• • 1 month per year formula

• • 24-year maximum

• • £23,000 floor / £80,000 cap

• • Governed by NHS Employers guidance

Scotland

NHS Scotland operates under different terms and conditions. While the principles are similar, specific provisions, including calculation methods, caps, and eligibility rules, may differ.

For NHS Scotland staff:

• • The UK statutory calculation shown in this calculator represents your minimum legal entitlement

• • Contractual terms should be verified with NHS Scotland HR or your union

• • Different handbook provisions may apply

Wales

NHS Wales has its own terms and conditions that may vary from English AfC provisions.

For NHS Wales staff:

• • Statutory minimum applies UK-wide

• • Contractual enhancements should be confirmed with your employer

• • Consult NHS Wales HR for accurate figures

Northern Ireland

Health and Social Care (HSC) in Northern Ireland operates separately from NHS structures in Great Britain.

For HSC Northern Ireland staff:

• • Statutory redundancy rules apply (with some NI-specific provisions)

• • Contractual terms differ from AfC England

• • Contact your HSC employer for accurate calculations

NHS Redundancy Calculation Examples

Worked examples help illustrate how calculations work in practice. These use the current 2025/26 figures.

Example 1: Full-Time Band 6 Nurse

Details:

• • Age: 45 years old

• • Length of service: 15 years

• • Annual salary: £40,000

• • Contracted hours: 37.5 (full-time)

• • Redundancy type: Standard

NHS Contractual Calculation:

• • Monthly pay: £40,000 ÷ 12 = £3,333

• • Years counted: 15 (under 24-year maximum)

• • Gross redundancy: £3,333 × 15 = £50,000

UK Statutory Calculation:

• • Weekly pay: £40,000 ÷ 52 = £769 → capped at £719

• • Age 30-40: 10 years × 1 week = 10 weeks

• • Age 41-45: 5 years × 1.5 weeks = 7.5 weeks

• • Total weeks: 17.5

• • Gross redundancy: 17.5 × £719 = £12,582

Comparison: NHS Contractual pays £37,418 more

Tax calculation on £50,000:

• • Tax-free: £30,000

• • Taxable: £20,000

• • Estimated tax (20%): £4,000

• • Net take-home: ~£46,000

Example 2: Part-Time Band 5 Healthcare Assistant

Details:

• • Age: 38 years old

• • Length of service: 8 years

• • FTE Annual salary: £32,000

• • Contracted hours: 22.5 (0.6 FTE)

• • Redundancy type: Voluntary

NHS Contractual Calculation:

• • FTE ratio: 22.5 ÷ 37.5 = 0.6

• • Monthly pay (FTE): £32,000 ÷ 12 = £2,667

• • Pro-rated monthly: £2,667 × 0.6 = £1,600

• • Years counted: 8

• • Gross redundancy: £1,600 × 8 = £12,800

UK Statutory Calculation:

• • Weekly pay (actual): (£32,000 × 0.6) ÷ 52 = £369

• • All years at age 22-40: 8 years × 1 week = 8 weeks

• • Gross redundancy: 8 × £369 = £2,952

Comparison: NHS Contractual pays £9,848 more

Tax: Entire amount under £30,000 threshold = tax-free

Example 3: Over 55 Senior Manager

Details:

• • Age: 57 years old

• • Length of service: 22 years

• • Annual salary: £65,000

• • Contracted hours: 37.5 (full-time)

• • Considering pension access

NHS Contractual Calculation:

• • Monthly pay: £65,000 ÷ 12 = £5,417

• • Years counted: 22 (under 24-year maximum)

• • Gross redundancy: £5,417 × 22 = £119,174

UK Statutory Calculation:

• • Weekly pay: £65,000 ÷ 52 = £1,250 → capped at £719

• • Service capped at 20 years

• • Weighted by age brackets (complex calculation)

• • Approximate gross: £19,000-£21,000

Important for over-55s: This employee should contact NHS Pensions to explore immediate pension access withoutan actuarial reduction. Combined with redundancy pay, the total package value could be substantially higher than redundancy alone.

Tax on £119,174:

• • Tax-free: £30,000

• • Taxable: £89,174

• • Estimated tax (mixed rates): ~£28,000

• • Net take-home: ~£91,000

Common Mistakes to Avoid

These errors frequently lead to incorrect expectations or missed entitlements:

Using total service instead of reckonable service. Not all NHS employment automatically counts. Breaks exceeding 12 months, periods covered by previous redundancy payments, or MARS severance all reduce reckonable service. Always confirm your reckonable service figure with HR.

Forgetting part-time adjustments If you work part-time, salary floors (£23,000) and caps (£80,000) apply to your FTE salary first, then the result is pro-rated. Don’t apply caps to your actual part-time salary.

Confusing statutory with contractual, NHS AfC contractual terms are usually far more generous. Ensure you know which scheme applies—statutory is the minimum, not the standard.

Not accounting for prior redundancy or MARS Service covered by previous payments cannot be counted again. If you’ve received NHS redundancy or MARS before, only the service since that payment counts.

Ignoring the salary floor Staff earning below £23,000 FTE have their calculation based on £23,000—this increases their payment above what their actual salary would suggest.

Using outdated weekly caps The statutory weekly cap changes annually. For 2025/26, it’s £719 (not £700, £669, or £643 from previous years).

Forgetting tax on amounts over £30,000 Your net take-home on large redundancy payments will be less than the gross figure once tax applies to amounts exceeding £30,000.

Not checking for enhanced local terms. Some trusts offer enhanced packages—always ask HR about any additional benefits before accepting standard terms.

Assuming VR pays more than compulsory The calculation formula is identical. VR may have local enhancements, but the base calculation is the same.

How to Use This Calculator

Follow these steps for an accurate estimate:

Step-by-Step Guide

1. 1. Enter your date of birth
      • • Required for statutory age-based multipliers
      • • Determines which age brackets apply to your service years

1. 1. Enter your NHS employment start date
      • • The date your continuous NHS service began
      • • Include transfers between NHS organisations if breaks were under 12 months

1. 1. Enter your expected redundancy date
      • • When you expect your employment to end
      • • Used to calculate total service years and your age at redundancy

1. 1. Select your contracted hours
      • • Full-time is 37.5 hours for the NHS
      • • Part-time staff: enter your actual contracted hours

1. 1. Enter your annual salary (FTE)
      • • Your full-time equivalent gross salary
      • • Part-time staff: enter what you’d earn if working full-time

1. 1. Select redundancy type
      • • Standard, voluntary, compulsory, or MARS
      • • Note: MARS is different from redundancy—see guidance above

1. 1. Check any special circumstances
      • • Previous redundancy payments
      • • Partial retirement
      • • Over 55 pension interest

1. 1. Click Calculate
      • • View both NHS Contractual and UK Statutory results

1. 1. Review your results
      • • Compare both methods
      • • Check tax breakdown
      • • Note any warnings about your circumstances

1. 1. Download or print your summary
      • • Keep for your records
      • • Use when discussing with HR

Official Resources & Support

For authoritative guidance and verification:

Official NHS Guidance

• • NHS Employers – Comprehensive redundancy arrangements guidance covering Section 16, eligibility, and calculation methods

• • NHS Terms and Conditions Handbook – Section 16 (redundancy) and Section 20 (MARS) provide the legal framework

• • NHSBSA – NHS Pensions information, including redundancy factors and pension access options

• • NHS England – MARS scheme guidance for ICB, CSU, and NHS England staff

Government Resources

• • GOV.UK Statutory Calculator – Official government tool for minimum statutory entitlement

• • ACAS – Free guidance on redundancy rights, consultation, and dispute resolution

• • Citizens Advice – Independent advice on employment rights

Union Support

Your union can provide personalised advice and support during redundancy:

• • RCN (Royal College of Nursing) – Specific guidance on NHS voluntary redundancy

• • Unison – UK’s largest public sector union

• • Unite – Support for NHS and healthcare workers

• • GMB – General Union with NHS membership

Your HR Department

Always verify calculations with HR, who can confirm:

• • Your exact continuous service dates

• • Your reckonable service (accounting for any deductions)

• • Any enhanced local redundancy terms

• • Pension implications for over-55

• • PILON and notice period arrangements

Frequently Asked Questions

Eligibility Questions

How many years do I need to work for the NHS to get redundancy pay?

You need at least 2 years (104 weeks) of continuous NHS service to qualify for redundancy pay under both NHS contractual terms and UK statutory rules. This continuous service must be immediately before your redundancy date. If you have less than 2 years’ service, you won’t qualify for redundancy pay, though you may still be entitled to notice pay.

Do agency or bank staff get NHS redundancy pay?

Agency staff are employed by the agency, not the NHS, so they do not qualify for NHS redundancy pay. Bank staff arrangements vary—if you’re employed directly by the NHS on a bank contract with over 2 years’ continuous service, you may qualify. However, casual bank arrangements without guaranteed hours typically don’t establish continuous service. Check your specific contract and consult HR.

Does my previous NHS employment count toward redundancy?

Previous NHS employment can count as reckonable service if the break between roles was under 12 months. However, any service already used to calculate a previous redundancy payment or MARS severance is excluded under Paragraphs 16.6 and 20.18 of the NHS TCS Handbook. Your HR department can confirm exactly which periods count.

I’m on a fixed-term contract – am I eligible for redundancy?

If your fixed-term contract ends due to genuine redundancy (your role is no longer needed) and you have 2+ years’ continuous service, you may qualify. However, if your contract simply reaches its end date and isn’t renewed for reasons unrelated to redundancy, this typically isn’t considered redundancy. The distinction depends on why the contract is ending.

Calculation Questions

• • How is NHS redundancy pay calculated?

• • NHS redundancy pay is calculated as one month’s pay for each complete year of reckonable service, up to a maximum of 24 years.

• • Month’s pay is the higher of:
    • • 1/12 of annual salary, OR
    • • 4.35 × weekly pay

• • A salary floor of £23,000 and a cap of £80,000 (FTE) applies. The maximum payment is £160,0002.

• • How much redundancy pay will I get for 20 years of service?

• • For 20 years of NHS service, you’d receive 20 months’ pay under NHS contractual terms3.

• • Example calculation:
    • • Annual salary: £40,000
    • • Monthly pay: £40,000 ÷ 12 = £3,333
    • • Redundancy: £3,333 × 20 years = £66,660 gross

• • Under UK statutory rules, you’d receive approximately £14,380 (capped at £719/week)2.

• • How do I calculate my redundancy payout?

• • NHS Contractual Formula:

• • (Annual Salary ÷ 12) × Years of Reckonable Service = Redundancy Payment3

• • UK Statutory Formula:
    • • Under 22: 0.5 week’s pay per year
    • • Age 22-40: 1 week’s pay per year
    • • Age 41+: 1.5 weeks’ pay per year14

• • Weekly pay is capped at £719 (2025/26), maximum 20 years counted.

• • What is a good redundancy package UK?

• • A good redundancy package typically exceeds the statutory minimum. NHS Agenda for Change terms are considered generous:

Package Type	Typical Amount
Statutory minimum	0.5-1.5 weeks per year (max £21,570)
Good (NHS contractual)	1 month per year (max £160,000)
Enhanced	Above contractual + additional benefits

• • The first £30,000 is tax-free1. Enhanced packages may include extended notice, outplacement support, or pension access for over-55s.

• • What is the formula for redundancy pay?

• • NHS Contractual (England):

• • Monthly Pay × Years of Service (max 24) = Redundancy Pay

• • Where Monthly Pay = Annual Salary ÷ 12 (floored at £23,000, capped at £80,000)3

• • UK Statutory:

• • text

• • Total Weeks (age-weighted) × Weekly Pay (max £719) = Redundancy Pay

• • Maximum 20 years counted, maximum payment £21,570.

• • What is the 4-week rule for redundancy?

• • The 4-week rule relates to trial periods in alternative employment, not the calculation itself.

• • If you accept an alternative role during redundancy, you have a 4-week statutory trial period to decide if it’s suitable. If you reject the role within 4 weeks:
    • • You retain redundancy pay entitlement
    • • Dismissal is treated as redundancy

• • If you work beyond 4 weeks, you’re considered to have accepted the new role and lose redundancy pay rights
    .

What salary is used for the NHS redundancy calculation?

NHS contractual redundancy uses your full-time equivalent (FTE) gross salary at the time of redundancy. A floor of £23,000 applies (if your FTE salary is lower, £23,000 is used), and a cap of £80,000 applies (if your FTE salary is higher, only £80,000 counts). For part-time staff, these limits apply to FTE salary first, then the result is prorated by your FTE fraction.

What is the maximum NHS redundancy payment I can receive?

The maximum NHS contractual redundancy payment is £160,000 for full-time staff (based on £80,000 salary cap × 24 years maximum × 1/12. For part-time staff, this maximum is prorated by your FTE. For example, a 0.5 FTE employee has a maximum of £80,000. The maximum UK statutory payment is £21,570 (2025/26).

How does part-time working affect my redundancy pay?

Part-time staff receive proportionally calculated redundancy pay. The salary floor (£23,000) and cap (£80,000) are applied to your notional full-time salary first. Then the redundancy amount is pro-rated based on your FTE fraction (your hours ÷ 37.5). For example, someone working 18.75 hours (0.5 FTE) receives half the full-time equivalent payment.

Why does NHS contractual pay more than statutory?

NHS contractual redundancy uses monthly pay (1/12 of annual salary) rather than weekly pay, and allows up to 24 years of service rather than 20. There’s also no weekly pay cap of £719. For most NHS staff, this combination results in significantly higher payments—often 2-4 times more than the statutory minimum.

Tax Questions

Is NHS redundancy pay taxable?

The first £30,000 of redundancy pay is tax-free. Any amount above £30,000 is added to your income for the tax year and taxed at your marginal rate. National Insurance is not payable on redundancy pay. Note that PILON (Pay in Lieu of Notice) is usually taxable separately and doesn’t fall within the £30,000 allowance.

Is my notice pay included in the £30,000 tax-free amount?

Generally, no. Pay in Lieu of Notice (PILON) is usually treated as normal earnings and is taxable with income tax and National Insurance deducted. The £30,000 tax-free threshold applies specifically to redundancy compensation, not to payments that replace what you would have earned during a notice period. Check your contract for specific provisions.

How much tax will I pay on my redundancy?

Tax on redundancy depends on your total income for the tax year. The first £30,000 is tax-free. Amounts above are taxed at your marginal rate: 20% basic rate, 40% higher rate (over £50,270), or 45% additional rate (over £125,140). A large redundancy payment might push you into a higher tax band temporarily. Consider consulting a tax advisor for precise calculations.

Special Circumstances Questions

I’m over 55 – can I take my pension and redundancy together?

Yes, in most cases. If you’re 55 or over when made redundant, you may access your NHS pension immediately without an actuarial reduction for early payment. This can significantly increase your total package value. The specifics depend on which NHS Pension Scheme you’re in (1995, 2008, or 2015 Section). Contact NHS Pensions for a personalised quote before making decisions.

What is the MARS scheme, and how does it affect redundancy?

MARS (Mutually Agreed Resignation Scheme) is a voluntary separation scheme—not redundancy. It’s primarily used by NHS England, ICBs, and CSUs. Critically, MARS payments are covered by Paragraph 20.18, meaning any service used in a MARS settlement is excluded from future redundancy calculations. If offered MARS, understand it’s legally different from redundancy and may affect future entitlements.

I took partial retirement – does this affect my redundancy pay?

Yes, significantly. Under Paragraph 16.6, service already used to calculate pension benefits cannot count as reckonable service for redundancy. If you took partial retirement drawing on 15 years of service, only service since then counts for redundancy. This “clawback” provision has been described as particularly strict in recent NHS England reorganisations.

Is voluntary redundancy pay the same as compulsory?

The calculation formula is identical under standard NHS Agenda for Change terms. Both voluntary and compulsory redundancy use 1 month per year of reckonable service. However, some trusts offer enhanced voluntary redundancy packages with additional benefits. Always check whether your employer is offering standard or enhanced terms before deciding.

Regional & Process Questions

Does this calculator work for NHS Scotland/Wales/Northern Ireland?

This calculator shows the UK statutory minimum for all nations, which provides a baseline. For England, the NHS contractual (AfC) calculation is accurate. For Scotland, Wales, and Northern Ireland, contractual terms differ—use the statutory figure as your guaranteed minimum and consult your regional HR or union for accurate contractual figures.

Where can I find official NHS redundancy guidance?

The primary sources are: NHS Employers website for comprehensive guidance on NHS redundancy arrangements; NHS Terms and Conditions Handbook (Section 16 for redundancy, Section 20 for MARS); NHSBSA for pension-related redundancy information; and GOV.UK for statutory redundancy rights. Your union (RCN, Unison, Unite) also provides member-specific guidance.

What should I do if I think my redundancy calculation is wrong?

First, request a detailed breakdown from your HR department showing how they calculated your payment. Compare against this calculator and official guidance. If discrepancies exist, raise them formally in writing. Contact your union representative for support. If unresolved, you can seek advice from ACAS or, as a last resort, claim an employment tribunal (time limits apply).

Disclaimer

Important: This calculator provides estimates only based on NHS Agenda for Change (England) terms and UK statutory redundancy rules. Your actual payment may differ based on your specific circumstances, local trust policies, or factors not captured in this tool.

Always verify figures with your HR department before making financial decisions. Trust-specific enhanced terms may apply. Service calculations should be confirmed by your employer.

This tool does not constitute financial or legal advice. For complex situations involving pensions, tax planning, or disputes, consult qualified professionals.

Sources: NHS Employers guidance, NHS Terms and Conditions of Service Handbook (Section 16, Section 20), Employment Rights Act 1996, NHSBSA redundancy factors, GOV.UK statutory redundancy information.

Last updated: January 2025 | Rates valid for: 2025/26 tax year