Whether you’re going through consultation, considering voluntary redundancy, or simply planning ahead, this tool provides a clear breakdown of your entitlement based on 2025/26 rates. You can see both calculation methods, understand the £30,000 tax-free threshold, and estimate take-home pay based on your salary, service, and hours.

What you’ll need: your date of birth, NHS employment start date, expected redundancy date, contracted hours, and annual salary. The calculator handles the service-year cap, part-time ratio, statutory age weighting, and the basic tax treatment automatically.

Read Guide: NHS Pay Bands 2025/26

How NHS Redundancy Pay Is Calculated

NHS redundancy pay can be calculated using two methods: the NHS contractual scheme under Agenda for Change, primarily for England, or the UK statutory scheme that applies nationwide. Most NHS staff in England will receive the contractual amount because it is more generous, but comparing both helps you validate your entitlement.

The result depends on 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 the statutory minimum.

Read Guide: NHS Band 5 Pay 2025/26

NHS Contractual Redundancy (Agenda for Change – England)

Under NHS Agenda for Change terms in England, redundancy pay is one month’s pay for each complete year of reckonable service, up to a maximum of 24 years. The calculator uses whichever monthly-pay method produces the higher figure: annual salary ÷ 12, or 4.35 × weekly pay.

If your FTE salary falls below £23,000, the contractual calculation uses the floor. If it exceeds £80,000, it applies the cap. For part-time staff, the cap or floor is applied to the FTE salary first and then prorated using your contracted hours ÷ 37.5.

Read Guide: NHS Band 6 Pay 2025/26

UK Statutory Redundancy Pay

The statutory redundancy calculation is the legal minimum. It depends on your age in each full year of service, your weekly pay up to the weekly cap, and a 20-year maximum service limit.

The statutory method works backwards from the redundancy date, applying the age-based multiplier that applied during each complete service year.

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 redundancy. The difference comes from using monthly pay instead of weekly pay, allowing 24 years instead of 20, and applying a much higher salary basis.

Example: a 45-year-old Band 6 nurse with 15 years’ service earning £40,000 may receive around £50,000 under NHS contractual terms compared with roughly £12,500 under statutory rules.

Read Guide: NHS Band 3 Pay 2025/26

Who Is Eligible for NHS Redundancy Pay?

To qualify for redundancy pay, you normally need at least 2 years of continuous NHS service immediately before redundancy. Continuous service covers unbroken NHS employment and can include moves between NHS organisations where the break is short enough to preserve continuity.

Eligible workers usually include direct NHS employees on permanent or fixed-term contracts, plus part-time and full-time AfC staff. Agency workers, contractors, and some casual bank arrangements are typically excluded.

Redundancy must also be genuine: organisational change, restructuring, service closure, or reduced staffing need are common triggers. Performance, misconduct, and personal issues do not count as redundancy.

Understanding NHS Service Calculations

Continuous service decides whether you qualify. Reckonable service decides how much you get paid. Previous redundancy payments, MARS exits, or pension service already used under partial retirement can reduce reckonable service even when continuity is intact.

Paragraph 16.6 of the NHS Terms and Conditions Handbook prevents service that has already been paid out in a previous redundancy or used for pension benefits from being counted again. Paragraph 20.18 applies similar rules to MARS payments.

Part-Time NHS Staff Redundancy Calculation

Part-time staff are fully entitled to redundancy pay. The calculator converts your hours into an FTE ratio, applies the salary floor or cap to the FTE salary, calculates the full-time redundancy amount, and then prorates the result.

Example: 18.75 hours per week equals 0.5 FTE. If the full-time redundancy amount is £21,336, the part-time payout is £10,668.

Tax on NHS Redundancy Pay

The first £30,000 of redundancy compensation is usually tax-free. Any amount above £30,000 is added to your taxable income for the year and taxed at your marginal rate. Redundancy pay itself does not attract National Insurance, but PILON usually does.

The calculator estimates tax using the 2025/26 income tax bands and your salary at the point of redundancy. That gives a planning figure rather than a payroll guarantee.

Special Circumstances

If you are 55 or over, speak to NHS Pensions before making a decision. In some cases you may be able to take pension benefits immediately on redundancy terms without the standard early retirement reduction.

MARS is not redundancy. It is a negotiated exit route and can affect future redundancy calculations because service already paid out under MARS is normally excluded later.

Voluntary redundancy and compulsory redundancy usually use the same basic formula under AfC England, although some trusts may offer enhancements locally.

If you have taken partial retirement, Paragraph 16.6 clawback can significantly reduce your reckonable service because service already used for pension benefits cannot be counted again for redundancy pay.

Regional Differences in NHS Redundancy

Common Mistakes to Avoid

• Using total service instead of reckonable service.
• Forgetting part-time adjustments to salary floors, caps, and the overall payment.
• Confusing statutory with contractual redundancy pay.
• Not accounting for previous redundancy, MARS, or partial retirement clawback.
• Ignoring the salary floor for lower-paid staff.
• Using outdated statutory weekly caps instead of the 2025/26 cap of £719.
• Forgetting tax on amounts above £30,000.
• Not checking for enhanced local trust terms.
• Assuming voluntary redundancy pays more than compulsory redundancy by default.

How to Use This Calculator

1. Enter your date of birth.
2. Enter your NHS employment start date and expected redundancy date.
3. Enter your contracted hours and annual FTE salary.
4. Select your redundancy type and pension status.
5. Review the side-by-side contractual and statutory results.
6. Check the tax estimate, warnings, and guidance notes before taking figures to HR.

Official Resources & Support

Frequently Asked Questions

Disclaimer

This calculator provides estimates only based on NHS Agenda for Change (England) terms and UK statutory redundancy rules. Actual payments may differ because of local trust policies, break-in-service interpretation, PILON, pension treatment, or other employer-specific factors.

Always verify figures with HR before making decisions. This tool is not financial or legal advice. For complex pension, tax, or dispute issues, use qualified professional advice.

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