NHS Redundancy Calculator

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How to Use This NHS Redundancy Pay Calculator

Enter your details below and the calculator works out both your NHS AfC contractual entitlement and your statutory redundancy pay side by side. Here is what each field means.

How to Read Your Results

The nhs redundancy calculator shows your NHS AfC payment and your statutory pay side by side. You receive whichever is higher — for AfC staff this is almost always the NHS figure. The tax-free amount shows the portion within the £30,000 threshold. The net take-home estimate applies basic-rate tax at 20% to any excess above £30,000. If you are a higher-rate taxpayer the tax on the excess will be 40% — treat the net figure as a conservative guide and discuss with your payroll team or an independent financial adviser.

What Is NHS Redundancy Pay?

NHS redundancy pay is the financial payment you receive when your employer formally ends your employment because your role is no longer required. It is not a resignation payment, a disciplinary payment, or a pension. It is a specific legal and contractual entitlement that compensates you for losing your job through no fault of your own.

For NHS staff on Agenda for Change contracts in England, redundancy pay is governed by Section 16 of the NHS Terms and Conditions of Service Handbook. These terms are significantly more generous than the statutory minimum that applies to most private sector workers in the UK. While statutory redundancy pay uses an age-weighted formula with a weekly pay cap of £751 from April 2026, NHS AfC redundancy uses your actual monthly salary with no cap and counts up to 24 years of service. The result is typically three to five times larger than the statutory equivalent for the same salary and service length.

The term redundancy pay calculator is often used interchangeably with statutory redundancy calculator in general searches, but for NHS staff on AfC these are very different things. The statutory figure on this page is shown purely for comparison. Your real entitlement as an AfC employee is almost always the NHS contractual figure.

Who Qualifies for NHS Redundancy Pay?

Not every NHS employee who leaves their role receives redundancy pay. Several conditions must all be met before any entitlement arises.

Your departure must be a genuine redundancy — your post is no longer required due to organisational restructuring, a service change, budget cuts, or facility closure. Dismissal for performance or conduct reasons, or voluntary resignation, does not qualify.

You must not have unreasonably refused a suitable alternative role offered by your employer during redeployment. You are entitled to a four-week trial period in any new role before committing. If you decline a genuinely suitable offer without good reason, your redundancy pay entitlement may be lost.

Minimum Service Requirement

You need at least two complete years of continuous NHS service immediately before your redundancy date to qualify for any payment — NHS contractual or statutory. This threshold is absolute. If you are approaching the two-year mark and your employer is rushing the process, contact your union immediately. The date your redundancy takes effect matters.

Fixed-Term and Bank Staff

Fixed-term contract staff can qualify if the non-renewal of their contract is genuinely because the role is no longer required. If the contract was always intended to be temporary and simply runs its course, that is not automatically redundancy. The contract wording and the reason given for non-renewal are both critical.

Bank staff working through an NHS staff bank rather than a substantive post sit in a more complicated position. Many bank-only workers will not meet the continuous service eligibility criteria. If you hold a substantive contract alongside bank work, it is the substantive contract that counts. Always check with your union if you are uncertain about your employment status.

How NHS Redundancy Pay Is Calculated

The Section 16 Formula

NHS AfC redundancy pay equals one month’s pay multiplied by the number of complete years of reckonable service, up to a maximum of 24 years. There is no age weighting and no weekly pay cap.

Monthly pay is defined as the higher of: one-twelfth of your annual basic salary at the date of termination, or 4.35 times your actual weekly pay. For most AfC staff these produce the same result.

Your salary is subject to a floor of £23,000 FTE and a ceiling of £80,000 FTE. The total payment is capped at £160,000, pro-rated for part-time workers.

Continuous Service vs Reckonable Service

This distinction is one of the most important and most misunderstood aspects of NHS redundancy, and mixing the two up can lead you to significantly overestimate what you receive.

Periods excluded from reckonable service include: service already counted in a prior NHS redundancy or loss of office payment (paragraph 16.6 of the TCS Handbook); service covered by a previous MARS payment (paragraph 20.18); any period for which you have already drawn NHS pension benefits through partial retirement; and breaks in NHS service exceeding 12 months.

Always ask your HR department to confirm your reckonable service figure in writing before any calculation is agreed. ESR systems carry inaccurate service start dates more often than most people realise. Even a single day’s discrepancy can cost you a full month’s salary if it pushes you below a complete year boundary.

Part-Time and Pro-Rata Calculations

Part-time staff are fully entitled to NHS redundancy pay. The salary floor (£23,000) and ceiling (£80,000) are applied to your full-time equivalent salary first, then the monthly pay figure is pro-rated by your FTE fraction (your contracted hours ÷ 37.5).

Statutory amounts depend on age. Weekly pay is capped at £751 from April 2026. Maximum 20 years counted. NHS figures use actual salary — no weekly cap.

NHS Redundancy Pay vs Statutory Redundancy Pay

If you are on an AfC contract in England you will almost always receive the NHS contractual payment because it is more generous. The statutory figure is shown in this redundancy pay calculator purely so you can verify your employer is using the right scheme.

Is NHS Redundancy Pay Taxable?

The £30,000 Tax-Free Threshold

The first £30,000 of any genuine redundancy payment is completely free of both income tax and National Insurance contributions. This applies automatically — you do not need to claim it or complete any special form. Your NHS trust payroll deducts the appropriate tax before paying you.

The threshold applies to the total termination payment, not to each element separately. Any amount above £30,000 is taxed through PAYE at your marginal income tax rate but is not subject to National Insurance — a point many people miss. If the excess pushes you into the higher rate band for that tax year, 40% applies to the portion above the higher rate threshold.

Payment in Lieu of Notice

PILON is taxed in full as earnings and does not benefit from the £30,000 tax-free threshold regardless of how the settlement is structured. If your package includes both redundancy pay and PILON, ensure you understand clearly which element is which and how each is being taxed. This is one of the most common sources of surprise in the final payment for NHS staff.

Accrued Annual Leave Payout

Untaken annual leave at the point of redundancy must be paid out and is treated as earnings — fully subject to income tax and National Insurance. If you have the option of taking your remaining leave before your redundancy date rather than receiving it as a cash payout, that may result in a better tax position depending on your circumstances and the timing within the tax year.

Voluntary vs Compulsory Redundancy in the NHS

During restructuring many NHS trusts and ICBs offer staff the option of volunteering for redundancy before moving to a compulsory selection process. Under standard AfC national terms, the payment formula is identical for both — one month’s pay per year of reckonable service, same floor and ceiling, same maximum. Volunteering does not earn you a larger payment under national terms.

Where voluntary redundancy can differ is in locally negotiated enhancements. Some trusts offer additional incentives — a contribution toward outplacement support, or a modest top-up — to encourage volunteers. These are trust-specific and not universal. Always confirm in writing what is on offer locally before making your decision.

One practical advantage of voluntary redundancy is control over timing. If you are close to a significant service milestone — 15 or 20 complete years for example — even a short delay to your leaving date can add a full month’s salary to your payment. In compulsory redundancy the timing is largely outside your control.

MARS — Mutually Agreed Resignation Scheme

MARS is a formal exit route that some NHS organisations offer during restructuring programmes. It allows staff to leave by mutual agreement with a financial package calculated on the same basis as redundancy pay. MARS is voluntary — you apply and your employer decides whether to approve based on organisational need.

The critical legal distinction is that under MARS you resign rather than being dismissed. This matters significantly:

• A prior MARS payment is offset against any future NHS redundancy entitlement under paragraph 20.18 of the TCS Handbook. Service covered by the MARS payment is excluded from your reckonable service figure.
• Early pension access without reduction is not automatically available under MARS — unlike compulsory redundancy for over-55s.
• You give up certain employment law protections that apply in genuine redundancy situations.

MARS can still be an excellent option if you are already planning to leave NHS employment and the payment terms are favourable. Always take independent legal advice before accepting a MARS offer. Under AfC terms your employer must contribute toward the reasonable cost of that advice.

Suitable Alternative Employment and Your Right to Refuse

Before making you compulsorily redundant, your employer must consider whether any suitable alternative employment exists within their organisation. If a suitable role is available you will normally be expected to accept it, with a four-week trial period to test suitability.

Suitability is assessed against your skills, experience, status, pay, and location. A role involving a significant drop in grade, a substantial change in location, or fundamentally different work may reasonably be declined. If you unreasonably refuse a genuinely suitable role, you may lose your redundancy entitlement. Document your reasons clearly and discuss with your union before declining any offer.

NHS Redundancy and Your Pension

Your NHS pension and your redundancy payment are completely separate entitlements, but the interaction between them — particularly around the age at which you are made redundant — can significantly affect your overall financial position.

Pension Strain Cost

Pension strain cost is a little-known but potentially very valuable element of NHS redundancy packages. In some restructuring programmes, particularly for Band 7 and above, an employer may offer to pay a lump sum directly to the NHS Pension Scheme to remove or reduce the early retirement reduction that would otherwise apply to a pension accessed before Normal Pension Age. This payment is made by your employer to NHS BSA — it is separate from your redundancy pay and does not count against your £30,000 tax-free threshold.

The pension strain cost can add tens of thousands of pounds to your lifetime pension income. It is not automatic and you would need to ask specifically whether it is available in your situation. If it is on offer, it should factor significantly into your decision. Always request a pension projection from NHS BSA before agreeing to any leaving date.

NHS Redundancy Clawback and Notice Period

The Recoupment Period Explained

If you receive NHS redundancy pay and subsequently return to work for any NHS organisation, your new employer may be required to recoup some or all of your redundancy payment. This clawback provision prevents the NHS from paying redundancy to staff who then return to the NHS workforce shortly afterwards.

The standard rule: one month of your redundancy payment is recouped for each month of NHS service you resume within the recoupment period. The recoupment period itself equals the number of months of redundancy pay you received. So if you received 15 months of redundancy pay, any NHS employment resumed within the following 15 months could trigger repayment up to the full amount.

The 2025 NHS England Policy Update

In late 2025, NHS England adjusted its clawback policy for staff affected by the NHS England and ICB restructuring programme. Staff who leave under the voluntary redundancy scheme and subsequently take a role in the wider government sector outside of health — a government department, arm’s length body, or non-NHS public body — are no longer required to repay their redundancy money under the updated policy.

This is a meaningful change for the significant number of NHS England and ICB staff considering their options in 2026. However, it does not apply to returning to any NHS organisation. The standard clawback period still applies in full if you re-join any NHS trust, ICB, NHS England, or other NHS body. If you are weighing up roles in the wider public sector post-redundancy, this change is directly relevant to your decision.

Notice Period

Your AfC contract specifies a minimum notice period, typically between four and twelve weeks depending on your band and length of service. You are entitled to work your full notice period and receive your normal pay throughout. Your employer may alternatively offer payment in lieu of notice to bring your employment to an earlier end. As noted above, any PILON is taxable in full — it does not benefit from the £30,000 redundancy tax exemption.

NHS Redundancy in Scotland, Wales and Northern Ireland

Agenda for Change covers NHS staff across all four nations of the UK, but the redundancy terms are not identical everywhere. If you work outside England, the NHS AfC figures from this redundancy pay calculator should be treated as a guide only — verify your specific entitlement with your employer or union.

The statutory redundancy calculation shown by this calculator applies across all four nations as the legal minimum, since statutory redundancy pay is governed by UK-wide employment law.

Worked Examples by Band and Service Length

The following examples show how the redundancy pay calculator UK figures work in practice across different bands, working patterns, and service lengths. All figures use 2026/27 AfC pay scales and assume England AfC terms.

All figures are estimates using 2026/27 AfC pay scales for England. Tax estimates apply basic rate (20%) to the full excess above £30,000 — higher-rate taxpayers will pay more. Statutory figures use age 35/40/52 respectively with the £751 weekly cap. Confirm your exact figures with NHS HR or your union.

Common Mistakes That Cost NHS Staff Thousands

These are the errors that NHS HR departments and union reps see most often — each one can significantly reduce what you receive or produce an unexpected tax bill.

Not verifying your service start date. ESR systems carry inaccurate service start dates more often than most people realise. A start date even a few months later than your actual first NHS day can cost you a full month’s salary if it pushes you below a complete year boundary. Request written confirmation of both your continuous service date and your reckonable service figure before any calculation is agreed.

Confusing reckonable service with continuous service. Your reckonable service can be substantially lower than your total NHS years if you have had breaks, taken partial retirement, or previously received redundancy or MARS payments. Always ask HR to confirm the reckonable service figure in writing.

Assuming voluntary redundancy pays more than compulsory. Under standard AfC national terms the formula is identical. Local enhancements for voluntary redundancy exist at some trusts but are not universal — do not assume they are on offer until confirmed in writing.

Not accounting for tax on amounts above £30,000. The gross redundancy figure is not what lands in your account. If your payment exceeds £30,000, the excess is taxed through PAYE. For higher-rate taxpayers the bill can be substantial. Factor this into financial planning before your leaving date.

Signing a settlement agreement without independent legal advice. If your redundancy is processed as part of a broader settlement agreement, always take independent legal advice before signing. Under AfC terms your employer must contribute toward the reasonable cost of that advice. Never sign without fully understanding what rights you may be waiving.

Returning to NHS employment too quickly. Joining a new NHS organisation within the recoupment period without accounting for clawback can result in a requirement to repay some or all of your redundancy payment. Understand the recoupment terms before accepting any new NHS role.

Resigning during a redundancy consultation. Resigning during a live redundancy consultation process generally removes your right to any redundancy payment, even if you were about to be made compulsorily redundant. Do not resign unless you are absolutely certain it will not affect your entitlement.

What to Do If You Are Facing NHS Redundancy in 2026

The period between being told your role is at risk and your leaving date is often rushed and stressful. These practical steps make the most difference.

Frequently Asked Questions