exitagreementNHS redundancy pay calculator
NHS staff on Agenda for Change contracts are not made redundant on the statutory formula. Their redundancy pay comes from Section 16 of the NHS Terms and Conditions of Service Handbook — and Section 16 exists in two versions that give different answers.
England against Scotland, Wales and Northern Ireland
Start with the version that applies to you. The difference is in three rows — the floor, the ceiling and the cap — and all three exist only in England.
| England | Scotland, Wales and Northern Ireland | |
|---|---|---|
| In effect from | 1 April 2015 | 1 October 2006 |
| Minimum continuous service | 2 years | 104 weeks |
| Rate | One month’s pay per complete year of reckonable service | One month’s pay per complete year of reckonable service |
| Maximum years counted | 24 | 24 |
| Salary floor (full-time equivalent) | £23,000, pro-rated | None |
| Salary ceiling (full-time equivalent) | £80,000, pro-rated | None |
| Cash cap on the payment | £160,000 (pro-rata) | None |
| Month’s pay | The more beneficial of 4.35 × a week’s pay or &frac112; of salary | The more beneficial of 4.35 × a week’s pay or &frac112; of salary |
| Early retirement on redundancy | Lump sum used to buy out the pension reduction | Unreduced pension as an alternative to the lump sum |
| Mutually Agreed Resignation Scheme principles (Section 20) | Apply | England only — not these |
Source: NHS Terms and Conditions of Service Handbook, Amendment number 62, published 1 June 2026. Read 23 September 2026.
NHS redundancy pay calculator
Section 16, Agenda for Change. The result appears straight away — nothing is held back.
Which version applies? Section 16 has an England version and a Scotland, Wales and Northern Ireland version, and they give different answers for higher earners.
Only complete years count (Section 16.9). Hours are compared with a 37.5-hour full-time week.
Key points
- One month’s pay per complete year of reckonable service, up to 24 years, once you have two years’ continuous service.
- England only: salary floored at £23,000 and capped at £80,000 full-time equivalent, and the payment capped at £160,000.
- Your statutory redundancy pay is inside the NHS figure, not on top of it.
- An offer of another NHS job starting within 4 weeks can remove the entitlement altogether in England.
- MARS is not redundancy. It is a severance scheme, and the settlement agreement should say when the money has to be paid back.
How NHS redundancy pay is calculated
Three definitions do all the work, and the handbook states each of them precisely.
What counts as a month’s pay
“Month’s pay” means whichever is the more beneficial of the following calculations: 4.35 times a week’s pay, calculated in accordance with the provisions of Sections 221 to 224 of the Employment Rights Act 1996; an amount equal to 1/12th of the annual salary in payment at the date of termination of employment.Read the handbook
So it is a choice of two routes and you get whichever is higher. The calculator above estimates a week’s pay as annual salary divided by 52. For someone on variable pay, a week’s pay under the Employment Rights Act can differ from that, which is a reason to check the figure an employer gives you rather than a reason to distrust it.
One month per complete year, up to 24
The lump sum will be calculated on the basis of one month’s pay for each complete year of reckonable service, subject to a minimum of two years’ continuous service and a maximum of 24 years’ reckonable service being counted. For those earning less than £23,000 per year (full time equivalent), the redundancy payment will be calculated using notional full-time annual earnings of £23,000, pro-rated for employees working less than full time. For those earning over £80,000 per year (full time equivalent) the redundancy payment will be calculated using notional full-time annual earnings of £80,000, pro-rated for employees working less than full time. No redundancy payment will exceed £160,000 (pro-rata).Read the handbook
Fractions of a year are ignored (Section 16.9), so eleven years and eleven months is eleven.
The Scotland, Wales and Northern Ireland wording
The lump sum will be calculated on the basis of one month’s pay for each complete year of reckonable service, subject to a minimum of two years’ (104 weeks’) continuous service and a maximum of 24 years’ reckonable service being counted.Read the handbook
Put the two side by side and the floor, the ceiling and the cap are simply absent.
Worked examples in both versions
Generated from the same rules as the calculator, so the table and the tool cannot disagree.
| Example | FTE salary | Years counted | England | Scotland, Wales, NI |
|---|---|---|---|---|
| Full time, 6 years | £25,000 | 6 | £12,548 | £12,548 |
| Full time, 12 years | £33,000 | 12 | £33,127 | £33,127 |
| 0.6 FTE, 15 years | £41,000 | 15 | £30,868 | £30,868 |
| Full time, 20 years | £58,000 | 20 | £97,038 | £97,038 |
| Below the England floor, 10 years | £19,000 | 10 | £19,240 | £15,894 |
| Above the England ceiling, 30 years | £95,000 | 24 | £160,000 (capped) | £190,731 |
Illustrative round-number salaries, not Agenda for Change pay points. A week’s pay estimated as salary ÷ 52. Part-time figures are pro-rated as Section 16.8 requires.
Where the versions part company
Below £23,000 the England version is more generous, because it calculates on the notional floor. Between the floor and the ceiling, and below the cap, the two give the same answer. For very senior staff with long service the England ceiling and cap bite, and the difference runs to tens of thousands of pounds.
NHS redundancy pay and statutory redundancy pay
NHS contractual redundancy is an enhancement to an employee’s statutory redundancy entitlement, the statutory payment being offset against any contractual payment.Read the handbook
The statutory amount is inside it
Your statutory entitlement is worked out on its own formula — age bands and a week’s pay capped at £751 for 2026/27 — and then offset against the NHS figure. For almost everyone the NHS figure is larger, so the statutory payment disappears into it. How the statutory figure is calculated.
The definition of redundancy is the statutory one
Section 16.2 of the handbook defines redundancy in the same terms as section 139 of the Employment Rights Act 1996. If the work is still there and someone else is doing it, it may not be a redundancy at all. What that means for an offer.
When you do not get it
If, before the date of termination, an employee is offered suitable alternative employment with their own employer or with another NHS employer and that employment starts within 4 weeks of the termination date, they will not be entitled to a redundancy payment.Read the handbook
Suitable alternative employment
Both versions also exclude people who are dismissed for misconduct, who unreasonably refuse to accept or apply for suitable alternative employment with the same or another NHS employer, or who leave before their notice expires other than by agreed early release. Where alternative employment is accepted, the handbook applies the statutory trial period in section 138(3) of the Employment Rights Act 1996.
“Unreasonably” is doing the work
Whether a refusal was unreasonable is the question most NHS redundancy disputes turn on, and it is fact-specific: pay, hours, location, grade and personal circumstances all go into it. If you are being told an offer is suitable and you do not think it is, that is the point to take advice rather than after you have refused.
Being made redundant from an NHS post?
Send your postcode and the deadline you have been given. Firms advertising for your area can check the figure and the alternative-employment question.
Voluntary redundancy and MARS
Mutually Agreed Resignation (MAR) is a scheme under which an individual employee, in agreement with their employer, chooses to leave employment in return for a severance payment. MAR is not a redundancy or a voluntary redundancy … Severance payments should not be made where the circumstances entitle an employee to a contractual redundancy payment or redundancy benefits under the NHS Pension Scheme Regulations.Read the handbook
MARS is a resignation, legally
The handbook is explicit that a Mutually Agreed Resignation is not a redundancy. That matters: it changes what you are giving up, and a MARS payment should not be made where the circumstances would entitle you to a contractual redundancy payment. The Section 20 principles apply in England only, and they guide local schemes rather than setting a national payment.
The repayment clause
An employee, who secures another job within the NHS within a short period of time, may be required to repay a proportion of their compensation to the employer that made the payment. If the job is at a lower salary then the repayment would be reduced accordingly. The settlement agreement should specify the requirements for repayment in such circumstances.Read the handbook
This is the clause to read twice. The handbook expects the repayment terms to be in the settlement agreement, which makes that document the place where the practical terms of a MARS live. What else a settlement agreement contains · who pays for the advice on it.
Early retirement on redundancy
If you are a member of the NHS Pension Scheme and meet the conditions, redundancy can open an early pension — but the two versions do it differently.
England
The redundancy lump sum is used to buy out as much of the early-payment reduction to your pension as it will cover. If it covers more than the reduction, the balance is paid to you.
Scotland, Wales and Northern Ireland
The scheme provides an unreduced pension as an alternative to receiving the full lump sum.
Either way this is a pensions decision with long consequences, and the handbook itself notes the minimum pension age rules that decide whether it is open to you at all.
Tax on NHS redundancy pay
Statutory redundancy pay counts towards the £30,000 threshold in section 403 of the Income Tax (Earnings and Pensions) Act 2003. How the contractual enhancement above the statutory amount is treated depends on HMRC practice we have not read from a primary source, so we do not state it. Notice pay, if any is paid in lieu, is earnings and taxed in full. How a leaving payment is taxed · payment in lieu of notice.
Common questions
How is NHS redundancy pay calculated?
Under Section 16 of the NHS Terms and Conditions of Service Handbook: one month's pay for each complete year of reckonable service, with a minimum of two years' continuous service and a maximum of 24 years counted. A month's pay is the more beneficial of 4.35 times a week's pay or one twelfth of annual salary. In England the salary used is floored at £23,000 and capped at £80,000 full-time equivalent, and the payment cannot exceed £160,000 pro-rata.
Is NHS redundancy pay different in Scotland and Wales?
Yes. The Scotland, Wales and Northern Ireland version of Section 16, in effect from 1 October 2006, uses the same one-month-per-year rate and the same 24-year maximum, but has no salary floor, no salary ceiling and no cash cap. For higher earners with long service that difference is substantial.
Do I get statutory redundancy pay on top of NHS redundancy pay?
No. Section 16.1 says NHS contractual redundancy is an enhancement to the statutory entitlement, with the statutory payment offset against the contractual one. The statutory amount is inside the NHS figure, not added to it.
What if I am offered another NHS job?
In England, Section 16.16 says that if, before the termination date, you are offered suitable alternative employment with your own or another NHS employer starting within 4 weeks of the termination date, you are not entitled to a redundancy payment. Both versions also exclude people who unreasonably refuse suitable alternative employment.
What is MARS in the NHS?
A Mutually Agreed Resignation Scheme. Section 20 of the handbook describes it as a scheme under which an employee, in agreement with the employer, leaves in return for a severance payment, and says it is not a redundancy or a voluntary redundancy. The Section 20 principles apply in England only and are guidance for local schemes rather than a national payment formula.
Does a MARS payment need a settlement agreement?
Section 20.17 assumes one: it says an employee who quickly secures another NHS job may have to repay part of the compensation, and that the settlement agreement should specify the requirements for repayment. That clause is worth reading closely before you sign.
Can I use my NHS redundancy payment to retire early?
If you meet the pension conditions, yes, but the mechanism differs. In England the lump sum is used to buy out as much of the early-payment reduction as it will cover. In Scotland, Wales and Northern Ireland the scheme provides an unreduced pension as an alternative to the lump sum.
Is NHS redundancy pay taxable?
Statutory redundancy pay counts towards the £30,000 threshold. How the contractual enhancement above it is treated depends on HMRC practice that we have not verified from a primary source, so we do not state it here. It is a question worth putting to the adviser who reviews your agreement.
Sources cited on this page
- NHS Employers — NHS Terms and Conditions of Service Handbook, Section 16 (England) and Section 16 (Scotland, Wales and Northern Ireland), Amendment number 62, published 1 June 2026
- NHS Employers — NHS Terms and Conditions of Service Handbook, Section 20 (MARS)
- Employment Rights Act 1996, s.139 — meaning of redundancy
- Employment Rights Act 1996, s.162 — statutory redundancy payment
- GOV.UK — Redundancy pay
- Employment Rights Act 1996, s.203 — conditions for a valid settlement agreement
Every figure above was read from the source it is attributed to on 19 September 2026. How we check this.
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