NHS Redundancy Pay Calculator

NHS redundancy pay by years of service: worked examples

A full-time £34,592 salary, a worker aged 45, at four lengths of service. The statutory column is the part of the NHS payment that statute already requires, so the NHS enhancement is the difference.

25 years gives the same figure as 24, because service over 24 years stops counting. At the top end, a full-time employee on £95,000 with 26 years has their salary capped at £80,000, which gives £160,000, the £160,000 maximum.

NHS redundancy pay vs statutory redundancy pay

Statutory redundancy pay is the legal minimum. You need two years' service, and you get half a week's pay for each full year you were under 22, one week for each year aged 22 to 40, and one and a half weeks for each year aged 41 or over, counting back from your last day, for a maximum of 20 years. Weekly pay is capped at £751 from 6 April 2026, so the most anyone can receive is £22,530 (gov.uk). Section 16 improves on that, and says the statutory payment is offset against the contractual one, so you receive the NHS figure in total. The calculator shows the year-by-year statutory working so you can see exactly what is statutory.

The £23,000 floor, £80,000 cap and "more favourable" month's pay

Three mechanics surprise people. First, in England the salary used is lifted to £23,000 if you earn less full time: a £21,000 salary with 10 years gives £19,188, calculated on £23,000. Second, "a month's pay" is the better of 4.35 x a week's pay or 1/12 of annual salary, and the calculator takes whichever is larger. Third, part-time staff are calculated on full-time earnings first and then pro-rated at the end: on £34,592 and 10 years, full time gives £28,858 and 22.5 hours a week (60%) gives £17,315. Only complete years count, so 9 years and 7 months is 9 years.

Is NHS redundancy pay taxable?

The first £30,000 of a genuine redundancy payment is free of Income Tax, and the rest is taxed as income in the tax year you are paid. No employee National Insurance is due. Pay in lieu of notice and holiday pay are taxed as ordinary earnings, and the £30,000 limit does not cover them, so a payment that looks under the limit can still produce a tax bill once everything is added up. The calculator estimates the tax on the taxable part by stacking it on your other income. If your income next year will be lower, the Pro tax-year comparison shows what a payment after 5 April would cost, and payroll will tell you when payment is due.

Redundancy notice period in the NHS

The statutory minimum is one week for each year of service up to 12 weeks, and one week for service of one month to two years (gov.uk). The NHS handbook does not set longer notice periods nationally: it leaves notice above the statutory minimum to local agreement, so your contract or local policy decides. Notice is paid as ordinary pay. If you find another job while serving notice, Section 16 says your employer will release you early on request unless there are compelling reasons not to, and that date becomes your redundancy date for the calculation.

Can I take my NHS pension early on redundancy?

Section 16 lets you retire early on grounds of redundancy if you are an active Scheme member, have two years' qualifying membership and have reached minimum pension age (55, or 50 if protected). Early payment normally reduces your pension, and the redundancy lump sum can be used to buy out some or all of that reduction. If the lump sum is more than the cost, you receive the difference. If it is less, your pension is reduced by the balance, and you can pay more from your own money before the pension starts. You can instead keep the lump sum and preserve your pension, or draw it reduced. The cost is set by the scheme actuary, so ask HR for a written quote before you decide. See NHS redundancy and your pension.

Voluntary redundancy vs a Mutually Agreed Resignation Scheme (MARS)

Voluntary redundancy is still a redundancy: Section 16 applies, though a local scheme can offer more. MARS is different. Section 20 of the handbook says MARS is not a redundancy or a voluntary redundancy, it is a voluntary resignation by mutual agreement with a severance payment, and severance payments are not to be made where you are entitled to a contractual redundancy payment. Whether a scheme is open, who can apply, and the payment scale are decided locally and need approval, your employer need not accept an application, and you may have to repay if you are re-employed in the NHS soon after. Because it is a resignation, check the effect on your pension, welfare benefits and any mortgage protection, and get advice and a settlement agreement checked. The calculator does not model MARS, so do not use its figure for one. See voluntary vs compulsory redundancy.

Alternative jobs: when you can lose your redundancy pay

Your employer must look for suitable alternative employment in the NHS before making you redundant. You are not entitled to the payment if a suitable job is offered in writing before your contract ends and starts within four weeks of the termination date, or if you unreasonably refuse or fail to apply for one. If you accept a role you have a four-week trial period. Suitability is about the job (similarity, terms, skills, pay, status, hours and location) and reasonableness is about you, so a job can be suitable and still reasonable to refuse. Our Suitable Alternative Employment Decision Tool compares an offer with your job, works through the factors and checks the dates, and the guide Suitable Alternative Employment Explained covers the law.

Dates and deadlines

Claims for the NHS payment must be made within six months of the termination date, and you certify that you have not unreasonably refused suitable work. If 20 or more redundancies are proposed at one establishment, collective consultation must start at least 30 days before dismissals (20 to 99) or 45 days (100 or more). There is no fixed legal length for individual consultation. The calculator's timeline turns your notice letter into your last day, the four-week window and the claim date. See consultation process and timelines and facing compulsory redundancy.

Scotland, Wales and Northern Ireland

This calculator follows the England handbook. In Scotland, Wales and Northern Ireland Section 16 uses a 104-week qualifying period, does not state the £23,000 floor, £80,000 cap or £160,000 maximum, and early retirement on redundancy is on different terms. Ask your health board or trust for its figure and use this calculator for a rough guide only.

What the calculator does not cover

• Enhanced local voluntary redundancy terms and MARS payments.
• The exact cost of buying out an early-retirement reduction, which needs a quote from NHS Pensions.
• Pay in lieu of notice and holiday pay, which are taxed as earnings.
• Student loans, Scottish tax and reliefs in the tax estimate.
• Bank staff, who are not covered by the handbook's contractual redundancy terms.