NHS Redundancy Pay Calculator

You need a minimum of 2 years' continuous NHS service with one or more NHS employers to qualify for the Section 16 contractual redundancy payment at all — this isn't about notice, it's a qualifying-service threshold. If you have less than 2 years, you generally won't be entitled to the contractual payment, though it's always worth checking with your trust's HR team, especially if you've worked for more than one NHS employer, since earlier NHS service elsewhere usually counts towards your total.

The Section 16 formula caps the payment at 24 months' pay, however many years of continuous NHS service you actually have beyond that point. So someone with 30 years' service is capped at the same 24-month maximum as someone with exactly 24 years — extra years beyond the cap don't add anything further to the contractual lump sum.

Section 16 uses your full-time equivalent (FTE) annual salary for the redundancy calculation, but applies a floor of £23,000 and a cap of £80,000 to that salary figure specifically for this calculation — it isn't a statement about your real take-home pay. If your actual FTE salary is below £23,000, the calculation uses £23,000 instead; if it's above £80,000, the calculation uses £80,000 instead.

Section 16 defines "a month's pay" as whichever is larger of two ways of calculating it: 1/12th of your (floored/capped) FTE annual salary, or 4.35 × a week's pay derived from the same salary. For most people these come out very close to each other, but the calculator always works out both and uses the larger figure, so you get the maximum you're entitled to under the formula rather than whichever happens to be quoted first.

The first £30,000 of a genuine redundancy payment is free of Income Tax — this is a general UK tax rule that applies across all sectors, not something NHS-specific. Any amount above £30,000 is taxable as income. National Insurance is not charged on redundancy pay under current rules, even on the amount above the tax-free threshold — only Income Tax applies to the excess.

The calculation starts from your full-time equivalent (FTE) salary — what you'd earn if you worked full time — and then pro-rates the final lump sum by your actual contracted hours as a fraction of full time (37.5 hours). This is the same standard pro-rata approach used across FrontlinePay's other calculators. Enter your true FTE salary, not your actual part-time salary, and your contracted weekly hours, and the calculator handles the pro-rating for you.

A part-way year is disregarded entirely for the purposes of this calculation. If you have, for example, 9 years and 7 months of continuous NHS service, the calculator (and Section 16 itself) treats this as 9 complete years — the extra 7 months don't add a further partial month's pay on top. This is one of the more commonly misunderstood parts of the formula.

Not necessarily. This calculator models the standard Section 16 contractual redundancy formula, which is what most compulsory redundancy payments are based on. A local Voluntary Redundancy scheme can sometimes offer enhanced terms above the standard Section 16 entitlement, or different eligibility conditions, and a Mutually Agreed Resignation Scheme (MARS) is a genuinely different arrangement with its own separate rules, often used alongside pension considerations. If you're being offered VR or MARS specifically, ask HR for the scheme document rather than assuming it mirrors this calculator's standard Section 16 figure.

The redundancy lump sum itself isn't pensionable — you don't pay NHS Pension contributions on it, and it doesn't count towards your pensionable pay. In some circumstances, redundancy can trigger early access to pension benefits, potentially unreduced, but whether that applies to you depends on your pension section (1995, 2008 or 2015 Scheme), your age, and the specific circumstances at the time — this calculator does not assess pension eligibility. See our NHS Pension Scheme (2015) guide for the underlying mechanics, and speak to NHS Pensions directly if retirement timing is a live question for you.

This calculator uses the Section 16 contractual redundancy formula as described by NHS Employers (nhsemployers.org/articles/nhs-redundancy-arrangements), corroborated against the BMA and other NHS pay sources, with figures correct as of September 2026. Redundancy terms are set through national negotiation between NHS Employers, the Department of Health and Social Care and trade unions, and can be revisited — always confirm your exact entitlement with your trust's HR team or the current NHS Terms and Conditions of Service Handbook before relying on a specific figure for a real decision.