NHS Redundancy Pay Calculator: Estimate Your Payout

Last updated: 28 September 2026 · Figures verified against the NHS Employers 2026/27 pay circular.

By the NHS Bands Pay editorial team

The calculator

How the Section 16 formula works

Contractual redundancy pay for Agenda for Change staff is set out in Section 16 of the NHS terms and conditions. The formula is deliberately simple — a flat rate with no age weighting (age-related thresholds were removed in 2006 to comply with age discrimination law):

Redundancy pay = (one month's pay) × (complete years of reckonable service)

• Minimum service: 2 years' continuous NHS service. Below that, there is no contractual entitlement (though statutory rights may still apply — see below).
• Complete years only. Ten years and eleven months counts as ten years.
• Maximum: 24 months' pay. Twenty-four or more complete years gives the same payment as exactly twenty-four.
• No salary floor or ceiling applied here: some secondary sources cite a £23,000 floor and an £80,000 ceiling on the FTE salary used, but these figures do not appear in the published Section 16 terms we were able to verify, so this calculator applies neither. Your trust's payroll will confirm which salary definition applies to you.

This contractual payment is far more generous than the statutory minimum redundancy pay (based on age, weekly pay capped at a statutory weekly limit, and up to 20 years' service). The NHS contractual terms replace — not add to — the statutory entitlement: you receive whichever calculation applies under your contract, not both.

Worked examples by band

Using 2026/27 England rates, assuming full-time service:

The Band 8d row shows the uncapped figure: £108,814 ÷ 12 × 20 = £181,357. Some secondary sources cite an £80,000 ceiling on the salary used — which would reduce that row to £133,333 — but the ceiling is not confirmed in the published Section 16 terms, so it is not applied here. Staff with long service hit the 24-month cap instead — the Band 7 example's 30 years of service pays the same as 24.

What counts as "a month's pay"

A month's pay is normally one-twelfth of your annual contractual salary at the date of redundancy — including London weighting (HCAS) and any other contractual consolidated payments, but not overtime or other non-contractual extras. For part-time staff it is one-twelfth of the actual pro-rata salary, which is why part-time service produces a proportionally smaller payment for the same years of service. If your salary changed recently (for example after the annual pay award or a promotion), the calculation uses the salary at the redundancy date.

The redundancy process: your rights

The payment is only one part of redundancy. The law and the AfC framework give you process rights that matter as much as the money:

• Genuine consultation. Your employer must consult with you — and, where 20 or more redundancies are proposed within 90 days, collectively with employee representatives — about ways to avoid redundancies, reduce numbers, and mitigate the consequences.
• Suitable alternative employment. The trust must consider and offer any suitable alternative roles. If you unreasonably refuse a suitable alternative, you can lose the redundancy payment. Staff on maternity leave get first refusal of suitable alternative vacancies.
• Notice. You are entitled to your contractual or statutory notice period (whichever is longer). Crucially, if you leave before your notice expires without an agreed earlier release date, you forfeit the redundancy payment — a point that has been tested in employment tribunals.
• Time off to look for work. Employees with 2+ years' service are entitled to reasonable time off during notice to look for new work or arrange training.
• Trial periods. If you accept an alternative role, you are entitled to a four-week trial period.

If you believe your selection was unfair or the process was flawed, speak to your union representative immediately — tribunal time limits are short. Our full redundancy pay explainer covers the detail.

The early-retirement option

Staff who are over the minimum pension age and members of the NHS pension scheme can choose early retirement with no actuarial reduction to their pension instead of the redundancy payment. The employer meets the cost of paying the pension unreduced. This can be worth significantly more than the lump-sum redundancy payment for long-serving staff near retirement — but it is irrevocable, so take independent financial advice before choosing. Younger staff, and those not in the pension scheme, receive the standard one-month-per-year payment.

Tax on redundancy payments

Under UK tax rules, the first £30,000 of a genuine redundancy payment is generally free of income tax (and no National Insurance is due on it). Any amount above £30,000 is taxed as employment income. This is general information, not tax advice — the exact treatment depends on how the payment is structured (for example, payments in lieu of notice are taxed differently), so confirm with payroll or a qualified adviser. The payment also does not affect your NHS pension already accrued, though leaving the scheme ends future accrual.

Staff in Scotland and Wales are covered by the same Section 16 framework (Scotland via its own circulars). If redundancy follows a restructure rather than a role disappearing, also read how starting salaries work — it explains how prior service is recognised if you are reappointed.