How is NHS redundancy pay calculated?

NHS contractual redundancy pay under Section 16 of the Agenda for Change handbook is one month's pay per year of reckonable service, capped at 24 months. The cap on weekly pay used in the calculation is higher than the statutory £700 figure, currently around £700 weekly cap mirrored or higher per the latest handbook revision; check the current handbook for the exact figure. For most NHS staff this is several multiples of the statutory minimum.

Do I get statutory redundancy pay as well?

No. The NHS contractual scheme is not additional to the statutory minimum; it replaces it. The formula is designed to be more generous than statutory, so staff with two years of service or more are always better off under the contractual scheme. Staff with less than two years of service do not qualify for either statutory or contractual redundancy pay in most cases.

What is NHS redeployment?

Before a redundancy becomes effective, the trust must attempt to find a suitable alternative role within the trust (and sometimes across the wider NHS) for the affected employee. This is the redeployment process. Suitable alternatives include similar bands, similar duties and reasonable commute. If a suitable role is offered and refused without good reason, the redundancy pay can be withheld.

Can I appeal an NHS redundancy?

Yes. NHS trusts have a formal appeals process for redundancy decisions, usually through HR to a senior manager not involved in the original decision. The appeal can challenge the redundancy decision itself, the selection process, or the calculation of the redundancy pay. Union representation at appeal is strongly recommended. If the internal appeal fails, ACAS early conciliation is the route to tribunal.

NHS Redundancy Rights (UK 2026): Pay, Redeployment, Appeals

The NHS redundancy formula

The standard NHS contractual redundancy formula is one month’s pay per reckonable year of service, capped at 24 months. This is set out in Section 16 of the Agenda for Change handbook and applies to most NHS staff covered by AfC.

Two elements are important. The number of years is the reckonable service: continuous employment within the NHS, which can span multiple trusts and (subject to the 12-month rule) periods out of the NHS. The month’s pay is the contractual gross monthly salary at the date the redundancy notice is issued.

A worked example: an NHS Band 7 nurse with 15 years of reckonable service and a monthly gross salary of £3,500 would receive £3,500 × 15 = £52,500 in contractual redundancy pay. The 24-month cap does not bite at this length of service.

For staff with very long service (over 24 years), the cap kicks in. A consultant with 30 years of service and a monthly gross of £8,500 would receive £8,500 × 24 = £204,000, not £8,500 × 30 = £255,000.

How NHS redundancy compares to statutory

The UK statutory minimum (set by sections 119-122 of the Employment Rights Act 1996) uses a different formula: years of service multiplied by a weekly pay cap (currently £700) and an age-based multiplier. The statutory cap on years counted is 20, and the maximum weekly pay used in the calculation is £700.

For the same Band 7 nurse, statutory redundancy at age 45 with 15 years of service would be roughly £15,000 to £18,000. The NHS contractual scheme pays £52,500. The difference is the NHS-specific benefit.

The NHS contractual scheme replaces the statutory minimum, it does not add to it. Staff cannot claim both.

The redundancy process

A standard NHS redundancy follows this sequence:

Business case and proposal. The trust identifies the role(s) potentially at risk and publishes a written proposal explaining the business rationale.
Consultation. Formal consultation with the affected staff and their union representatives for at least the statutory minimum period: 30 days for 20-99 redundancies, 45 days for 100+.
Selection. Where pools are involved, a fair selection process against published criteria.
Redeployment search. Trust HR works to identify suitable alternative roles for the affected staff within the trust, sometimes wider.
Notice of redundancy. If no suitable alternative is found and consultation concludes, formal notice is issued. The notice period is the contractual notice for that role.
Appeal window. Staff can appeal the decision through the trust’s internal appeal process.
Termination and payment. The role ends on the notice end date. Redundancy pay is calculated and paid in the final payslip.

Redeployment in detail

The redeployment process is one of the most important NHS-specific protections. Trusts must make genuine efforts to find suitable alternative employment within the trust before completing a redundancy. “Suitable” means similar in band, duties and location, with reasonable adjustments where needed.

The trust’s redeployment register lists vacancies that are flagged for at-risk staff to be considered for first. Internal candidates are usually given priority over external recruitment for flagged roles. The redeployment period typically runs from the start of formal consultation until the notice end date.

If a suitable alternative is offered and unreasonably refused, the contractual redundancy pay can be withheld. The reasonableness test looks at the comparability of the role, the location, the band and any personal circumstances (caring responsibilities, disability).

Consultation requirements

UK law requires collective consultation when 20 or more redundancies are proposed at one establishment within 90 days. The minimum periods are 30 days for 20 to 99 redundancies and 45 days for 100 or more. NHS consultations typically run longer than the minimum because of the complexity of clinical service planning.

Consultation must be genuine: the trust must consider proposals from staff and unions, explain the rationale for decisions, and provide enough information for meaningful input. The trust cannot start issuing notices before the formal consultation period ends.

Individual consultation is also required: each affected employee should have one-to- one meetings with management and HR to discuss their specific position, alternative roles, and any concerns.

Appeals

NHS trusts have a formal redundancy appeals process. The standard route is a written appeal to a senior manager not involved in the original decision, followed by an internal hearing. Union representation at appeal is the norm and is strongly recommended.

Appeal grounds typically include: unfair selection (the criteria were not applied consistently or were discriminatory), failure to consult properly, failure to search for alternative employment, and errors in the redundancy pay calculation. The appeal outcome can confirm the decision, reverse it, or modify the terms.

If the internal appeal fails, ACAS early conciliation is the mandatory next step before an employment tribunal claim. The claim would typically be unfair dismissal (where the redundancy process is challenged) or unlawful deduction (where the pay calculation is disputed). See the employment tribunal UK pillar for the full process.

NHS-specific protections

Several NHS-specific protections go beyond general UK redundancy law:

Mutually agreed resignation scheme (MARS). Some trusts run voluntary schemes where staff can apply to leave on enhanced terms, in lieu of future redundancies. Where available, MARS terms are typically negotiated with unions.
Pay protection. Where redeployment is to a lower-band role, some trusts protect the previous salary for a defined period (often 2 years) before stepping down to the new band. Local trust policy applies.
Pension implications. NHS Pension Scheme members may be entitled to actuarial reductions or early retirement options depending on age and section. Take pension advice before committing to redundancy terms.
Continuous service preservation. If you take a redundancy and return to the NHS within four weeks, the redundancy can be cancelled. After four weeks, you keep the payment but lose the continuous service for some purposes.

Tax on NHS redundancy

The first £30,000 of redundancy pay is tax-free under the standard UK rule (section 403 of the Income Tax (Earnings and Pensions) Act 2003). Anything above is taxed as income at your marginal rate.

For NHS staff with long service, redundancy payments often exceed £30,000 because of the generous contractual formula. The excess is taxed through payroll. A common tax-efficient option is to direct part of the excess into an additional pension contribution, which receives tax relief at the marginal rate.

The redundancy tax estimator gives a rough net figure on any gross redundancy amount.

Useful calculators

Redundancy pay calculator — statutory figure as a comparison baseline.
Redundancy runway calculator — how long the lump sum will last.
Redundancy tax estimator
NHS notice period calculator
Holiday entitlement calculator

Related guides

Frequently asked questions

How is NHS redundancy pay calculated?: NHS contractual redundancy pay under Section 16 of the Agenda for Change handbook is one month's pay per year of reckonable service, capped at 24 months. The cap on weekly pay used in the calculation is higher than the statutory £700 figure, currently around £700 weekly cap mirrored or higher per the latest handbook revision; check the current handbook for the exact figure. For most NHS staff this is several multiples of the statutory minimum.
Do I get statutory redundancy pay as well?: No. The NHS contractual scheme is not additional to the statutory minimum; it replaces it. The formula is designed to be more generous than statutory, so staff with two years of service or more are always better off under the contractual scheme. Staff with less than two years of service do not qualify for either statutory or contractual redundancy pay in most cases.
What is NHS redeployment?: Before a redundancy becomes effective, the trust must attempt to find a suitable alternative role within the trust (and sometimes across the wider NHS) for the affected employee. This is the redeployment process. Suitable alternatives include similar bands, similar duties and reasonable commute. If a suitable role is offered and refused without good reason, the redundancy pay can be withheld.
Can I appeal an NHS redundancy?: Yes. NHS trusts have a formal appeals process for redundancy decisions, usually through HR to a senior manager not involved in the original decision. The appeal can challenge the redundancy decision itself, the selection process, or the calculation of the redundancy pay. Union representation at appeal is strongly recommended. If the internal appeal fails, ACAS early conciliation is the route to tribunal.

General information about NHS redundancy terms, not legal advice. Specific calculations and processes depend on current Agenda for Change handbook revisions and local trust policy. For your situation, contact your trade union, the trust HR team or ACAS.