How NHS redundancy pay works
You get a lump sum of one month's pay for each complete year of reckonable service, as long as you have at least 2 years' continuous service. Up to 24 years are counted, and part years are ignored. Reckonable service includes previous NHS employment, and employers can choose to count relevant service outside the NHS. Service already used for an earlier NHS redundancy payment, or for NHS pension benefits you've been paid, doesn't count again.
A "month's pay" is whichever is better for you: a twelfth of your annual salary on the day your job ends, or 4.35 times a week's pay worked out under employment law. For a full-time Band 5 at the bottom of the band in England with ten years' service, a twelfth of salary gives about £26,728.
England's floor, ceiling and cap
In England only, three extra rules apply:
- If your full-time salary is under £23,000, the payment is worked out as if it were £23,000. Every full-time pay point is above that now, so it mostly affects older or protected contracts.
- If your full-time salary is over £80,000, it's worked out as if it were £80,000. That catches everyone from the middle of Band 8c (£84,346) upwards.
- No payment can be more than £160,000.
All three are pro rata for part-timers. Scotland, Wales and Northern Ireland use the same one-month-per-year formula without these limits.
The statutory minimum
The law sets a floor: half a week's pay for each full year you were under 22, one week's pay for each year aged 22 to 40, and a week and a half for each year aged 41 or over, counting up to 20 years, with weekly pay capped at £751 for redundancies from 6 April 2026 (so the most it can be is £22,530). The NHS scheme is usually worth far more, and the calculator shows both.
Tax
The first £30,000 of your combined statutory and enhanced redundancy pay is usually tax free; tax is due on anything above that. Notice pay (including pay in lieu of notice), holiday pay and unpaid wages are taxed and charged NI as normal earnings.
Retiring early instead
If you're in the NHS Pension Scheme and have reached the minimum pension age, with at least two years' continuous service and two years' scheme membership, you may be able to retire early on redundancy. In England the redundancy payment can be used to buy out some or all of the reduction to your pension; in Scotland, Wales and Northern Ireland you can choose early retirement without a reduction instead of the full lump sum. Get a pension estimate before you decide.