NHS redundancy pay: how your years of service are counted

If you are made redundant from an Agenda for Change post, the NHS scheme pays one month’s pay for each complete year of reckonable service, with a maximum of 24 years counted. You need at least two years of continuous service to qualify. Part years are ignored, so 9 years and 11 months counts as 9. The figures below are from the NHS Terms and Conditions of Service Handbook (version 63), England section. Scotland, Wales and Northern Ireland have their own wording in the same handbook, and the differences are noted where they matter.

Who qualifies

You must be an employee of an NHS employer, with a contract of employment, and be dismissed by reason of redundancy. In England the handbook asks for two years of continuous full-time or part-time service. The Scotland, Wales and Northern Ireland section says 104 weeks, which is the same length. Part-time hours make no difference to whether you qualify.

Misconduct dismissals are excluded. So are cases where you keep NHS work: you do not get the payment if you start suitable alternative NHS employment with no break, or with a break of no more than four weeks, or if you unreasonably refuse suitable alternative employment with an NHS employer. You also do not qualify if your job transfers to another public service employer that is not an NHS employer, or if you are offered a renewed contract with a new NHS employer in place of the old one.

Employers are expected to look for alternative posts before making anyone redundant, in their own organisation or through another NHS employer. Our redundancy rights guide covers the wider legal process, including consultation and notice.

What counts as reckonable service

Reckonable service is continuous full-time or part-time employment with your present NHS employer or any earlier one. The handbook adds that:

• service before a break of 12 months or less still counts
• periods as a trainee with a GP under the Trainee Practitioner Scheme count
• your employer has discretion to count jobs outside the NHS that it judges relevant to NHS employment

Two kinds of service are excluded. Anything already counted towards an earlier NHS redundancy or loss of office payment cannot be used twice. The same goes for service already counted when NHS pension benefits were previously awarded to you.

There is a separate test for whether service with different NHS employers is continuous at all. In England, previous continuous employment with different NHS employers can be counted as long as there was no break of a week or more, measured Sunday to Saturday. That test applies to the two-year qualifying period. The 12-month rule above widens what counts once you qualify. Continuous service in the public sector explains how the law and the contracts differ.

How the payment is worked out

The payment is a lump sum of one month’s pay for each complete year of reckonable service. A month’s pay is whichever of these is better for you:

• 4.35 times a week’s pay, worked out under the Employment Rights Act 1996
• one twelfth of your annual salary on the day your employment ends

In England the handbook also sets a floor and a ceiling. If you earn under £23,000 a year (full-time equivalent), the calculation uses £23,000 instead, reduced pro rata if you work part-time. If you earn over £80,000 full-time equivalent, it uses £80,000. No payment can go above £160,000, again pro rata. The Scotland, Wales and Northern Ireland text, as read, has no such floor or ceiling.

Say you earn £36,000 full-time and have 10 complete years of reckonable service. One twelfth of your salary is £3,000, so the one-twelfth method gives £30,000. The 4.35 weeks method may give a slightly different figure, and you get the higher of the two. HR will run both.

Whether the payment is taxed is a separate question, covered in is redundancy pay taxed?.

Statutory pay is offset against it

Statutory redundancy pay uses a different formula: weeks of pay by age band, with years capped at 20 and a weekly pay cap of £751 for redundancies on or after 6 April 2026. The NHS handbook says its payment is an enhancement to the statutory entitlement and that the statutory payment is offset against the contractual one. You are not paid both in full. Ask your employer to show how the figure it quotes compares with the statutory one.

Early retirement and pensions

Members of the NHS Pension Scheme with at least two years of qualifying membership may be able to use part or all of the redundancy payment to avoid a reduction in pension benefits if they retire early. The conditions include reaching minimum pension age. The handbook sets them out at length, and the NHS Pension Scheme guide is a starting point. NHS Pensions or your union can give you a personal figure.

What to check

• Ask HR for your reckonable service start date in writing, and tell them about any earlier NHS jobs and any gap of 12 months or less.
• Check whether a previous redundancy or pension award has used up some of your service.
• Compare both month’s pay calculations.
• Note the six-month deadline for claiming.
• If you disagree with the calculation, the handbook says to raise it through the local grievance procedure.