How much are NHS redundancy payments?

Redundancy (or the threat of redundancy) is a worrying time for anyone working in the NHS. Understanding how much you might be eligible for as a redundancy payment is an important consideration in planning your finances.

During any formal consultation period, your HR team should be able to provide an exact calculation of redundancy pay, as well as confirming whether you have enough continuous service to be eligible for any redundancy package. However, coming up with an estimate is fairly straightforward. There are two main considerations:

• Your current annual salary (including normal uplifts for unsocial hours work and High Cost Area Supplements, but excluding overtime payments)
• How many full years of reckonable service you have with the NHS (reckonable service essentially refers to the total length of time you have worked in the NHS without a break of more than 12 months between jobs; there is more information on how to calculate your reckonable service available here)

Once you have your annual salary, divide it into 12 to find your monthly salary. This monthly salary is then multiplied by the number of full years of reckonable service you have to find the approximate redundancy payment figure (note that part years do not count, i.e. if you have five and half years of reckonable service, your multiplier will be 5 rather than 5.5 years).

For example to calculate the redundancy payment figure for a Band 6 nurse with a salary of £35,392, with 3 years and 2 months of reckonable service:

• Divide £35,392 by 12, giving us £2949
• Multiply 2949 by the years of reckonable service (3)
• This gives us a total of £8847 as the approximate redudancy pay package

Limitations

There are a small number of additional considerations to bear in mind:

• For the salary calculation, the minimum figure is taken as £23,000; if your salary as a full-time equivalent is below this figure you need to substitute £23,000 into the calculation. On Agenda for Change this impacts some Band 2 and Band 3 roles.
• For the salary calculation the maximum figure is taken as £80,000; if your salary as a full-time equivalent is above this figure you need to substitute £80,000 into the calculation. On Agenda for Change this impacts some Band 8c, 8d and Band 9 roles.
• The maximum length of reckonable service is 24 years. Any years beyond 24 do not increase the redundancy pay package.

Is my NHS redundancy pay tax free?

As with all jobs in the UK, the first £30,000 of severance or redundancy pay is tax free. You will pay tax on any amount beyond this figure.

What are NHS MARS schemes?

NHS Mutually Agreed Resignation Schemes (MARS) are often used by organisations wishing to change the size or shape of their organisation by reducing the number of staff they employ in particular roles.

The schemes tend to offer payments to staff wanting to leave the organisation, which may be more than what they would receive during their notice period and allow them to leave more quickly.

Generally, MARS payments are significantly lower than what staff would recieve if they were made redundant. If you’re considering taking MARS rather than a possible voluntary or compulsory redundancy, our strong advice would be not to. You can find out more about the downsides of MARS on the Royal College of Nursing website.