Voluntary redundancy information

Redundancy - financial terms, calculations, and employment rights

• What will the redundancy terms be?

  Agenda for Change (AfC) terms are as follows: One month’s salary for every completed year of service up to a maximum of 24 years’ service (24 months payment). Only one full year of service will count towards a redundancy calculation. 

  A month’s pay, subject to a total annual earnings floor of £23,000 and cap of £80,000 (pro rota for part time workers), will be either an amount equal to 1/12th of the annual salary at the date of termination or 4.35 times a week’s pay whichever is more beneficial to the employee (the average month has 4.35 weeks). The calculation of 4.35 times a week’s pay should be made in accordance with the Employment Rights Act 1996. 

  Further details regarding the differences between CR and VR can be found in the below document.

  

  Comparison between voluntary and compulsory redundancy - November 2025

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• How do I work out what my redundancy payment will be?

  You can use the online Voluntary Redundancy Calculator which is on the Voluntary Redundancy pages on the intranet to calculate your estimated voluntary redundancy payment.

  

  NHS Voluntary Redundancy Calculator tool

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  Figures should be taken only as indicative and purely as an estimate of the payment and using the information that you input. Information and payments will be verified should you wish to continue with an application. 

• Is your VR payment based on current hours and salary? Does a history of changes in hours affect your payment calculation?

  Your redundancy would be calculated based upon your current salary / payroll data at the point of leaving the organisation.

• If you have previously worked full time and then gone part time, will the years of full time be taken into account?

  Yes – all eligible years of service will be taken into account, including those worked full time and part time.

• Is VR the same money as compulsory redundancy and are there other key differences?

  The terms of the Scheme have been shared – the financial elements are the same as compulsory redundancy but there are differences in the way that notice periods and clawback operate, for example. We cannot offer individual advice regarding eligibility for benefits – you will need to check with another agency, e.g, Job Centre Plus or Citizens Advice.    

  Further details regarding the differences between CR and VR can be found in the document below.

  

  Comparison between voluntary and compulsory redundancy - November 2025

  docx, 38.03 KB

  Download
• Will redundancy payments be taxed?

  Tax and National Insurance rates can be found on the Government website here (opens in new window). The first £30,000 of a redundancy payment is tax free. Any redundancy amount over £30,000 is subject to tax. NHS redundancy payments are inclusive of statutory redundancy. 

  We are not able to advise what the tax rate would be. The tax rate will depend on your own personal circumstances, tax code and what income you earn. We would encourage you to take your own personal financial advice on this and to contact HRMC. 

• Will there be payment in lieu of notice (PILON)?

  The national guidance currently states that there will be no PILON (Pay in Lieu of Notice).

• Could Post-Employment Notice Pay (PENP) apply if colleagues exit their organisation before their contractual notice period ends?

  The ICB has proposed that contractual or statutory notice periods (whichever is the greater) will be honoured.  Where an employee requests to leave earlier than their contractual notice period PENP (Post Employment Notice Pay) will apply.

• I am considering VR but am on maternity leave. Would I need to pay back my maternity pay?

  You will not get statutory maternity pay (SMP) if you are made redundant and your employment ends before your qualifying week (the 15th week before your baby is due) but you may be able to claim Maternity Allowance. 

  If you are made redundant and your employment ends in or after your qualifying week, you are still entitled to SMP for 39 weeks. If you are already on maternity leave and receiving SMP, your maternity leave and Occupational maternity pay will come to an end when your employment ends, but your SMP must continue for the rest of the 39-week period 

• My understanding is the ‘take home’ VR payment after tax is subject to tax paid to date in the tax year in which the VR payment is made. When in the current tax year would payment be made, and can a VR tax / take home pay estimate calculator be provided to allow colleagues to enter details to calculate estimated take home payment?

  Each person’s tax position will be unique. The scheme dates and therefore when individuals may be likely to leave are still subject to consultation.

• If I am set to receive an incremental pay rise during a redundancy notice period, will my redundancy payment be based my salary at the end of my notice period or at the start?

  Redundancy pay is based on the salary at the date of termination. Therefore if the employee reaches the top increment during their notice period, and that increment is reflected in their salary at the point of termination, then the redundancy payment will be based on the top increment.

• [UPDATED 29.01.2026] Will my salary sacrifice deductions (childcare vouchers, lease car, home electronics, cycle to work, gym scheme) affect any redundancy calculation?

  Lease cars 

  Can you clarify the latest position re lease cars? Can you confirm what happens at the end of my lease and can you confirm if salary sacrifice contributions will affect my redundancy calculation? 

  • If you have been appointed to a permanent (substantive post) you can apply for a lease car. 

  • If you have not got a confirmed permanent post and have a lease car which is due for renewal, you have two options: 

   1) Move to a rolling contract 

  Your lease car will continue as long as you are in employment, or until you return the car or are in a position to enter into a new lease contract by securing a permanent role. 

  If you go on to a rolling contract, you will not be responsible for any early termination charges if you are made compulsory redundant. There is a small risk that, at any time, the lease company can ask for return of the car immediately.  Whilst very unlikely, it is possible. 

  2) Conclude the lease 

  You can conclude the lease by handing back the car at the end of the term. 

  All applications for new lease car contracts (i.e. entering a new contract), are paused until you have a confirmed permanent post in the new structure. If your contract is expiring, you will need to choose option 1 or 2. 

  If you are made compulsory redundant, the ICB can confirm you will not be charged a termination fee if your contract is terminated. 

  However, if you accept voluntary redundancy then you will be responsible for all termination costs. We can also confirm that if you have a lease car any redundancy pay calculation will be based on your gross salary. 

  Home electronics

  Will my redundancy calculation be affected by any other salary sacrifice payments (e.g. the Home Electronics Scheme)? 

  If you have purchased items through other agreed salary sacrifice schemes (e.g. home electronics) then your redundancy calculation will be based on your gross pay. 

  However, any outstanding balances for items that you have purchased will be deducted from your final salary if you leave the ICB either voluntarily or on any other terms, including voluntary and compulsory redundancy. 

  We would therefore ask you to consider the above before entering into any further arrangements. 

• Will continuous service affect redundancy?

  Yes. Continuous NHS service (with breaks of less than one week) is used to calculate redundancy entitlement. You can check your Continuous Service Date (CSD) in ESR.

• I entered the organisation via TUPE. Is that period of employment counted as service?

  This depends on the organisation from which the individual transferred. TUPE ensures continuous service is protected if individuals transfer from another NHS organisation. Reckonable service is only protected in transfers from NHS organisations.

  Some organisations, such as GPs, are not classed as NHS organisations for reckonable service. You are always able to contact HR colleagues directly for more information about this process.  

  This video explains NHS service dates, the types of service dates and what they mean. 

• What is the difference between continuous service and reckonable service?

  Continuous service and reckonable service are different but related concepts used to determine an employee’s entitlement to benefits like sick pay, redundancy pay, and annual leave.  

  Continuous Service: 

  • Definition: Continuous service refers to employment with one or more recognised NHS organisations with no significant breaks in between. 

  • Break in Service: A break in service typically occurs if you are out of NHS employment for more than one full week (measured Sunday to Saturday). 

  • Purpose: Two years of continuous service are required to qualify for an NHS contractual redundancy payment. This unbroken period (or minimal break period) establishes the initial eligibility. It is also relevant for contractual maternity, paternity, and adoption leave and pay, where the break limit is usually three months.  

  Reckonable Service: 

  • Definition: Reckonable service is any previous service with a recognised NHS organisation that is counted towards calculating the amount of benefits you receive. 

  • Aggregation: Previous periods of NHS service are aggregated (added together) to form your total reckonable service. 

  • Breaks Allowed: The length of breaks allowed between periods of service is more flexible than for continuous service: 

  • Redundancy Pay: Previous service counts as reckonable provided there has not been a break of more than 12 months. 

  • Purpose: Once an employee has met the qualifying period for a benefit (using the continuous service rules), the amount of that benefit (e.g., the size of a redundancy payment) is calculated based on their total aggregated reckonable service.
• I don’t agree with my CSD on ESR. What should I do?

  Speak to your line manager in the first instance to let them know you believe this is an issue. You will need to evidence your CSD (through payslips, HR documents etc) so start gathering these, and then with the support of your line manager, any correction request can be made. You are always able to contact HR colleagues directly for more information about this process.

  The below video explains NHS service dates, the types of service dates and what they mean.

• If you take VR, does that wipe out or reset your years of NHS continuous of service if you are reemployed in the NHS in the future?

  If you take VR, your NHS continuous service does come to an end at the point your contract ends. This means that if you return to NHS employment at a later date, your previous service would not automatically carry forward.

• Is your ESR number the same as your 'assignment number'?

  Yes.

• Will TUPE apply if roles are transferred?

  Yes, TUPE or Cabinet Office Statement of Practice (COSOP) regulations will apply, preserving continuous service. TUPE entitlements remain as detailed in the NHS terms and conditions handbook.

• Do the same conditions regarding clawback of redundancy payment still apply, should someone be re-employed in a public sector organisation following compulsory redundancy? Which public sector organisations would this apply to?

  Clawback is the requirement to repay some or all your VR payment if you are re-employed by certain organisations within a specific timeframe after leaving an NHS organisation under VR.  

  Changes have been made to the list of organisations this applies to to those who leave under VR – drastically reducing the number of organisations this applies to.  

  Clawback under VR now only applies to:  

  • NHS employers – as set out in Annex 1 of the NHS Terms and Conditions. 

  • Department of Health and Social Care. 

  • Any of Department of Health and Social Care’s arm’s-length bodies – you can view all these organisations on the GOV.UK website here (click the link that says ‘works with 23 agencies and public bodies’ underneath the heading of Department of Health and Social Care’) 

  Clawback for those who leave their organisation under CR is limited only to those on VSM contracts and is limited to NHS employers and contractors to the NHS. Colleagues on Agenda for Change contracts can’t 

  Further details regarding the differences between CR and VR can be found in the document below. 

  

  Comparison between voluntary and compulsory redundancy - November 2025

  docx, 38.03 KB

  Download