NHS Redundancy & Holiday Allowance

NHS Annual Leave Entitlement (Agenda for Change)

Full-time Agenda for Change (AfC) staff are entitled to the following annual leave. The NHS leave year runs from 1 April to 31 March — pro-rata rules apply if your employment ends mid-year.

Part-time staff receive these entitlements pro rata to their contracted hours. The 8 public holidays are not a separate bonus — staff who work on a public holiday receive a day in lieu.

Reference: NHS Terms & Conditions Handbook (nhsemployers.org)

How Holiday is Calculated When You Leave

• Leave is pro-rated from 1 April (start of the NHS leave year) to your termination date.
• Holiday pay must reflect normal remuneration — not just basic pay. This is a legal requirement established in Williams v British Airways [2012] and Lock v British Gas [2016].
• Fixed-salary staff: use normal weekly pay including regular contractual allowances.
• Variable pay / shift workers: average of the last 52 weeks in which you were paid.
• Regularly paid overtime, on-call payments and shift premiums must be included in the calculation — not just basic salary.

Reference: Acas: Holidays and final pay

Holiday Accrual During Your Notice Period

• Working notice: full accrual continues until your final day.
• Garden leave: full accrual continues. Your employer may require you to take holiday during garden leave, but must give statutory notice of at least twice the length of the leave period.
• PILON (Pay in Lieu of Notice): employment ends on the date PILON is accepted — accrual stops immediately. You must be paid for all leave accrued to that date.

NHS Redundancy Pay — Section 16 AfC

• Qualifying period: minimum 2 years' continuous NHS service.
• Payment rate: 1 month's pay per complete year of reckonable service.
• Maximum: 24 months' pay, subject to a total payment cap (updated each April by NHS Employers).
• Monthly pay calculation: 1/12th of annual salary or 4.35 × weekly pay — whichever is the higher figure.
• The annual salary used in the calculation is subject to a floor and cap (updated each April). Part-time staff: the floor and cap apply to the full-time equivalent salary, not your actual part-time earnings.
• Tax: the first £30,000 of your redundancy payment is tax-free. Any amount above £30,000 is taxed as normal income. Holiday pay and notice pay are always fully taxable.

References: NHS Redundancy Arrangements  ·  Section 16 — Redundancy Pay (England)  ·  GOV.UK: Explaining your redundancy payments

Reckonable Service — What Counts

• All continuous NHS employment with any NHS employer counts as reckonable service.
• Breaks of less than 12 months do not break your reckonable service under AfC rules — this is more generous than general employment law, where a break of more than one week breaks continuity.
• Previous NHS service that was used to calculate a prior redundancy payment is excluded from the new calculation.
• Service following a MARS (Mutually Agreed Resignation Scheme) payment may also be excluded — confirm with your HR team.
• To qualify under Section 16, your post must be genuinely redundant: the role must cease to exist or the requirement for those duties must substantially diminish. Simply being replaced by someone else does not qualify.

Reference: NHSBSA: Eligibility for Redundancy

Notice Periods Under AfC

Contractual notice under AfC is determined by your pay band and length of service. As a general guide: Bands 2–4 receive 1 month's notice; Bands 5–7 receive 2 months; Bands 8 and above receive 3 months. (Band 1 was closed in 2024.) If statutory notice — 1 week per complete year of service, up to a maximum of 12 weeks — exceeds your contractual notice, the statutory notice period applies.

Holiday continues to accrue throughout whichever notice period applies to you. If you are uncertain about your notice entitlement, check your contract of employment or contact your union.

NHS Pension on Redundancy

• In the 2015 NHS Pension Scheme (which most currently active members are enrolled in), the minimum pension age is 55. Note: this is due to increase to 57 from April 2028 — staff nearing that age should check the current position with NHS Pensions.
• The age-50 minimum for the 1995 Section applies only to members who joined the scheme before 6 April 2006.
• Voluntary redundancy carries the same pension access rules as compulsory redundancy — see the Voluntary vs Compulsory section below for a full comparison, including the key differences from MARS.
• Always contact NHS Pensions or your Trust's HR team for a written estimate showing your net financial position after pension strain.

Reference: NHSBSA: Pension options on redundancy

Redeployment — Your Rights Before Redundancy

Before a formal redundancy notice is issued, NHS employers must make reasonable efforts to redeploy staff at risk. Staff are usually given a priority matching period (typically 4 weeks) to be considered for suitable alternative posts within the organisation.

Accepting a suitable alternative role ends your entitlement to a redundancy payment. Check your Trust's Managing Organisational Change (MOC) or Redeployment Policy for the local procedure and timescales that apply.

Voluntary redundancy — how it compares to compulsory

Voluntary redundancy (VR) is offered by your employer during a restructure. It is not an automatic right — you cannot request it at any time. The key similarities and differences are set out below.

What is the same as compulsory redundancy?

• Section 16 calculation is identical: 1 month per year of reckonable service, maximum 24 months, with the same earnings floor and cap.
• Holiday entitlement: Accrued but untaken leave is paid out in exactly the same way — as a separate entitlement on top of any redundancy payment.
• Pension access and pension strain: The same pension access rules apply, including the pension strain risk described in the NHS Pension section above. Age alone does not guarantee an unreduced pension — always get a written estimate before deciding.
• Notice periods: The same contractual notice periods apply under AfC.

What is different?

• There is no automatic right to VR. The employer calls for volunteers and selects at their discretion — applying does not guarantee acceptance.
• VR must be formally offered by your employer during a restructure; you cannot request it outside a live scheme.
• Being shortlisted does not guarantee acceptance — the employer can decline if operational or clinical needs require it.
• Your selection for VR could be withdrawn if a suitable redeployment opportunity arises before the redundancy date.

References: NHS Employers: Redundancy arrangements  ·  NHS Employers: MARS (Section 20)

Practical Checklist

Before you accept any settlement or sign any agreement:

• ☐ Confirm your continuous NHS service start date with HR
• ☐ Request a written redundancy payment calculation from your employer
• ☐ Request a written holiday pay calculation showing days accrued and days taken
• ☐ If aged 55 or over, request a pension strain estimate before deciding whether to draw your pension early
• ☐ Contact your trade union — UNISON, RCN, BMA or Unite — for independent advice
• ☐ Use the NHSBSA redundancy overview for an initial estimate
• ☐ Check your Trust's Managing Organisational Change or Redeployment Policy

Frequently Asked Questions