NHS redundancy pay: Agenda for Change Section 16
How is NHS redundancy pay calculated?
Section 16 pays 1 month's pay per full year of reckonable service, up to a maximum of 24 months, using an annual salary bounded between the scheme's floor and cap before the month's-pay sum is worked out. You need at least two years' reckonable NHS service to qualify at all.
Figures are correct to our knowledge against NHS Employers' published summary of Section 16 of the NHS Terms and Conditions Handbook, retrieved 19 August 2026, and are indicative only. Read how our figures are checked.
Who does Section 16 cover?
Section 16 applies to staff employed on Agenda for Change (AfC) terms: the great majority of nurses, healthcare assistants, administrative, clerical and allied health professional staff. Medical and dental staff, and very senior managers (VSMs), sit under separate contractual terms with their own redundancy provisions, not Section 16. Bank staff engaged on zero-hours/bank contracts do not typically accrue redundancy entitlement in the same way as substantively employed staff, because they are not employed on a continuing contract to be made redundant from.
Reckonable service can run across more than one NHS employer: a move between trusts, or a break of no more than 12 months between periods of NHS employment, does not reset the clock. Only full years of reckonable service count toward the month's-pay total; a partial final year is not pro-rated.
Early retirement on redundancy and your pension
Staff who are NHS Pension Scheme members and have reached minimum pension age can usually take their pension early on redundancy, funded from the redundancy payment, without the actuarial reduction that would otherwise apply. Minimum pension age for the 2015 scheme is rising to 57 from April 2028. Exactly how this interacts with your Section 16 payment depends on which section of the scheme you are in.
We describe how the scheme rules work; we do not advise on whether you should take your pension early, because that is a personal financial decision, not a legal one. Speak to NHS Pensions and, for a personal recommendation, an FCA-regulated financial adviser.
MARS, voluntary redundancy and compulsory redundancy
These are three different routes and it matters which one you have been offered. Voluntary redundancy and compulsory redundancy are both Section 16 redundancy: the same month's-pay formula applies whether you volunteered or were selected. The Mutually Agreed Resignation Scheme (MARS), by contrast, runs under Section 20 and is not a redundancy at all — NHS Employers states this explicitly. MARS does not carry Section 16 pay or the early-retirement-on-redundancy pension route; it typically offers up to a number of months at the employer's discretion, set locally trust by trust, not a published national figure.
Both a Section 16 exit and a MARS exit are commonly documented through a settlement agreement, which is where the legal advice your trust pays for comes in: an agreed reference, a waiver of claims, and (where relevant) resolution of a parallel grievance or whistleblowing concern alongside the exit terms. See NHS voluntary redundancy and MARS for the detail on each route.
NHS-specific settlement agreement terms
NHS settlement agreements can include re-employment restrictions and clawback if you return to an NHS role within a set period, agreed reference wording, and (where relevant) a carve-out preserving your rights under the Freedom to Speak Up framework, which cannot lawfully be waived. Because NHS pay and pension arrangements are complex, and because these clauses vary by trust, staff should have any agreement checked by a solicitor — a cost the trust almost always covers.
Settlement agreement NHS: what to expect
Settlement agreements are used both for straightforward Section 16 or MARS exits during restructuring, and to resolve disputes — such as grievances about bullying, performance management or whistleblowing — where a trust wants a clean break rather than a formal process or tribunal claim. An NHS agreement typically combines a redundancy, MARS or ex-gratia payment with an agreed reference and a waiver of claims.
NHS trusts and integrated care boards continue to restructure services through 2025-26 under NHS England guidance on workforce and financial recovery; the specifics vary by trust and change frequently. This paragraph describes the general position only, as at 21 September 2026.
Union positioning: Royal College of Nursing, Unison, GMB and other recognised NHS trade unions can advise on and support you through a Section 16 or MARS process alongside, not instead of, your own solicitor's review of any settlement agreement.
Scope: this page covers Agenda for Change in England and Wales. NHS Scotland operates its own Handbook with variations to these terms; if you work for NHS Scotland, check the NHS Scotland Handbook rather than relying on the figures here.
Work out your figure
Statutory redundancy pay is the legal minimum regardless of scheme: up to £22,530 (2026/27). Our Section 16 calculator estimates the scheme's own figure alongside that floor. Figures are correct to our knowledge against NHS Employers' published summary and are indicative only.
NHS Section 16 redundancy calculator →Your advice comes from an SRA-regulated solicitor at RGF Lawyers, named to you when your call is confirmed.
Been offered a settlement agreement?
If your NHS trust has offered you a settlement agreement, whether under Section 16, MARS or to resolve a dispute, we will review it the same working day and tell you honestly whether the offer is fair. Free to you when your trust pays our fee, which is the case in nearly every UK settlement agreement.
NHS redundancy: frequently asked questions
Is NHS redundancy pay better than the statutory minimum?
For most staff with several years of service, yes. Section 16 pays one month's salary per year of reckonable service (subject to the scheme's floor, cap and maximum), which for many staff exceeds the statutory formula of up to 1.5 weeks' pay per year capped at £751 a week. Exact entitlement depends on your salary and length of service; figures on this page describe the scheme's structure and are pending our solicitor's sign-off before we publish a computed amount.
Can I access my NHS pension early if I am made redundant?
Staff who have reached minimum pension age and are NHS Pension Scheme members can usually take their pension early, funded from the redundancy lump sum. This is a valuable but complex benefit that depends on which section of the scheme you are in. We describe the scheme rules here; we do not advise on whether to take your pension early. Speak to NHS Pensions and, if you want a personal recommendation, an FCA-regulated financial adviser.
Is MARS the same as NHS redundancy?
No. The Mutually Agreed Resignation Scheme (MARS) is run under Section 20 of the Handbook and is explicitly not a redundancy: NHS Employers states this directly. MARS does not carry Section 16 redundancy pay or the early-retirement-on-redundancy pension route; it typically pays up to a number of months at the trust's discretion, set locally rather than by the national formula. If you are unsure which route you have been offered, that distinction changes both the figure and the pension consequences, and is worth checking before you sign anything.
Situations that often arise in the NHS
Redundancy in other sectors
- Civil Service redundancy
- Local Government redundancy
- Schools and Teachers redundancy
- Higher Education redundancy
Related
- NHS voluntary redundancy and MARS
- NHS Section 16 calculator
- NHS exit package dataset: 159 trusts sourced
- Compare with council redundancy policies (local government)
- Facing redundancy? Start here
- Statutory redundancy pay calculator
- Redundancy or settlement agreement: what is the difference?
- Redundancy settlement agreements: what to check before you sign