Our report, Leading the NHS workforce through to recovery, outlines the potential options for trusts to consider.
For those organisations where redundancies are unavoidable, this page has details on the current NHS redundancy arrangements, areas that employers need to consider, potential external support to help minimise the impact on individuals and guidance and tools for employers on managing the redundancy process.
Summary of current NHS redundancy arrangements
The current NHS redundancy arrangements came into effect on 1 October 2006. Any staff made redundant should receive one month’s pay per year of continuous service, with a maximum of 24 months’ pay.
Areas for employers to consider
Corporate governance
It is essential that employers have robust corporate governance arrangements and are able to demonstrate the probity, consistency, efficiencies and value for money of any proposed redundancies or retirements in the interests of the service. This agreement is in line with the required standards in the public sector including the Code of Conduct for NHS Managers.
Where arrangements are entered into outside of these standards, then referrals may be made to the Audit Commission, Counter Fraud Service or other appropriate agencies. Chief executives and, where appropriate, their remuneration committees, must not allow changes to be made to the terms and conditions of employment of affected staff, for the purpose of enhancing any benefits which might be paid on termination.
Provision for costs
Provision for the costs of redundancy and capitalised costs of redundancy retirement, or retirement in the interests of the service, has to be made in the accounting year in which the redundancy fell for full capitalised costs (ie total costs including employers’ contributions) for any proposed redundancies or early retirements.
The Financial Reporting Standards (FRS) 12 describes how, for accounting purposes, treatment of a liability that is of uncertain timing or amount should be handled.
Detailed guidance and support for employers
The following guidance outlines the current NHS redundancy arrangements in more detail and external support:
- A briefing for employers summarising the current redundancy arrangements
- The section 16 of the NHS terms and conditions of service handbook, detailing the arrangements in full
- A briefing for employers Retirement and redundancy: the right approach outlining what employers need to set up, and the differences between retirement and redundancy
- Details of the NHS (Pension Scheme and Compensation for Premature Retirement) Amendment Regulations 2006
- Information on potential support from Jobcentre Plus for employers and staff who may be affected by redundancy
Employers can access a redundancy ready reckoner on Pensions Online (POL) via NHS Pensions. The ready reckoner can be used to process estimates of redundancy benefits.
Employers should also be aware of the potential pitfalls to look out for and guidance on the extended working process which was introduced in 2006 and includes a mandatory process that employers need to follow, if they want an employee to retire.
Information for staff
Individual members of staff should contact their employer or trade union representative for information and guidance on NHS redundancy arrangements.
The Consumer Financial Education Body has produced The Redundancy Handbook, which staff might find helpful as part of these discussions.