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What is a ‘Mutually Agreed Resignation Scheme’?
A ‘Mutually Agreed Resignation Scheme’, or ‘MARS’ for short, is a recognised scheme typically used by the NHS and other public sector employers to give employee’s the opportunity to resign and receive a severance package, usually under a settlement agreement.
An employee is free to choose whether to apply to resign under an available MARS operated by their employer. It is therefore voluntary.
So now we’ve clarified we are talking about a severance scheme and not a chocolate bar, let’s deep dive into how these schemes work in reality.
Is a MARS the same as redundancy?
A MARS is not the same as a redundancy or voluntary redundancy.
MARS is definitely not suitable for redundancy situations. In a redundancy situation an employer should follow its own redundancy policy and comply with appliable legal requirements regarding individual and collective redundancy consultations. Public sector redundancy policies provide for a superior severance package than MARS.
Why do employers use them?
An employee that resigns under a MARS will leave a vacancy for another employee to fill – as their role is not redundant. That might mean another employee that is at risk of redundancy is offered the role left vacant by an employee resigning, thereby retaining experienced staff and avoiding the higher cost of a redundancy package.
MARS severance versus redundancy payment
The employee resigning under the MARS scheme will not be entitled to a redundancy payment or the same pension treatment, had their role been redundant. Instead, the MARS scheme will detail the payments the employee will receive.
There are two kinds of redundancy payment:
- First, there is a statutory redundancy payment (‘SRP’) that all redundant employees are entitled to, subject to having at least two years service. The SRP is calculated using a statutory formula that uses the employee’s age, length of service and weekly gross pay, subject to a cap.
- Second, some employers operate an enhanced redundancy scheme, which is sometimes established as a contractual scheme, which is to say the employee is contractually entitled to the enhanced redundancy payment subject to meeting the qualifying criteria.
A MARS severance payment is calculated using its own formula, and will usually be less than employer’s enhanced redundancy payment rate.
How much is a typical MARS severance?
It really does depend on the particular scheme. An example might be two weeks basic pay for each complete year of service, up to a maximum of 52 weeks pay. If the employee was paid £1,000 a week and had 30 years continuous service, they would be entitled to 2 x 30 (= 60 weeks) which drops to 52 after the MARS cap, used in this example, is applied. 52 x £1,000 = £52,000.
Compare that to SRP that the same employee would receive if they were made redundant, applying the statutory caps (i.e. 20 years maximum service, and £643 for a weeks pay for redundancies on or after 6 April 2023). That means the statutory redundancy would be £19,290
Notice periods and pay
You should check your MARS scheme to establish the terms of the offer. Schemes will usually be expressed as open for applications for a limited period of time and the process of considering and determining which applications are successful can take weeks or months.
Impact on Pension
Because the termination is a mutually agreed resignation – and not redundancy – the employee will not usually receive any special pension benefits or augmentation of their pension. Employees should consult their pension provider and take appropriate financial advice, to ensure they understand the impact and their options.
No duress!
An obvious point, by a mutually agreed resignation scheme must be something the employee decides to they want, freely and voluntarily. They should not be pressurised into leaving by their manager or employer.
MARS Criteria
Generally speaking, an employer will set out criteria in its MARS scheme that it will apply when it receives an employee’s MARS application. The following criteria or similar will often be used by an employer:
- Savings – will accepting the resignation achieve a cost saving for the employe.
- Costs – the cost of the MARS severance package.
- Impact on service and capabilities – the employer will want to ensure the employee’s responsibilities can be attended to properly if the employee resigns. This will include considerations such as loss of skills, knowledge within the employee’s team, if they leave.
I’m facing a disciplinary procedure, am I able to leave under a mutually agreed resignation scheme?
Generally speaking your employers written MAR should answer this question. Typically, a MARS scheme will say an employee will not be eligible until the disciplinary process is complete.
I’m on long-term sick leave, does this mean I’m ineligible to resign through my employer’s mutually agreed resignation scheme i.e. MARS?
You should check your scheme rules but many employers that operate a scheme do not bar applicants simply because they are on long term sick leave. To do so would potentially be discriminatory if the employee’s absence arises from a disability and is not justifiable.
Can I apply for a vacancy with the same employer, after I resign?
After your employment has ended you will usually be able to return but there are strict rules about when you can rejoin your employer, and in some cases, you may need to pay back some or all of the MARS severance you received. Your employer’s particular MARS will lay this out and care should be taken to ensure any restrictions in the settlement agreement mirror the MARS scheme.
Can I start working for another employer in the public sector?
Depending on the which part of the public sector you’re employed in (i.e. NHS, central government, local government) your ability to join another employer within that same part of the public sector to a greater degree than other public sector employers. The details of any restrictions on accepting employment elsewhere within the public sector, will be covered in the MARS scheme.
MARS Settlement Agreement advice
If you’ve been offered a MARS settlement agreement and need a legal advice from a specialist employment please get in touch. The costs of an employee obtaining their own legal advice on the settlement agreement are paid for by the employer, and the scheme, associated MARS offer, and the settlement agreement should confirm this.
MARS Update and News
This section contains updates for NHS and public sector personnel on mutually agreed resignation schemes across the UK.
November 2023 – It’s been reported that The Northern Care Alliance NHS Trust (NCA) which includes Salford Royal Hospital, Oldham Royal Hospital and Rochdale Infirmary, has opened a new Mutually Agreed Resignation Scheme for Employees. The NCA’s Chief of People, Nicky Clarke, is reported as saying “We have launched a mutually agreed voluntary resignation scheme (MARS) as a way to reduce our deficit. This is not a redundancy scheme. The care and safety of our patients remains our utmost priority and this scheme is not available to frontline clinical colleagues.”
October 2023 – St Helens Borough Council amends its Mutually Agreed Resignation Scheme. Updated MARS Document. According to the FAQs document provided by the Council the MARS is open from 6th November 2023 and the closing date for application is 24th November 2023. The FAQs also confirm employees will have the right to withdraw at any time up to formal legal sign off with a settlement agreement.
