An overview of the NHS Mutually Agreed Resignation Scheme (MARS)

A number of NHS Trusts are seeking approval from NHS England to offer employees a financial incentive to voluntarily resign from their role in return for a financial settlement. This is part of on-going efforts to help reshape and streamline the NHS workforce. In this briefing we set out a short overview of such MARS schemes.

What is the purpose of MARS?

The NHS Mutually Agreed Resignation Scheme (MARS) is a voluntary scheme designed to:

• Enable organisational change and work force cost reduction.
• Avoid and minimise compulsory redundancies
• Offer employees an opportunity to leave voluntarily with a financial severance package

It is important to note that MARS is not a redundancy programme nor is it a retirement scheme. It is a mutual agreement between the employer and the employee with a one-off payment in return for the employee’s resignation. It is a negotiated exit under Section 20 of the NHS Terms and Conditions of Service which provides “a scheme under which an individual employee, in agreement with their employer, chooses to leave employment in return for a severance payment. Mutually agreed resignation is not a redundancy or a voluntary redundancy which be covered by AfC section 16. Severance payments should not be made where the circumstances entitle an employee to a contractual redundancy payment or redundancy benefits under the NHS Pension Scheme Regulations.”

MAR schemes should not be used where a post is disappearing, or work reducing so as to put the employee at risk of dismissal. It may be used as a precursor to wider organisational change. As AfC 20.2 states:

‘MAR schemes support employers by creating job vacancies which can be filled by redeployment of staff from other jobs or as a suitable alternative job for those facing redundancy.’

Are there any specific criteria that a MARS scheme must adopt?

Each MARS is required to adhere to the national MARS model and which includes:

• Each scheme is to be appropriately considered and authorised by the respective NHS Trust, NHS Foundation Trust and ICB Board
• Each payment must not be greater than £80,000 in respect of any individual
• Each scheme must apply a salary cap of £80,000 (i.e for staff with total earnings of more than £80,000 the figure used for calculating a MARS payment will be £80,000 (pro rata for part time workers)
• Each scheme must operate for no more than 3 months in duration
• Only staff with a minimum of 12 months continuous service can be considered

What is the process to obtain approval?

NHS Trusts and NHS Foundation Trusts should seek approval from the Trust board and any responsible committee. In seeking approval confirmation will need to be provided that any financial impact will be managed within the organisational and financial plans. Once this process has been completed a completed checklist and the proposed scheme should be submitted to NHS England for approval.

The process for ICBs is slightly different. ICBs should first seek approval of the proposed scheme from the ICB Board and responsible committee. The ICB should obtain confirmation of funding for the scheme from their regional director of finance and then the following documents should be sent to the regional director of workforce; completed checklist, copy of the proposed scheme and completed paper for the Executive HR Group. This will then be submitted to NHS England Executive HR Group for approval. A complication for ICBs is, however, likely to be that most of them (if not all) are already in the throes of preparing a voluntary and/or compulsory redundancy process.

Can the employee return to work in the NHS after exiting on MARS?

The purpose of MARS payment is to compensate employees for loss of employment. Employees who leave the NHS under MARS would not be re-employed under normal circumstances by the NHS in England in the same or different post, before a period of 1 month has elapsed. If an individual does return to the NHS within a month, they would be required to repay any MARS payment in full.

Where an employee returns to work for the NHS in England within 6 months and before the expiry date of the period for which they have been compensated (as measured in equivalent months/part-months salary), then an employee would be required to repay any unexpired element of their compensation. This would be reduced to consider any appointment to a lower grade to reflect net salary. These repayment terms should be reflected in the settlement agreement that employees should sign when agreeing a MARS package — as recommended under AfC 20.24.