MUTUALLY AGREED RESIGNATION SCHEME (MARS)
FREQUENTLY ASKED QUESTIONS
These FAQS cover four main areas:

The scheme

Annual leave

Re-employment

Pension
MUTUALLY AGREED RESIGNATION SCHEME
1. What is a Mutually Agreed Resignation Scheme (MARS)?
A Mutually Agreed Resignation Scheme (MARS) is a scheme under which organisations may offer a
severance payment to an employee to leave their employment voluntarily. MARS helps to increase
flexibility for an employer to be able to address periods of rapid change and service redesign and offers
employees the opportunity of a lifestyle change.
2. What is the purpose of the scheme?
The scheme has been developed to assist employers in addressing some of the financial challenges
facing the NHS in the years ahead. Its key purpose is to create job vacancies which can be filled by
redeployment of staff from other jobs or as a suitable alternative for staff facing redundancy. This
scheme is time limited and the deadline for completed applications is 12 noon on 28th July 2016.
3. Does the scheme apply to all employees?
The scheme applies to all employees of Southern Health Trust, with at least one year’s continuous
service. There are a few exceptions which are detailed in the scheme outline provided.
4. If an employee has retired and returned to the service what would their payment be?
Where an employee has retired and then returned to work in the NHS, their reckonable service would be
re-set to zero from the point of retirement because they would already be in receipt of their NHS
pensionable benefits.
5. What if an employee registers an interest in leaving under a MARS and then changes their
mind about applying for the scheme?
Registering an interest does not commit employees to proceeding with voluntary severance. Employees
can withdraw their application at any time up to the point that they sign a settlement agreement; likewise
the Trust can change their application decision.
6. What is a Settlement Agreement?
Employees who decide to proceed with a MARS will be issued with a settlement agreement to sign
which sets out the financial and other terms under which the employment relationship will end.
Independent legal advice will need to be obtained by the employee before signing the settlement
agreement for which the Trust will contribute £250.00 plus VAT towards the cost.
Last update May 2016
1
7. What about employees currently absent from their organisation – will they be able to apply?
Yes, if they satisfy the eligibility criteria. This should include staff on maternity leave, long term sick
leave, secondment or unpaid leave. The nature of their absence may mean communications are difficult
or sensitive, but it is important that their attention is drawn to the existence of the scheme. It is the
responsibility of employers to identify and contact these employees to inform them about the scheme.
8. Should managers approach employees directly to see if they are interested?
No, line managers should ensure that all employees are alerted to the scheme but they should not target
anyone specifically. This could be misinterpreted and may leave the organisation open to potential
litigation on a number of grounds including discrimination.
9. What if an employee approaches me directly for my opinion? (E.g. where I know that I could
not support the application because the employee is essential to retain)
Explain that there is a process and you will have an opportunity to provide your feedback if they apply.
You cannot advise them personally on whether or not they should apply.
10. Are severance payments free of Tax, NI contributions or pension contributions?
Current legislation can allow for voluntary severance payments to be paid without deduction of tax and
national insurance up to a maximum of £30,000 (subject to HM Revenue and Customs approval). Any
payment made above this amount will be subject to tax and national insurance.
There are no pension contributions payable by the employee or the employer on the severance payment
received.
11. When will I receive my severance payment?
Please note that severance payments will not be paid along with the last month’s basic salary.
Severance payments will be paid the next available pay run after the person’s last month in the
business. This is usually 1 week after the normal payday on the 28th (or closest working day prior to the
28th if 28th falls on a weekend).
12. Can employees apply for the scheme if they have already indicated their intention to leave the
organisation prior to the launch of the scheme?
If an employee has already submitted their resignation or given some other kind of clear indication that
they intend to leave the organisation, they are not eligible for a voluntary severance payment. If an
employee asks to rescind their notice in order to apply for the scheme this should not be agreed to
regardless of whether a termination notice has been completed.
13. What payments are being offered under MARS?
The payment rate under this scheme has a minimum payment of 1.75 months’ salary for 1 – 6 years
reckonable service and is fixed at 1.75 months’ salary for each full year of service up to a maximum cap
of 10.75 months’ salary.
14. How do the terms of MARS compare with redundancy payments?
The MAR scheme is not a redundancy or a voluntary redundancy. Entitlements to redundancy are set
out in Section 16 of the NHS terms and conditions of service handbook.
Last update May 2016
2
15. Could employees be classed as redundant, therefore potentially able to claim benefit?
Employees are not being made redundant under MARS as they are leaving voluntarily. The national
benefit rules are very complex and depend upon personal circumstances. If employees feel that they
may have to rely on benefits, then they should seek advice before submitting an application. They could
contact the national benefits helpline for advice: Tel: 0800 055 6688, or visit the Directgov website , or
alternatively contact Citizens Advice on 0844 8487979 for further information.
16. What is basic pay?
Basic pay is defined as the pay employees receive based on pay scale/band and as stated on their pay
slip. It does not include any additional payment such as:
 Overtime/emergency work done/waiting list initiatives
 Additional programmed activities
 On call
 Emergency Commitment payments
 Acting Up
 Special Duty/Enhancement payments
 Recruitment and Retention Premia (Long & Short)
 Discretionary points
 Distinction awards
 Banding Supplements
 Intensity Supplements
 Additional Responsibility Allowances i.e. Clinical Director
 Clinical Excellence Awards
17. Where an employee is in receipt of protection for basic pay due to organisational change, will
this be protected?
Yes, this is classed as part of basic pay.
18. Will an employee on maternity leave who is in receipt of a MARS payment have to repay their
occupational maternity pay?
Any occupational maternity pay repayment to the Trust, will be deducted from the final MARS payment,
in accordance with the maternity policy.
19. If employees receive an increment after the closing date for this scheme, will this affect their
severance pay?
Basic pay will be confirmed to employees if their application is accepted. The payment will be based on
the basic pay which they are entitled to on their last day of service.
20. What criteria will be considered for approval of a MARS application?
An application must demonstrate to be in the clinical, operational and financial interests of the
organisation.
21. What happens if the Trust does not receive enough applications, will redundancies be
compulsory after this offer has ended?
This is not a redundancy process. As the organisation goes through various organisational change
processes it may be that some posts are no longer needed. The staff within these posts will be
communicated with through the usual organisational change processes and those staff who are not
redeployed will be entitled to their full redundancy pay. However, this may well be over a long period of
time and staff will be expected to take up posts which offer suitable alternative employment. This
process offers staff an opportunity to leave voluntarily over the next few months.
Last update May 2016
3
22. Do employees have to work their notice period?
The employee’s leaving date will be subject to negotiation and mutual agreement between the Trust and
the employee, however employees will normally be expected to work their contractual notice periods. If
notice cannot be worked, no payment will be made as there will be no payment in lieu of notice. Leaving
dates should not exceed normal notice periods.
23. What happens if a Line Manager does not support an employee’s application?
All applications whether supported by the Line Manager or not, will be submitted to a panel for
consideration. The panel will consist of the relevant Director, a Senior HR representative and a Staff
Side representative.
24. What would happen to outstanding loans or training costs employees may have with the
Trust?
The balance of any outstanding loans or costs would be deducted from the final MARS payment and
settled in full.
25. Will the Trust provide a reference?
References will be provided in the normal way in accordance with policy.
ANNUAL LEAVE
26. Employees may have leave outstanding, what happens to their leave if they are successful?
Employees will be asked to use any outstanding leave during their notice period. If this is not possible
due to operational requirements, they will be paid in lieu for any outstanding annual leave due at the last
day of service.
27. Will an employee be expected to re-pay any excess annual leave they may have taken?
Debit leave balances will be required to be repaid.
RE-EMPLOYMENT
28. Can employees return to work for the same organisation/NHS if they leave under MARS?
The purpose of the 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 a 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 un-expired element of their compensation.
This would be reduced to take account of any appointment to a lower grade and reflect net salary. The
settlement agreement will specify the requirement to repay monies in such circumstances and may
provide for a period of repayment.
29. Can employees return to work for the NHS through an agency or on the bank?
Employees can register with NHS Professionals or any agency, but before seeking bank work on a zero
hours contract staff must first check the terms of their settlement agreement.
Last update May 2016
4
PENSION
This section will provide some general information for employers that may help their employees to
decide to seek further information to assist them in making a decision on whether to apply for the
severance scheme or not.
The Pension Scheme website’s factsheet on “Leaving Early and Transferring Out” is available to
download from their website.
Employees can access the Pensions Website on
www.nhsbsa.nhs.uk/pensions
The Pension Scheme website’s factsheet on “Leaving Early and Transferring Out” is available to
download from their website.
Employees can access the Pensions Website on
www.nhsbsa.nhs.uk/pensions.
30. What happens to their pension if an employee leaves?
Employees can choose to:
 leave their Pension contributions in the scheme
 transfer their Pension to another scheme
 take their contributions out of the scheme if they have less than two years service
 apply for their Pension
 take voluntary early retirement subject to eligibility criteria
 claim their Pension - subject to eligibility criteria
31. What happens if an employee leaves their pension contribution in the scheme?
If employees leave their pension contributions in the scheme, it will be index linked. This means it will
grow in line with inflation, with the annual uplift being applied each April.
If employees do re-join the scheme within 12 months, their membership will link up and all the
membership will count when their retirement benefits are worked out.
If employees have less than 2 years membership and choose not to return to the NHS within 12 months
then they can apply for a refund. They do not have to wait until they have been out of the NHS
employment for 12 months to exercise this option. If employees do not return to NHS employment within
12 months and have not applied for a refund, the pension agency will contact them at their last known
address and advise them that they have insufficient membership to retain an NHS pension and the
contributions will be refunded.
Employees can apply to have their pension paid when they reach normal pension age, provided they
have qualified for benefits. Those employees with a pension under the 1995 Scheme who leave under
MARS and then return to the NHS within 5 years will be eligible to rejoin the 2015 Scheme so long as
they have not already taken their pension.
32. How do employees transfer their pension credit to another scheme?
If employees decide to transfer their benefits, they should contact their new provider. They will explain
how much pension their transfer value will buy in their scheme and employees can decide if they want
this transfer to happen. Transfer can only take place if their new scheme is registered with HMRC.
Those with at least 2 years’ membership can apply for a transfer at any time before they reach normal
retirement age. Those with less than 2 years’ membership would need to register with a new registered
pension scheme within 12 months of leaving NHS pensionable employment. In addition they would need
to apply for a transfer within 12 months of joining a new scheme or before they reach normal retirement
age, whichever is earlier.
Last update May 2016
5
33. How do employees take their contributions back?
Employees can only do this if they have less than 2 years’ service. Employees will not receive the full
amount of pension contributions they have paid. The amount paid will be subject to Tax and National
Insurance deductions. Employees can download a form to request a refund of contributions from the
pension website.
34. Employees who are of minimum pension age - can they take a MARS payment and apply for
their pension?
This may be possible - to qualify for early retirement when leaving the NHS under this voluntary scheme,
staff in the NHS Pension scheme must have at least 2 years’ pensionable service. If the member of staff
has been an active pension scheme member since 5 April 2006 or earlier, early retirement may be
possible from age 50. If the member of staff joined the NHS pension scheme after this date, early
retirement may be possible from age 55.
However, unless employees are over age 60, their accrued benefits will be reduced by an actuarial sum,
based on the cost to the scheme of them accessing their pension benefits early.
Employees in the NHS Pension scheme who qualify for early retirement may also choose not to access
their pension benefits at all immediately on leaving, in which case their accrued pension benefits will
remain in the pension scheme and may be either taken as a deferred pension at normal retirement age
or may be transferred to another pension scheme in the future.
35. Employees who have an outstanding application for retirement on grounds of ill-health - can
they apply for the MARS?
Organisations would not be able to consider this whilst an ill health application is being considered by
NHS Pensions. However, if employees are told that it is not successful and they are not appealing
against the decision, they may submit an application for voluntary severance by 12 noon on 28th July
2016.
Under the voluntary severance scheme, there is no provision for organisations to make a payment which
would give employees an enhanced early retirement pension payment. Therefore, should employees
leave their organisation under voluntary severance terms over the age of 50, they will not be eligible for
an enhanced retirement package. If they wish to leave the organisation in these circumstances, they
should be advised to seek further guidance prior to opting for voluntary severance so that they are aware
of all the implications.
36. If an employee is leaving the NHS on MARS terms and taking (actuarially reduced) early
retirement benefits from the NHS Scheme, Can the employer use the MARS lump sum to prevent
the employees pension benefits from being reduced?
Not directly; your benefits from the NHS Scheme must be reduced because they are being paid before
your normal retirement age. But you can if you wish, ask your employer to use some or all of your MAR
lump sum to buy "Additional Pension" (AP). AP is paid at the same time as your early retirement
benefits and could help offset the actuarial reduction. Remember though that AP increases only your
early retirement pension, not your lump sum. It is important to note that, as a consequence of the
employer buying the "additional pension", any amount over £30,000 would not normally be subject to tax
as it would if the additional pension were purchased by the individual. Generally where a contribution is
made into a tax exempt pension scheme (such as the NHSPS) then the amount will not be subject to
tax. The rules are, however, complex and individuals may wish to visit the HMRC guidance below for a
comprehensive explanation of whether an amount paid in "additional pension" will be subject to taxation.
http://www.hmrc.gov.uk/manuals/eimanual/EIM13735.htm
Last update May 2016
6
37. Can the employer buy Additional Pension (AP) at any time?
Your employer can apply to buy AP at any time up to the date of your MAR. AP cannot be bought after
you have left the NHS.
38. Will the employer be able to buy enough AP to completely offset the reduction of the
employee’s early retirement benefits?
NHS Scheme early retirement benefits are reduced according to how early you take them. The
reduction is biggest at age 50 and much smaller at age 59. AP can be bought in units of £250, up to a
maximum of £5,000. The cost depends on the amount of AP you buy and your age at the time of
purchase. Remember though that the charges for AP assume scheme members will retire at normal
retirement age. This means that the AP will be reduced, according to the age at which you take MAR.
Your employer will be able to help you work out how much AP your MAR lump sum would buy.
For example:
An employee who is a member of the 1995 Section with 20 years scheme membership and pensionable
pay of £40,000 would receive a pension of £10,000 if they retired at 60. Their MAR payment would be 10
months’ pay: £33,330. If they chose to take the MAR scheme at the age of 58 their payment would be
actuarially reduced (due to early retirement) by 11%. Their pension would therefore be reduced to
£8,900.
If the employee requested that their employer buy them AP of £1,500, this AP would also be subject to
the actuarial reduction for early retirement of 11% and would therefore be reduced to £1,335.
However, when added to their total pension of £8,900. This would offset the actuarial reduction and
provide a total pension of £10,235. It would therefore give them a greater pension amount than the
£10,000 they would receive if they did not take early retirement. The cost of buying £1500 of additional
pension is £28,980 for a 58 year old. Their employer could buy £1,500 additional pension for the
employee and pay a net MAR payment of £4,350.
The NHS Pensions Scheme Guide should allow employees to calculate the impact of the actuarial
reduction for early retirement on their pension amount. The NHS Pensions website has a section on
buying additional pension which will be useful for employees to reference - it includes an additional
pension calculator.
In light of complexity around using MAR to offset the loss of benefits due to Early Retirement, anyone
considering this option may want to take independent financial advice before proceeding.
Please note: Outside of MARS it is open to employers to offer employees "Retirement in the Interest of
the Efficiency of the Service". This is covered under section 16 of Agenda for Change.
Last update May 2016
7