Larger organisations looking to reduce costs in response to the current financial situation are exploring opportunities to increase productivity, create efficiencies and reduce spending through staff restructures. In this blog, we explore one option for staff restructures called mutually agreed resignation schemes and explain how our specialist Employment Team can help employees who need independent legal advice on the settlement agreement that they have been offered as part of the scheme.
What is a Mutually Agreed Resignation Scheme?
A mutually agreed resignation scheme (‘MARS’) is a form of voluntary severance, designed to enable employees, in agreement with their employer, to choose to leave their employment in return for a severance payment.
The aim of the scheme is to create job vacancies which either do not need to be filled, or which can be filled by redeploying staff from other jobs which do not need to be replaced. The scheme can help to create vacancies which can be considered as suitable alternative roles for staff facing redundancy elsewhere in the organisation. The end result is that the employee leaves their job on agreed terms, and the employer achieves a reduced workforce and lower staffing costs.
How do Mutually Agreed Resignation Schemes work?
An employer will set criteria detailing which employees are eligible to apply for MARS which will confirm the severance payment terms that are being offered. Eligible employees are invited to apply for MARS using the employer’s form. It is normal for an employer to set a deadline for applications. Applications are then reviewed, and employees are notified whether their application has been successful or not. Successful employees will leave their jobs on a mutually agreed date. Payment of the severance payment is usually subject to the employee signing a settlement agreement.
What is a settlement agreement?
A settlement agreement is a legally binding contract between an employer and an employee that ends the employment on agreed terms. They notably include the employee making a binding promise not to sue the employer and a payment being made to the employee.
Settlement agreements must be in writing and specify the claims that the employee is waiving. Employees must receive legal advice on the settlement agreement from a qualified solicitor or legal advisor. The employer pays a contribution towards the employee’s legal fees in securing the necessary independent legal advice on the settlement agreement. With MARS settlement agreements, the employer’s contribution will usually cover the full cost of the advice so the employee will not have to pay anything themselves.
Contact our specialist MARS settlement agreement solicitors
The Employment Team at O’Donnell Solicitors has specialist knowledge and experience in helping employees to navigate mutually agreed resignation schemes and in providing the necessary independent legal advice on MARS settlement agreements.
We offer rapid appointments and a quick turnaround to ensure matters are concluded as time and cost efficiently as possible.
If you would like to speak to one of our employment solicitors about a MARS settlement agreement, please contact the Employment Team at 0161 503 5449 or e-mail Kenneth.Lees@odonnellsolicitors.co.uk.
