An employee’s guide to MARS settlement agreements

What is a MARS?

MARS stands for a “mutually agreed resignation scheme”. A MARS usually comes about when an employer is looking to save costs and subsequently cut down on staff. It is most common to see a MARS within public organisations such as the NHS, universities, schools or the police.

A MARS usually involves offering an employee a tax-free payment in exchange for agreeing to resign and waiving their rights to pursuing any claims against their employer in relation to their employment or its termination.

What is a MARS settlement agreement?

This is an agreement whereby an employer and employee formalise the termination of an employee’s employment, as well as the employee providing their agreement not to pursue any claims against their employer, usually in return for a termination or compensation payment.

How does the MARS process work?

The process usually involves a few stages before a settlement agreement is offered.

The first stage will likely be the MARS being advertised within an organisation, allowing eligible employees to apply to the scheme, the second stage being a review of an employee’s application, and the final stage would entail the employee being approved onto the scheme and offered a MARS settlement agreement.

Each organisation will likely have their own scheme rules and relevant eligibility criteria, so it is important to familiarise yourself with these.

What can you expect to see in a MARS agreement?

A MARS settlement agreement will typically include the following clauses:

• Waiver of claims – once a settlement has been signed, an employee will not be able to pursue any claims relating to their employment or its termination against their employer, apart from specific excluded claims.
• Confidentiality – there will likely be an obligation for the employee to keep the agreement confidential apart from permitted disclosures to their immediate family and professional advisers.
• Compensation payment – a compensation payment (calculated in accordance with the organisation’s scheme rules).
• Warranties – these are promises made by the employee to the employer.
• Tax indemnity clause.

The above list is non-exhaustive.

Do you need to take legal advice?

Yes. It is a requirement, before entering into a settlement agreement with an employer, to have the agreement explained by a qualified solicitor.

An employer would usually offer a contribution to an employee’s legal fees to have the agreement explained. The standard contribution amount usually ranges between £350 – £700 plus VAT, and the solicitor would invoice the employer directly for these fees meaning there is no cost for the employee.

At Ellis Jones, we offer straightforward and comprehensive advice. We are happy to cap our legal costs at the contribution the employer offers. We deal with MARS settlement agreements across the country on a daily basis, and therefore not only are we experienced in dealing with these kinds of agreements, but we are also able to offer flexibility in terms of how we meet with employees. We usually conduct advice over the phone or by Microsoft Teams. We understand the urgent nature of having these agreements dealt with and therefore we are able to book in appointments on the same day as your enquiry or within 24 hours should this be needed.

What happens once you have taken advice?

A typical advice call/meeting will usually take around one hour. Once this meeting has taken place, on the basis that the employee is happy with the agreement, we can arrange signing and returning of the agreement to the employer.

In most situations, the agreement can be completed electronically by using an electronic signature, however, if this is not the case we can assist with working out the easiest way for our client to sign. We will then return the agreement directly to the employer.

What to do if you need to find a solicitor to assist with your MARS settlement agreement?

Get in touch with our expert Employment team today on 01202 525333 or email employment@ellisjones.co.uk to book in with one of our solicitors.

About the author

Tayla is a London-based employment solicitor, committed to delivering clear, pragmatic advice with empathy. She specialises in settlement agreements, workplace disputes, tribunals, employment status issues, and contract reviews.

Qualified as a solicitor in March 2025, Tayla holds membership in the Employment Lawyers Association and serves as Vice Chair of the Westminster & Holborn Law Society JLD.