Managers will have until the end of October to decide whether to sacrifice their job in return for a lump sum pay-off, HSJ has learned.

In a highly unusual move, a national NHS deal will allow managers to receive up to a year’s pay if they volunteer to leave the service.

Managers who wish to leave their employer will need to weigh up carefully whether to exit immediately or wait to see whether they will be made redundant

This would equate to £97,478 for the highest paid manager on band 9 of the Agenda for Change framework or £137,500 for the average primary care trust chief executive.

But the agreement is worth only half that offered under Agenda for Change redundancy terms, of which the maximum payable sum is equivalent to two years’ salary. In both cases, the first £30,000 would be tax free.

This means managers who wish to leave their employer will need to weigh up carefully whether to exit immediately or wait to see whether they will be made redundant. They will be given a small window, from mid-September to the end of October, to make their choice.

The deal is expected to include penalties to discourage employees from taking a pay-off and then rapidly securing another job in the NHS.

NHS East of England chief executive Sir Neil McKay has overseen the deal, which is known as the mutually agreed resignation scheme. It was due to be signed off by ministers as HSJ went to press.

In a letter sent to all strategic health authority chief executives last week, Sir Neil said the scheme would supersede any local agreements, other than those developed by foundation trusts. But it will be up to local organisations whether or not they sign individuals’ applications for severance pay.

Sir Neil told HSJ: “It won’t be compulsory. Some employers will need to say ‘Mr Smith is so important during the transition that even if he would like to go, we’d like to keep him.’”

However, there is no guarantee large payouts will be permitted, even if managers express an interest and their employer agrees to it.

This is because, following wide publicity of the payout given to former Maidstone and Tunbridge Wells chief executive Rose Gibb, severance payments worth more than £50,000 have to be signed off by the Treasury.

A set of principles governing the MARS scheme has been drawn up by the NHS staff council, stressing that the process “should not be seen as a substitute for addressing poor performance, disciplinary matters, unwelcome publicity or reputational damage” (see box).

Sir Neil is working on ways to tackle the workforce implications of the transition from PCTs and strategic health authorities to GP led consortia. This should avoid a “headlong rush from people deciding they need to leave quickly”, he said.

But there are concerns the severance scheme may not entice enough managers to leave. The NHS is expected to achieve 46 per cent management cost savings, while avoiding unnecessary compulsory redundancies.

Managers in Partnership chief executive Jon Restell said from what he had seen of the scheme it was “unlikely to prove attractive to many of our members”.

He said: “It is designed to let people who are not at risk of redundancy leave if they want to, freeing up jobs for people who might be at risk but want to stay.”

Unite national officer Karen Reay advised those eligible for the scheme to seek legal advice to gain a “full understanding of what you’re signing up to”.

Unison senior national officer Mike Jackson said the union was “broadly supportive” of the attempt to avoid compulsory redundancies but had told the Department of Health the deal “might not be attractive enough”.

It is widely felt the deal is most likely to appeal to managers worried about ongoing reviews of public sector pay and pensions, those able to obtain private sector jobs, or those likely to be transferred into unappealing consortia jobs.

NHS North West chief executive Mike Farrar said: “Clearly, if it’s not sufficiently attractive to people then they won’t take it up… It’s trying to get that balance between individuals’ interests and the interests of the business.”

Mutually agreed resignation scheme

Principles agreed by the NHS staff council:

  • The mutually agreed resignation scheme is not a redundancy or a voluntary redundancy scheme
  • MARS should not be seen as a substitute for addressing poor performance, disciplinary matters, unwelcome publicity or reputational damage
  • Employees should consider the possible loss of mortgage protection insurance policies not covering resignations, and any possible impact on pensions
  • Employers must consider why the severance payment is in the public interest, why it represents value for money and how it represents the best use of funds