Many NHS staff are facing organisational change, restructuring and cost-saving measures in 2025. As pressure grows across NHS Trusts, interest in redundancy schemes and voluntary exit options has increased. These schemes can offer financial compensation and a structured exit, but each route has different rules, payment structures and legal implications. This guide explains the main NHS exit schemes, how payments work and what staff should consider before accepting an offer.

What Is NHS Voluntary Redundancy

Voluntary Redundancy (VR) allows staff to volunteer for redundancy during periods of organisational change. Approval depends on whether the Trust can release the individual without affecting essential services. Payments are based on reckonable service and weekly earnings, often including enhanced terms for long-serving employees. In some cases, a settlement agreement may be required before enhanced redundancy payments are released, as Trusts increasingly use settlement agreements to confirm that all employment rights and potential claims have been resolved.

What Is NHS Voluntary Early Retirement

Voluntary Early Retirement (VER) allows eligible NHS Pension Scheme members to retire early with reduced pension benefits. VER is generally available to staff who have reached the minimum pension age and who have pensionable service within the final salary or 2015 Scheme. Pension reductions can be significant, and staff must assess how early retirement will affect long-term income. As enhanced terms often apply to older workers, NHS employers need to ensure that VER and redundancy arrangements are structured in a way that avoids age discrimination risk. Payments must be justified by objective business needs rather than age alone.

What Is The NHS Voluntary Exit Scheme

The NHS Voluntary Exit Scheme (VES) is used during large-scale workforce change programmes. It provides a lump-sum payment for staff who volunteer to leave, even when they are not at direct risk of redundancy. Payments vary between Trusts and do not always follow full redundancy calculations. Acceptance will depend on operational requirements and the financial limits of the scheme. Some VES exits may require a settlement agreement, especially if enhanced payments are offered or if the Trust wants to ensure a legally binding conclusion to the employment relationship. Staff should be aware that upcoming reforms under the Employment Rights Bill 2025 may influence how Trusts manage VES exits, particularly around contract changes and consultation obligations.

What Is Mutual Agreement Termination

Mutual Agreement Termination (MAT) is a negotiated exit where an employee and NHS Trust agree to end the employment relationship on agreed terms. MAT is not redundancy and does not automatically follow redundancy payment rules. Terms typically include an agreed exit date and a financial payment. MAT arrangements almost always require a settlement agreement to ensure both parties fully understand the legal effect of the exit, including the waiver of potential employment claims. Because the Employment Rights Bill 2025 is expected to remove the two-year qualifying period for unfair dismissal, Trusts may rely more heavily on settlement agreements when offering MAT terms to protect against future challenges.

How NHS Redundancy Payments Are Calculated

Redundancy payments in the NHS are generally based on reckonable service and weekly earnings, with enhanced terms often available for long-serving staff. Some schemes apply payment caps or tapering rules. Pension options, notice periods, contractual benefits and age-related factors can also influence the final payment figure. Where enhanced redundancy terms are provided, some Trusts require a settlement agreement as a condition for release of the payment. Staff should check their Trust’s policy to understand how figures are calculated and whether a settlement agreement is required.

Key Differences Between VR, VER, VES and MAT

VR is based on redundancy rules and normally includes an enhanced redundancy payment. VER is an early retirement option that triggers reduced pension benefits rather than redundancy payments. VES is a discretionary scheme providing a lump-sum exit payment during major workforce changes and may sometimes involve settlement agreements where enhanced terms are used. MAT is a negotiated exit typically supported by a settlement agreement. Each route has different financial outcomes, pension implications and legal considerations. Age discrimination considerations may arise where schemes appear to disproportionately benefit or disadvantage particular age groups, meaning Trusts must justify payment structures objectively.

Should You Accept a Voluntary Exit Offer

Deciding whether to accept VR, VER, VES or MAT depends on financial considerations, pension impact, future employment plans, tax consequences and whether redeployment may be a better option. Staff should also consider the possible impact of the Employment Rights Bill 2025, which will strengthen protection around contract changes and remove the two-year qualifying period for unfair dismissal. These changes may alter negotiation leverage and how Trusts structure voluntary exit schemes. A legal review can help staff understand whether the offer is fair and whether negotiation is possible.

Why Legal Advice Matters

Exit schemes are legally complex and can have long-term effects on income, pension rights and future employment. A legal review ensures redundancy calculations are correct, pension reductions are understood and settlement agreement terms protect your position. Where a settlement agreement is required as a condition of receiving enhanced redundancy or MAT payments, independent legal advice is essential. Legal guidance also helps employees understand how upcoming changes under the Employment Rights Bill 2025 may influence their rights before and after leaving employment.

Pre-Law provides fixed-fee support for NHS staff considering redundancy, voluntary exit schemes, early retirement options and mutual agreement terminations. We review calculations, explain your rights, assess settlement agreements and help you understand the financial and legal implications before signing. If you have received information about VR, VER, VES or MAT and want professional guidance, you can contact us for fast support and practical next steps.

For more information, please call us on 01524 907100, email us at info@pre-law.co.uk or fill in our online enquiry form