By Richard Johnstone | 30 September 2013
Councils could face a slew of employment claims unless ministers back down over plans to scrap the protection against dismissal given to chief finance officers, a senior lawyer has warned.
Local Government Secretary Eric Pickles announced earlier this year that the government wanted to take action to stop senior local government officers, such as chief finance officers, receiving large payoffs if they were dismissed.
Pickles announced a consultation on changes in the current local government standing orders to remove the requirement for a ‘designated independent person’ to review cases before senior officers holding statutory positions are dismissed. Pickles said this ‘bizarre bureaucratic ritual’ had led to larger payoffs for officers including chief executives, and said only a council vote should be required.
Following the consultation, which closed in March, an announcement from the Department for Communities and Local Government about whether the provision will be removed is expected soon.
But a senior local government lawyer told Public Finance that ministers would face difficulties in implementing the change.
Sarah Lamont, a partner at law firm Bevan Brittan, said it would be impossible to impose the reforms, as they require changes to individual employment contracts as well as to standing orders. Model contracts for senior officers in local government have been ‘built around’ the DIP process, she said.
‘So they [senior officers] could well have a claim if the council was to dismiss them for lack of competence or conduct. They could sue the council for breach of contract for failing to follow an expressed procedure,’ she told PF.
Lamont added that, as individual contracts need to be changed to remove the DIP provisions, it would be many years before the reforms had any impact.‘Unless you get your senior officers to change their contract – and why would they if they have that protection in their contract? – or take up new roles, it’s still going to be there as a protection.’
CIPFA has raised concerns that removal of the DIP provisions would erode safeguards that protect the duty of the chief financial officer to represent the interests of the local ratepayer to councillors.
Lamont, who specialises in local government employment cases, added that the safety net of the DIP provisions was important. ‘[Councils] can’t, on a whim, get rid of a chief finance officer who’s questioning some finance arrangement. That’s going to give CFOs a level of protection and encourage them to carry out their duties and say what needs to be said.’
CIPFA chief executive Rob Whiteman warned that the removal of the DIP had the potential to weaken the ability of a CFO to represent the interests of all parties in the council and robustly defend those of the local taxpayers.
‘At a time when councils are increasingly finding themselves having to make very sensitive decisions about service cuts and delicate funding decisions are in the balance, it seems unwise at best, if not to say reckless, to withdraw the safeguards that are designed to ensure a degree of fairness in, and the long-term sustainability of, public finances at a local level,’ he said.
A spokesman for the DCLG said: ‘The government is considering its response to the consultation, and we hope to make an announcement shortly.’
