Public sector redundancy payments to be further restricted

5 Feb 16

The Treasury today set out plans to further restrict public sector redundancy payments by better coordinating the rules for calculating payoffs across the civil service, the NHS and local government.

Chief secretary Greg Hands said the changes could save hundreds of millions of pounds by 2020. They include setting a maximum tariff to calculate exit payments at three weeks’ pay per year of service and capping the period that can be used to calculate redundancy payments at 15 months.

The proposals, which will also apply to teachers, police offers and firefighters, would taper lump sum redundancy payments the closer people got to retirement and set an £80,000 salary cap for calculating exit payments.

These intended changes are in addition to the introduction of a £95,000 cap on redundancy payments, which is being introduced after consultation.

Hands said the changes were part of plans to modernise the public sector workforce after November’s Spending Review.

“Reforming public sector redundancy payments could save taxpayers hundreds of millions of pounds by 2020 and will ensure that public sector workers get a fair deal by ensuring greater consistency in redundancy pay-out terms between workforces,” he said.

Currently, redundancy payments vary across the public sector, even for people with similar levels of pay and length of service, the Treasury stated. The changes would put payment terms between different workforces on a more equal footing, it added, ensuring a fairer deal for public sector workers.

Hands has also today written to all Whitehall departments setting out new guidance on the rules they must follow on pay and terms for public sector workers. These include the need for approval of pay packages above £142,500, limits on the use of confidentiality clauses and restrictions on private health insurance.

Responding to the announcement, Dave Penman, general secretary of the FDA trade union representing senior civil servants, said the changes represented “a breach of trust”.

Five years ago the union reached an agreement on new redundancy terms with then Cabinet Office minister Francis Maude that were described as a “lasting settlement” sustainable over the long term, he highlighted.

“Civil servants have the right to be consulted on changes to their redundancy terms, yet the Treasury seeks to prescribe the boundaries of the scheme without any discussion at all,” he added.

“This isn’t about efficiency or modernisation, this is simply an arbitrary decision to cut the terms and conditions of public sector workers.

“If the Treasury proposals go through, the result will be longer, more tortuous exit processes that will slow the system down to a crawl, making every civil service staff reduction a long, painful and drawn out process challenged at every stage.”

PCS general secretary Mark Serwotka added that there was no justification for the proposed changes and the union would be opposing it.

"It is utterly sickening to see the Tories treat civil servants with such contempt, rowing back on promises made just a few years ago.”

Shadow minister for the civil service Louise Haigh said the change fitted a familiar pattern for the government – "announce a decision first, anger employees and then launch a sham consultation".

“Junior doctors contracts, nursing bursaries, HMRC and BIS office closures and now a clampdown on terms and conditions for dedicated civil servants agreed only a few years ago,” she stated.

“When is this government going to start treating teachers, firefighters and civil servants with the respect they deserve and when will they realise you cannot treat your employees as an irrelevant afterthought? Terms and conditions are a bond of trust between employer and employee and they should be changed in partnership not imposed from the top.”

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