Stay of execution for civil servants’ £95,000 redundancy cap

9 Aug 19

Current redundancy terms for civil servants will remain in place until at least the end of this year, the government has told the Public and Commercial Services Union.

The government has been trying to change the terms of the 2010 Civil Service Compensation Scheme [see box below] for the last four years and cap civil servants voluntary and compulsory ‘golden handshakes’ at £95,000.

But it has been frustrated in this aim by the unions. The PCS met with the Cabinet Office at the end of last month – soon after a change of administration in Westminster – and said on Wednesday the government had told it that changes would not be made to the compensation scheme before next year.

The Cabinet Office moved closer to imposing the cap in the Spring, outlining the changes it wanted to make. But the Public and Commercial Services Union (PCS) said it pointed out to the Cabinet last month that these proposals were “almost entirely unchanged” from those made in 2016.

The PCS has suggested to the Cabinet Office that new prime minister Boris Johnson making various spending commitments showed the political situation has changed.

“We met the employer again on 30 July when we pointed out that since the Cabinet Office, on 9 April, outlined changes it intended to make that were almost entirely unchanged from the proposals that were imposed on us in 2016, the political situation in the UK had significantly altered,” the PSC said.

In the latest meeting, the union argued the government’s previous assertion that the savings on redundancy payments were important for future financial projections “no longer stood up to scrutiny”, and so new proposals will be necessary.

They asked for the 2010 terms remain in place until the end of the year and the Cabinet Office agreed.

Union officials now want to meet Oliver Dowden, who has been promoted to minister for the Cabinet Office.

A Cabinet Office spokesperson said: "It is important to put in place sustainable compensation terms that strike a balance between providing fair redundancy payments to individuals and value to the taxpayer.

“Consultations are ongoing with trade unions on reforms to the Civil Service Compensation Scheme.”

The 2016 proposals were put into place by the government in that year, but PCS won a judicial review in 2017 with judges ruling it was unlawful for the union to have been excluded from talks, so the 2010 terms were put back in place.

Current 2010 Civil Service Compensation Scheme terms:
Voluntary redundancy
• Below normal pension age on exit – one month’s pay for each year of service up to 21 months
• Above normal pension age on exit – one month’s pay per year of service up to a maximum of six months
Compulsory redundancy
• One month’s pay per year of service up to 12 months (all staff who might face compulsory redundancy will have the opportunity to exit under voluntary redundancy when they are told their role is at risk)
Protection for low-paid workers and limits for high earners
• All staff earning less that £23,0001 (on FTE basis) will be treated as if they earn £23,000 for the purpose of calculating redundancy payments. And anyone earning more than £149,820 will have their redundancy pay calculated at this figure.

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