A further consultation has commenced specifically in relation to exit pay reform within local government - what are the proposals and how can you comment?
This article is taken from October's public matters newsletter. Click here to view more articles from this issue.
This month has seen headlines of UK planned redundancy levels approaching 500,000 since the coronavirus pandemic began. Whilst the vast majority of the announced redundancies so far have been within the private sector, the public sector will still be affected, particularly with the pressures faced pre-Covid to meet budgetary constraints. And the issue of payments due to public sector employees on redundancies or other negotiated exits has been the source of debate for some time, with the concern being that such payments from the public purse are out of line with payments made in the wider economy.
The government has previously consulted on the issue of public sector exit payments and a cap on public sector exit payments of £95,000 was included in the Small Business Enterprise and Employment Act 2015. However, secondary legislation was required to bring this cap into force. The draft Restriction of Public Sector Exit Payments Regulations 2020 (Exit Payment Regulations) were laid before Parliament on 21 July 2020 but have not yet been brought in force.
However, in September, a further consultation was commenced specifically in relation to exit pay reform within local government. This consultation is clear that it is not in respect of the government’s position regarding exit pay reform; instead, it is limited to the impact that the proposed reform (see below) will have on (i) the regulations which currently cover exit payments within local government and (ii) the local government workforce.
The overarching framework was set out back in February 2016. The key proposals include:
In respect of pension changes, the consultation makes clear that it wants LGPS members who are made redundant over the age of 55 to have the choice as to whether they take their pension or not. The changes proposed are therefore:
There is scope under the Exit Payment Regulations for the £95,000 cap to be lifted in certain circumstances. Within local government, this would require a decision of full council but such discretion must also be exercised in line with the mandatory directions in section 5 of the HMT statutory guidance to the Exit Payment Regulations. This would require approval by the Secretary of State for Housing, Communities and Local Government. As part of this consultation, views are sought about whether these proposals are appropriate or whether there are alternative ways of meeting the same objectives.
Views are also sought on whether the existing pay policy provisions within the Localism Act 2011 provide sufficient transparency where a chief officer employed by the Authority previously received a severance payment from that Authority, or where a chief officer is in receipt of an LGPS pension.
The issue of public sector exit pay reforms seems here to stay and will no doubt cause concern to public sector employees who may see themselves being adversely affected over the coming months.
If you would like to comment on any of the issues raised within this consultation, a link to the consultation can be found here; the closing date for any responses is 9 November 2020.