Agenda item

Ruth Bagley, Chief Executive, outlined a report setting out proposed changes to the discretionary elements of the Council’s redundancy payment scheme.

The Committee was requested to consider and agree the following suggested changes to the scheme:

• Reduce the levels of redundancy payment through reducing the current redundancy multiplier of 2.5 to 1.5 and capping the maximum number of weeks payable from the current 75 weeks to 30 weeks or
• Taking note of feedback from Trade Unions, adopt a different model.

The Chief Executive discussed the background to the proposal and the consultation process that had taken place.  The purpose of the consultation was to address the need to balance a fair employment offer for staff with the need to reduce future budgets, whilst addressing the increased demand for services.  The Committee was reminded that a Planning for the Future exercise was undertaken between 2010 and 2012 and staff numbers had subsequently reduced by measures which included voluntary and early retirement.  It was clear that in the resulting smaller, less flexible organisation, further change was needed and restructures had been necessary. Whilst savings approaching £50 million had been made since 2010, further savings of £35 m were required in the years 2015 to 2019.

It was highlighted that although the cost of redundancy payments could eventually be recoverable through savings, the payments placed a significant charge on the Council’s budget and could attract public criticism in times of austerity. Some employers had adopted the national statutory formula for calculating redundancy payments but some chose to enhance this formula.  In considering budgetary issues, an initial report to Corporate Management Team (CMT) had indicated that the Council’s redundancy payments were falling out of step with some other authorities and there was an opportunity to reduce these costs.

The Chief Executive advised that since all Council Officers had a potential interest in the redundancy payment scheme, an independent report was commissioned from the Council’s internal auditors who were asked to recommend a revision to the scheme that would offer affordability to the local taxpayer whilst ensuring acceptable staff recruitment and retention. The report and recommendation were based on the auditor’s report.

Members considered the results of the subsequent benchmarking exercise that had been undertaken which made comparison with more than 40 other local authorities and public sector bodies, and the methodology used in calculating redundancy payments.  The exercise included the consideration of weekly pay, the redundancy multiplier, the application of statutory age bands versus one that used a standard multiplier irrespective of age, and the question of capping.  The analysis identified a number of proposals for consideration set out in the report and it was noted that a discretionary multiplier of 1.5 was the average amount used by councils, and this assisted in recruitment and retention as it fell above the statutory minimum.  Some Councils had adopted a lower option for the multiplier and higher for the number of weeks capped or vice versa. In some cases Authorities had opted for lower levels for both or higher for both.

The Committee was advised that the payment scheme or a change to it did not form part of the Council’s contractual arrangements.  The Council had the option to adopt the statutory redundancy scheme but having reviewed the options it was proposed that a discretionary multiplier of 1.5, a cap of 20 years’ service and a 30 weeks’ cap was applied and the Committee was asked to agree these combinations. This revision would enable the Council to provide a scheme that was significantly above statutory levels of redundancy whilst at the same time reducing the financial burden imposed by future redundancy costs.

The Chief Executive advised that the Council had the option to implement the scheme without notice or build in a delay so that consultations that were well under way could be accommodated and the latter was the preferred option.  It was therefore recommended that the revised scheme take effect from 1^st April 2015, subject to any restructure consultations which had been fully launched (i.e. approved by CMT and sent to staff) by 6 February 2015, and where the respective members of staff would receive their redundancy payments before or on 30 June 2015, being considered under the existing redundancy payment scheme.

Members were advised that the consultation was issued to all staff on 5^th February, 2015, both across the Council and in schools.  Trade Union representatives were also sent a copy of the proposals for consideration and comment.  All staff were given an opportunity to attend an information session during the week beginning 9th February 2015. The Chief Executive had advised that at the close of the consultation on 9^th March, only 3 individuals submitted a response.  Trade Unions had on behalf of their members requested a considerable enhancement to the proposal which would have meant that the Council remained an outlier from the significant majority of local authorities within the benchmark report.  It was noted that following discussion with senior managers, Trade Unions had advised they would undertake a survey their members on an alternative proposal as follows: 

1.  Reducing the levels of redundancy payment through reducing the current redundancy multiplier of 2.5 to 1.75 and capping the maximum number of weeks at 30 or:

2.  Reducing the levels of redundancy payment through reducing the current redundancy multiplier of 2.5 to 1.65 and capping the maximum number of weeks at 35.

The detailed outcome of the survey had not been received.

Staff had concerns around the capping arrangements and the Trade Unions had requested a longer period of implementation. It was noted that none of the Unions had made any comment on the effective date.

Members were advised that staff who were able to demonstrate by 28th February that their post could be redundant with effect from 30th June subject to there being a sound business and financial case without disruption to the service, would be eligible to be considered for redundancy under the existing scheme.  The Chief Executive advised that a small number of applications were received for voluntary redundancy and these had been considered by CMT in the usual way. Some were agreed whilst others were rejected. It was clear that staff were naturally not happy with the less favourable redundancy proposals but the revised scheme reflected what other Council’s had implemented.

In the ensuing debate Members raised a number of comments/ questions: 

·  Would the terms be applied in the same way for both voluntary and compulsory redundancy schemes? It was confirmed that this was the case.

·  Had other options been considered? It was confirmed that other options had been considered but the analysis had generated three suggested options for consideration as set out in the report.

·  What was the average cap for other Labour run Councils? Two Labour Councils benchmarked were reported to have a cap of 104 weeks but the suggested cap was comparable to the average cap and was not out of step with many other Labour Councils.

·  Could the Committee decide to place a cap on the cash value? Members were advised that this option had not formed part of the consultation and was not before the Committee as an option.

·  How was the variable multiplier affected by age? The age bands would remain- in the proposed scheme the multiplier would be 2.25 after the age of 41 yrs and reduce to 0.75 at age less than 22 yrs.

·  Would the cap on years be changed? The current cap was set at 20 yrs and this would remain the same under the recommended levels. It was felt that a higher cap could be discriminatory against women.

·  Could an example be given of the affect of a revised cap to 30 weeks pay where the staff member was a high earner with long service? The example was given of a staff member who would hit the 30 weeks cap with a reduced multiplier of 1.5. The resulting redundancy payment under the proposed scheme would be approx £91k rather than £200k under the existing scheme.

·  How did this calculation meet the weekly pay cap of £470? It was explained that this figure represented the amount used in a statutory redundancy calculation only.

·  How did Central government redundancy schemes compare with the proposed Slough scheme?  The Civil Service schemes had been reduced but broadly at a level above those set in Local Government.

The Committee was reminded that the proposed option was for a discretionary multiplier of 1.5 and a cap of 20 yrs and 30 weeks. There was no proposal to change the statutory minimum weekly pay. Members deliberated and agreed these proposals.

Resolved-    That the Committee agree that the Council’s Redundancy Payment scheme be amended as follows:

(a)  That the current redundancy multiplier be reduced from 2.5 to 1.5.

(b)  That the cap on the maximum number of weeks payable under the scheme be reduced from 75 weeks to 30 weeks and that the cap on years be retained at 20 years.

(c)  That the revisions to the scheme be implemented from 1^st April 2015, subject to any  restructure consultations which had been fully launched (i.e. approved by CMT and sent to staff) by 6 February 2015 and where the respective members of staff receive their redundancy payments before or on 30 June 2015 will be considered under the existing redundancy payment scheme.