Civil service redundancy ruling likely to be challenged by coalition government

The new coalition government is likely to appeal a High Court ruling that planned changes to civil service redundancy packages were unlawful, in a bid to axe jobs more cheaply next year, experts have warned.

The court ruled last week that Labour’s attempt to change accrued staff benefits without seeking union consent was illegal, so amendments to the Civil Service Compensation Scheme (CSCS) must be renegotiated.

Former prime minister Gordon Brown sought to introduce a cap on Whitehall severance payments so that those earning £25,000 or more would receive a maximum of two years’ salary. Whitehall staff with 20 years service can currently claim three years’ salary if made redundant. The changes were due to take effect in April 2011.

Helen Farr, an employment partner at law firm Pinsent Masons, said the new government would likely “look at an appeal first” to the ruling. The government has until early June to appeal, with a hearing possible in the next three months, she said.

“I would have thought it would be a top priority so any changes can affect future redundancies after April 2011,” she added.

Business groups, including the Chartered Institute of Personnel and Development (CIPD), have warned 500,000 public sector jobs could be shed over the next five years as the new government begins to tackle the £163bn deficit.

Farr explained that although the public sector faces immediate job cuts this financial year, the vast majority were likely to hit after April 2011, as any large-scale redundancy programme will require a huge consultation exercise lasting 90 days just to agree. “Then a lot of public sector organisations have got particular internal policies and procedures to follow when making redundancies, which can take a while,” she added.

However, Charles Cotton, rewards adviser at the CIPD, thought an appeal was unlikely to succeed, and said the coalition government could be forced into paying out the full three years’ salary to eligible workers made redundant.

“What they may do is stop this right accruing for new and existing employees,” he said. “They could say accrual rights will be frozen and from then on people will be covered under other redundancy terms.”

A Cabinet Office spokesman refused to comment on whether it would appeal the High Court ruling.

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