Cumbria County Council has admitted that money it had earmarked to cover a multi-million pound equal pay award will not be enough to meet its liabilities.
An employment tribunal ruled in March that almost 3,000 care workers, cleaners and cooks were entitled to pay rises of up to 38% and compensation of up to £60,000 each. Unions believe the final bill could run to £60m.
The council originally set aside £8.7m when negotiating with trade unions back in 2002, but a spokesman admitted to Personnel Today that figure “won’t be sufficient” to cover the eventual award.
The council has an annual budget of about £500m, half of which is allocated to schools. Any inflated payouts will be “an enormous issue”, the spokesman said.
“We will be borrowing against our assets and looking at what services we deliver in the future,” he said. “But we want to make clear the council is a good employer and will meet its obligations.”
The council has estimated it would take the equivalent of two year’s worth of work hours to make the calculations necessary to determine exact payouts.