Legislation expected to cap civil service redundancy payouts

The Government is expected to introduce legislation later today (15 July 2010) aimed at reforming redundancy payments for 500,000 civil servants, the BBC has reported.

The coalition will continue its plans to force through a tough new cap to reduce the multimillion pound public sector redundancy bill.

Ministers say they want to cap the value of severance deals at one year’s salary for compulsory job losses and 15 months’ salary for voluntary exits. The existing scheme sees some payouts of more than six years’ salary, but to change it under current legislation the government needs the agreement of all six civil service unions.

The PCS union has promised to fight the plans and warned of strike action. A deal agreed by the previous Government and five of the unions was thrown out by the courts.

The union says the plans are a savage attack on the rights of its members, coming at a time when public sector workers are facing a pay freeze and reduced pension entitlements.

Francis Maude, the cabinet office minister leading the negotiations, has said that there could be room for manoeuvre on the voluntary terms and has not absolutely ruled out movement on compulsory arrangements either.

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