Civil service redundancy pay ruling could lead to more job cuts

A High Court ruling that changes to civil service redundancy payments were unlawful could lead to more Whitehall job cuts.

 Earlier in the week the court found it was illegal to change accrued staff benefits without seeking union consent, so amendments to the Civil Service Compensation Scheme (CSCS) must be renegotiated.


Civil service redundancy package changes

The former Labour government sought to introduce a cap on Whitehall severatnce 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 implemented last month and were due to take effect in April 2011.

With the new coalition government now unable to reduce the number of civil servants as cheaply as planned, public sector HR professionals warned the Civil Service will “inevitably” have to axe more jobs.

Gill Hibberd, HR director at Buckinghamshire County Council, told Personnel Today: “If HR can’t achieve the required savings through these means, they will look elsewhere.

“One obvious way is it could mean ultimately more jobs have to go to pay for the enhanced redundancy packages.”

She added: “Trade unions need to think what’s better for their members in the long-term – saving more jobs or retaining a very generous redundancy package.”

The Chartered Institute of Personnel and Development (CIPD) has warned 500,000 jobs could be lost across the public sector in the next five years as the new Conservative-Liberal Democrat government attempts to reduce the £167bn national deficit.

Stephen Moir, treasurer at the Public Sector People Managers’ Association, agreed the ruling could result in more Whitehall job losses, but as HR tried to recoup the extra redundancy expenses it could also lead to additional job cuts across the public sector.

“The Civil Service might stop commissioning major programmes and work across the country so there will be a knock-on effect for other public sector jobs,” he said.

But Roger Seifert, a professor of industrial relations and HR management at the University of Wolverhampton Business School, disputed whether more jobs could go, saying: “The balance could be that it’s cheaper to keep people rather than let them go.”

Charles Cotton, rewards adviser at the CIPD, warned the government could compensate for the higher redundancy costs through recruitment freezes and cuts to pay, benefits and training.

It is thought the new coalition government will look to appeal the ruling, but the Cabinet Office refused to comment on its plans. The CIPD suggested the government could consider freezing all future accrual and introduce a more economical severance scheme.


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