Civil service redundancy pay will be capped under new government Bill

The government has announced it will introduce legislation to cap redundancy pay for civil servants at one year’s pay, bringing the packages in line with best practice in the private sector.

The introduction of the Bill comes after the government tried to impose reductions to the Civil Service Compensation Scheme (CSCS) in April. A High Court judicial review of these changes, launched by the PCS union, found the reductions were unlawful and had to be undone as employee agreement had not been sought.

The new Bill will now cap all compulsory redundancy payments at 12 months’ pay and limit payments for voluntary exits to 15 months’ salary. But the legislation will not affect accrued pension rights.

Under the current scheme, some long-standing employees are eligible for a severance package worth more than six years’ pay.

Francis Maude, minister for the Cabinet Office, described the current system as “untenable” and said the use of legislation to implement the reductions in payments was necessary because of the economic climate.

Maude insisted he wanted to negotiate the changes with unions and has written to the Council of Civil Service Unions to invite them to discuss the move.

He said: “Sadly, the huge deficit we inherited means there is a real urgency now for change. It is for this reason, and in the light of the current deadlock, that we have had to reluctantly start this process today.

“Had the PCS shown the same willingness to negotiate as the other five civil service unions, then today’s action might not have been necessary.”

The changes imposed in April by the government, which were opposed by the PCS, meant Whitehall redundancy packages were capped at a maximum of two years’ salary for employees earning £25,000 or more. Those who rejoined the Civil Service after receiving a severance payment were also forced to pay some of the money back.

Maude added: “I want to make it absolutely clear that we see today’s Bill as the basis for immediate discussions to start. What is on offer now is simply untenable and completely out of kilter with what is on offer in the wider public sector and the private sector.”

But Mark Serwotka, general secretary of the PCS union, described the government’s move as “disgraceful” and pledged to use “all the means at our disposal to resist” the changes.

He said: “The High Court ruled twice in our favour that it was unlawful for the government to cut civil service redundancy pay without the consent of its workforce. It is a disgrace that, simply because it failed to get its way, the government now appears to be prepared to change the law to make it easier and cheaper to sack tens of thousands of civil and public servants.

“Following the High Court decision, we immediately said we were open to negotiations to seek to reach an agreement. So it is shocking the government does not seem willing to even test whether this is possible.

“There is an alternative to these cuts and we are clear we will use all the means at our disposal to resist any attempt to make low-paid public servants pay the price for an economic crisis they did not cause.”

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