Major cuts to be made to civil service severance terms

Severance pay for civil servants will be drastically cut by August in an attempt to modernise terms and save £500m.

Prime minister Gordon Brown revealed on Tuesday that redundancy packages will be cut from up to three years’ pay to as little as 24 weeks’ pay by the parliamentary summer recess, to mirror the private sector terms and save £500m over the next three years. Pay rises for senior civil servants were also capped at 1.5%.

All civil servants who have worked 20 years at Whitehall are entitled to two years’ pay in a lump sum if they take voluntary redundancy and three years’ pay if the redundancy is compulsory.

The government is currently in negotiations with public sector unions over the severance terms, and is considering removing the age-disciminatory ’50+ rule’ that states officials over 50 applying for early retirement can get immediate payment of unreduced pensions and additional years of service credited as well.

A union official close to the negotiations told Personnel Today he had doubts whether the severance terms changes could be completed within the next three months, however.

“It’s a complex scheme that we’ve been presented with that will have to go before parliament, and a few of the unions may have to ballot before it even gets that far,” he said.

A Cabinet Office spokesman the £500m savings were calculated based on the number of packages awarded in the past three years. So far more than 70,000 Whitehall jobs have been cut across Departments since the 2004 Gershon Review.

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