Whitehall redundancy pay cap Bill will lead to bitter employee relations and low morale

A Bill to cap Whitehall redundancy payouts at one year’s pay will result in a bitter employee relations climate within the Civil Service, as well as plummeting staff morale, HR directors and employers’ groups fear.

The new Bill intends to bring Whitehall severance packages in line with best practice in the private sector and cap all compulsory redundancy payments at 12 months’ pay, and limit payments for voluntary exits to 15 months’ salary.

But Francesca Okosi-Arimah, the former HR director of Whitehall department Defra, and now the director of support services at East Thames Housing Association, warned the move would have a negative effect on staff morale at a time when government departments are already looking at making significant cuts at senior and junior civil service levels.

She told Personnel Today: “A lot of people are going to be unemployed. A lot of them have specialist skills that might not be transferable to the private sector. It will create a difficult employee relations climate in the Civil Service and very low morale as well.”

The introduction of the Bill comes after the government tried to impose reductions to Civil Service compensation packages in April, but a High Court judicial review ruled these changes were unlawful and had to be scrapped.

Mike Emmott, adviser on employee relations at the Chartered Institute of Personnel and Development, said he understood why the government was considering the plans, but spurned the idea.

“They will save a lot of money and make significant savings. The fact they are coming back with legislation says there is real money on the table and serious money [savings] over years,” he said.

“It’s not generally a good idea for the government to undermine contractual rights… These are legal entitlements as a result of their employment contract. I don’t think it’s a good idea for government to legislate and deny people their legal entitlement.”

The union Prospect, which represents 122,000 members in the public and private sectors, said civil servants were outraged and slammed the plans as “unlawful and undeserved”.

Prospect deputy general secretary Dai Hudd said: “Six hundred thousand staff are affected, of whom tens of thousands potentially face redundancy through no fault of their own.

“The government wants to rip up their rights in a way that would do justice to King John. But it will not work. These rights are protected by law, and bully-boy tactics will not get round that fact.”

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.

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