'Golden goodbyes' - or gilded job protection?

Announcing a slimdown in the size of the public sector is one thing. Achieving it is quite another. The government faces the prospect of stiff resistance to its plans to end "golden goodbyes" for civil servants.

Trade unions see it as a blatant attempt to strip public-sector staff of their legally agreed redundancy entitlements ahead of a job cull that could see up to 600,000 jobs being axed. Those in the private sector will see it as a battle to protect a massive inequality of treatment, with civil servants enjoying such expensive packages on being made redundant that they are effectively impossible to sack. As the coalition government is determined to push ahead with its fiscal austerity programme to bring down the UK's massive debt pile, and the civil service and public sector unions determined to resist, a potentially stormy period lies ahead, with the battle being fought on two fronts: in the courts, and in the streets.

Employment lawyers warn that the government may have to pass new legislation if it wants to end "golden goodbyes" for civil servants. But in seeking to limit the size of pay-offs, its hands may be legally tied. An equally stiff political challenge is being threatened by the civil servants' Public and Commercial Services Union. It says it will fight any job losses and changes to work and pension conditions.

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It is not hard to see why. Civil servants, depending on their length of service, can claim up to six years of salary if they are made redundant, rather than the 380 a week for 20 weeks available in the private sector. The sums involved are thus colossal. For example, in the three years 2006-8, some 15,000 civil servants were made redundant, receiving in aggregate 1 billion in severance payments.

The average 60,000 pay-out figure disguised sums of 100,000 and more being paid out. Taxpayers will be aghast at the prospect of such generous "golden goodbye" as vital public services are cut or closed, all the more so considering that the rationale for such generosity - public-sector workers being paid less than the private-sector counterparts - has become less true in recent years.

More worrying for the government is that the prospect of legislating for a change in redundancy terms are not good. An attempt by Labour to change the rules last year and shave 500 million off the Civil Service Compensation Scheme by capping pay-offs saw ministers defeated by the PCS union in the High Court through a judicial review. And even if the coalition government rushed through legislation, it would almost certainly run into legal and technical objections over such issues as accrued rights. If the government backs down it would be seen as weakness and seized upon by public-sector unions to mount resistance in other areas.

The austerity programme would stumble and almost certainly with it the confidence of financial markets in the deficit reduction plans. This has all the hallmarks of a massive, defining struggle between the government and its legions of well-wdug-in employees.