Labour MSP Jenny Marra said former NHS Tayside chief executive Lesley McLay had presided “over a board in financial chaos” and was “way behind” on meeting health service targets.
The sum she received when she was replaced in April 2018 included a payment of more than £64,000 - which equated to six months’ notice, but her contract only had a notice period of three months.
John Brown, the chair of NHS Tayside, conceded “mistakes were made” in the payment, which was awarded after then health secretary Shona Robison described Ms McLay’s position as “untenable”.
The “golden handshake” also included more than £19,000 in pension contributions that spending watchdogs at Audit Scotland said “should not have been made”.
Mr Brown confirmed the pension payment has now been repaid to the board.
But Ms Marra, convener of Holyrood’s Audit Committee, said: “The increase you put on this golden handshake is the equivalent to a teacher in a Dundee primary school, that teacher’s annual salary. How is that a reasonable decision?”
Ms Marra, who represents the North East of Scotland, added: “I don’t think the public in Tayside were looking for a golden handshake for a former chief executive who had presided over severe financial mismanagement on the board.”
Senior figures at the cash-strapped health board, which was facing a budget deficit of almost £19 million in 2018-19 despite receiving just over £50 million of Scottish Government brokerage loans in the previous six years, appeared before MSPs on the Audit Committee.
Ms Marra pressed them on the payout given to Ms McLay, asking: “You were aware the contractual entitlement was three months but you increased it to six months as part of the settlement agreement?
Former chief executive Malcolm Wright confirmed: “That is correct.”
MSPs heard from Hazel Craik, who advised the board over Ms McLay’s departure, that her solicitors had indicated she could bring sex or age discrimination claims against NHS Tayside.
Dr Annie Ingram, strategic director of workforce at NHS Tayside, said Ms McLay had indicated she “would resign if the board would agree to six months’ notice”.
Mr Brown said the board had had to “balance the cost” of agreeing a payout to Ms McLay against the “cost of going down the alternative route”.
Mr Wright added: “If this had gone to an employment tribunal - without any comment on the merit of whatever legal case might be brought - the value of a settlement an employment tribunal can give, if it was for age, if it was for sex, the caps are lifted on that.”
Ms Craik went on to state: “My view was that for the additional money that was being sought, it was a way of bringing certainty and conclusion to matters.”
She added that as money would “be spent either getting to a termination of employment or defending claims”, it was “good value” to come to an agreed payout.
Mr Brown later apologised to patients in Tayside who had waited too long for treatment, as he insisted the health board now has a recovery plan in place.
Labour’s Anas Sarwar questioned him on waiting lists in the area, saying at the end of September last year almost 3,000 people had waited more than the legally guaranteed time of 12 weeks for treatment.
He added that “most shockingly of all”, the heath board only met the 18-week target of providing an appointment at Child and Adolescent Mental Health Services (CAMHS) for 39% of young people needing help - well below the Scottish Government target of 90% being seen in this time.
Mr Sarwar said: “That is simply not good enough and there are thousands of people in Tayside who are owed an apology.”
Mr Brown told him: “I agree with you entirely Mr Sarwar, it isn’t good enough.
“The performance of the health board is of major concern to the board and everyone who works in NHS Tayside.
“That’s why we have taken such a fundamental look at what the underlying problems are, how the organisation is structured, how it is funded, how it is resourced, and tried to develop from that analysis a process of change which will deliver the services in a different way so we can improve that access.
“We’ve also got additional funding from the Scottish Government, £2.74 million in recent weeks has come in from the Scottish Government to improve the waiting times in particular, including the CAMHS.”
The health board believes its financial situation has “now stabilised”, he added, and could balance its books within three years.
Mr Brown accepted: “We need to improve access to services, we need to improve our mental health services in particular, we need to integrate health and social care at a bit more pace, and we need to develop the workforce required to support this.
“This level of change won’t happen overnight, there is a long history of problems in Tayside going back six years, so I think for us realistically to be aiming to be in financial balance and have performance improved in the next three years is a realistic ambition for us.”