Public sector high earners in big redundancy share

Two-fifths of a half-billion pound public sector pay-off fund was shared by just 1,200 high earners, the spending watchdog has found.

Strathclyde Fire and Rescue chief fire officer Brian Sweeney retired and returned to his post. Picture: Robert Perry

Bodies such as the Scottish Government, councils, the NHS, police and fire services spent £561 million on redundancy and early retirement packages for more than 14,000 staff in the last two years, according to the Accounts Commission.

The vast majority of packages averaged under £50,000, but 8.3% averaged in excess of £100,000 and accounted for more than 40% of the total expenditure, the Commission found.

Early release can save money but the Commission wants more transparency about their costs and conditions, amid concerns that generous early release packages are being used to silence whistleblowers, reward executives and sweeten job offers.

West Dunbartonshire Council’s former chief executive was hired for five years but given a pension for nearly nine years’ service, the Commission said.

Concerns have also been raised about retired staff returning to their post, such as Strathclyde Fire and Rescue chief fire officer Brian Sweeney.

Mergers

Organisations must ensure that their packages do not cost more in the long run, do not deprive the organisation of vital staff and do not unfairly deprive staff of their employment rights, the Commission said.

The issue is particularly relevant today with the merger of police and fire services and colleges.

Direct public sector employment has dropped by 40,000 since 2009, with early departures accounting for around half and the rest retiring through age and health, or moving to other jobs or arms-length bodies.

The report states: “In the two years 2010/11 and 2011/12, over 14,000 public sector staff accepted some form of early retirement or redundancy, at an initial overall cost of £561 million.

“The vast majority of individual packages have an average cost of less than £50,000. But about 8.3% of packages had an average cost over £100,000, representing over 40% of the total expenditure.”

While early departures can be cost-effective “there is a price to pay” with some organisations “unaware of the true costs to revenue budgets or to pension funds”, according the Commission.

Posts vacated should not be replaced by someone on the same salary and care should be taken over re-employing the same person back into the post, the Commission said.

Restrictions

It added: “Strathclyde Fire & Rescue’s decision to re-employ its chief fire officer, immediately after he took early retirement, was the subject of a report by the Accounts Commission and attracted much media attention and criticism.

“Similar decisions have been taken in recent years by other fire and rescue and police services.

“Even where there are some savings, for example in superannuation contributions, organisations need to think about public perceptions.

“Dumfries & Galloway Council has recently announced an intention to place restrictions on the future recruitment of individuals who have accepted any form of early departure.

“Similarly, posts which are vacated by an individual taking an early departure package should not subsequently be filled by new recruitment at the same cost.”

The Commission added: “Early departure schemes are an important tool for public organisations. They are not a way of rewarding staff and should not be seen as an entitlement.”

The report continued: “At West Dunbartonshire Council the former chief executive was employed on a five-year fixed-term contract which expired during 2011/12.

“The contractual entitlement resulted in an ‘added years’ pension enhancement of eight years and 236 days.

“The auditors highlighted a lack of transparency in the decision-making process.”

Whistleblowers

Organisations should not use “compromise agreements”, which ban ex-staff from suing or speaking publicly about their experiences, as a way to avoid public accountability.

“Compromise agreements have attracted significant public interest, with fears that they can be used to silence whistleblowers,” the Commission said.

“The Scottish Government has recently emphasised that confidentiality clauses should only be used appropriately. It is essential that in reaching compromise agreements, public sector organisations adhere to the principles of transparency and accountability.”

The Commission added: “There is little point in spending money on departure schemes, only to spend more money on recruiting new staff to fill these vacant posts.”