Agenda item

Exit Cap Payments

Minutes:

Before the Committee was a report by the Director for Digital Sustainability & Resources, copies of which had been circulated to all Members and a copy of which is attached to the signed copy of these minutes as Item 8.

 

The Head of Human Resources advised Members the Chief Financial Officer was also in attendance to answer queries on the report.

 

The Officer advised the report was a briefing paper on Exit Cap Payments brought to the Committee for Member’s attention.  The Officer outlined the three elements where were:-

 

the implementation of the £95,000 cap on exit payments that came into force on 4 November 2020;

the consultation regarding the Reform of the Discretionary Payments Regulations and Local Government Pension Scheme Regulations; and

the proposal to require higher earners to repay severance payments if they secure re-employment in the public sector within 12 months.

 

The Officer’s recommendation was as outlined within the report.

 

Members raised queries with the Officers for clarification. 

 

A Member asked the Head of Human Resources how often an Exit Cap Payment was made and whether it was a regular occurrence.  The Chief Financial responded that it was a fairly rare occurrence and did not necessarily affect only high earners.  It could affect staff who were relatively low paid and over 55, where there was a cost to pension strain.  The Officer explained that under the current Local Government Pension Scheme (LGPS), if you were made redundant over 55, you would be entitled to access your pension as though you had retired at retirement age.  However, it would not include added years, and your pension would not be actuarially reduced.  If you were made redundant at 55, those pension costs could be significant, and if you also had long service, you could be entitled to a significant redundancy payment and therefore it would be easy to breach the £95,000 limit even if you were earning a moderate salary. 

 

The Chief Financial Officer advised the Councils were in an unusual situation at present, insofar as whilst the £95,000 cap had been implemented, the LGPS regulations have not as yet been amended.  The Officer concluded by advising the Councils made very few staff redundant and hoped the new regulations would be in place towards the end of the year.

 

A Member commented that he welcomed the proposal to require higher earners to repay severance payments if they secured re-employment in the public sector within 12 months.

 

Another Member agreed pension payments could easily exceed £95,000 and asked the Officer that if you could not reduce the payment to under that amount, would that mean you would be unable to make the member of staff redundant.  The Chief Financial Officer advised that at the moment you could not make a person lawfully redundant due to the commitment within the LGPS regulations.

 

A Member agreed the Councils were in an awkward position but found it pleasing to note that not many staff were made redundant although he felt this may not always be the case.  

 

Another Member requested that any proposed changes should be agreed with the Trade Union to the staff’s best advantage.    

 

Due to the legal uncertainty and the potential impact on both the Councils and its Officers, a Member proposed the Committee at present just note the paper, until the legal implications are understood, with the paper returning to the Committee for further consideration.

 

The Officers confirmed they were happy to bring the Policy back to the Committee for consideration, but made Members aware Officers needed to comply with legislation.

 

Decision

 

The Joint Staff Committee noted the contents of the current changes and reform proposals detailed in the paper; AGREED the paper return to them for further consideration once the legal implications were understood and AGREED to delegate authority to the Head of Human Resources (in consultation with the Chief Financial Officer and the Head of Legal Services, where relevant) in order to make minor and non-consequential amendments to the Policy at any time. The policies that will need to be reviewed, following the outcome of the consultation, will potentially include the Councils’ LGPS Discretions Policy and the Managing People Change Policy.

 

 

Supporting documents: