Victory! Six-figure public sector pay-outs banned
A BAN on six-figure pay- offs to NHS staff, police and town hall fat cats leaving their jobs will be announced by ministers today in a victory for the Daily Mail.
Chancellor Philip Hammond will unveil rules to ensure that public sector staff cannot walk away with more than £95,000.
Managers will be able to claw back payments made to departing staff who later return to do a similar job in an attempt to bring an end to the scandal of the public sector ‘revolving door’.
Treasury insiders said the reforms, which will come into force next summer, could save taxpayers up to £250million a year.
They follow a Mail exposé on how fat cat bosses were being paid small fortunes to walk away from their jobs, often after a record of failure.
A total of £1.8billion was paid in public sector exit payments in 2013/14, including 1,838 of more than £100,000 each.
Sources said the proposals are ‘designed to prevent boomerang bosses and the fat cats from creaming off golden goodbyes only to return for more’.
The new rules apply to the ‘large majority’ of the five-million-strong public sector workforce, including the Civil Service, teachers, NHS workers, local government staff, police officers, members of the armed forces and firefighters.
The BBC, which is not under the direct control of the Government, has voluntarily agreed to cap its pay-offs at £95,000. Controversially, however, its armies of staff will not be covered by other elements of the new regime.
Treasury officials said public sector exit arrangements currently ‘vary significantly’, including in the benefits provided for people with similar pay and length of service. The packages are often much higher than those in the private sector.
A Treasury source said: ‘ This is about ensuring ordinary hardworking taxpayers aren’t footing the bill for senior figures in the public sector getting pay-offs far in excess of the private sector.
‘There are different terms across the public sector – these changes are about consistency as well as fairness.
‘It’s long overdue that we tackle inappropriate payments at the top end by limiting expensive “golden goodbyes” and the ability to pop back up in the public sector a few months afterwards.’
The new rules include a maximum tariff for calculating exit payments of three weeks’ pay per year of service. Employers could apply tariff rates below these limits.
There will also be a ceiling of 15 months on the maximum period of salary that can be paid as a redundancy payment.
And there will be a maximum salary of £80,000 on which an exit pay- ment can be based. The rules capping payments at £95,000 will cover all types of departures, including voluntary as well as compulsory redundancy, and other severance arrangements.
The amount could include a cash lump sum or an employer-funded contribution to access a pension early. The £95,000 cap also includes any pay in lieu of notice.
At the same time, public sector employers will be able to claw back exit payments made to high earners who return to the same part of the organisation within 12 months of leaving.
In an investigation last year, the Mail revealed how, despite the worst Health Service funding crisis in a generation, NHS bosses were able to claim redundancy deals far more generous than those seen in the private sector.
Some take home two years’ worth of their six-figure salaries, plus pay in lieu of notice, when they are made redundant.
We revealed how Oxfordshire County Council chief executive Joanna Simons, who quit her £194,000 job after a scathing report about a paedophile scandal on her watch, was given a £259,000 pay-off after apparently signing a gagging clause. Other cases included that of John McIvor, who was responsible for the implementation of the 111 non- emergency NHS hotline service, which was widely condemned as a failure that put
‘Limiting golden goodbyes’
patients at risk.
He was paid £479,222.67 for 201314, the year in which 111 was introduced. Included in this was his salary for launching the service and an exit package of between £290,000 and £295,000.
It also emerged how an NHS chief executive placed in charge of struggling hospitals has received a pay- off of £410,000 on top of his £210,000 salary.
David Flory was awarded the sums as he stepped down from the NHS Trust Development Authority at a time when almost of half of trusts were in deficit.