04.04.16
Councils pay out more than £220m to ex-employees in settlement agreements
Local authorities have paid out more than £220m in settlement payments over the last five years to just over 17,000 ex-employees, with many agreements including gagging orders, but the LGA says all payments were only authorised in the public interest.
An FOI request, from BBC 5 Live Investigates, revealed that 17,571 council workers have signed a settlement agreement, many of which include confidentiality clauses, between 2010 and 2015, with pay-outs worth £226.7m.
It is not clear how much of the settlement money was enhanced pay-outs for signing agreements, which can include confidentiality clauses designed to limit what former employees can say about their work.
A spokesperson for the LGA said: “These are financially difficult times for councils and as a result of their efforts to provide efficient cost-effective public services there has regrettably been a requirement to downsize their workforces.
“In this context, as good employers, councils make decisions that are based on their contractual and legal responsibilities when determining the level of severance or settlement payments made to their employees.
“In extreme circumstances payments are made beyond this level but only when the alternative would be costly or lengthy legal action.
“All payments made by local authorities are subject to legal and external scrutiny and are only authorised when they are considered to be in the public interest.
“It is also important to note that when calculating pay outs, local authorities are one of the most efficient groups in the public sector.”
The 2016 State of Local Government Finance Survey showed councils warning about having to cut services, increase charges and draw on their reserves as a result of funding cuts.
A spokesperson for the Department for Communities and Local Government said: “There is no excuse for outrageous payoffs at a time when all parts of the public sector should be finding ways to save taxpayers' money.”
They added that confidentiality clauses should not be used to “stop, stifle or control individuals from speaking out about concerns about their employer”.
The City of Cardiff Council issued the most settlement agreements, producing 2,008 in total with pay-outs worth £5.5m.
Wirral Council signed more than 1,000 agreements in 2010-12 and Sunderland City Council used 155 in 2014-15.
A previous FOI request found that 256 councils signed compromise agreements with former staff between 2005 and 2010.