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Treasury to tackle exit payments for public workers returning to similar job

HM Treasury has launched a consultation to underpin the government’s proposals on stopping high paid public sector employees keeping redundancy payments when they come back to the same part of the public sector within a short period of time.

The ‘Recovery of Public Sector Exit Payments’ consultation will be seeking views on a number of areas including, the workforces in scope and compliance arrangements.

Recently the government announced that it is considering establishing nationally determined rules requiring high paid employees that leave and re-join the same part of the public sector within a year to return some or all of any exit payments that they have received.

These proposals would be taken forward in primary legislation as part of the Small Business Enterprise and Employment Bill with the measures being implemented no later than April 2016, with the final deadline to be decided following consultation.

These provisions will mean individuals are not over-compensated and will ensure value for money for the taxpayer. The core elements of the government’s proposal under consultation are as follows:

  • To require high earning public sector employees or office holders to repay exit payments should they return to the public sector within 12 months on a pro rata basis; following similar principles to the Civil Service Compensation Scheme, individuals would be required to repay the full amount should they return before 28 days and a pro-rata amount should they return between 28 days and 12 months
  • To apply these measures to employees moving between the same part (or ‘sub sector’) of the public sector, with the definition of these subsectors to be determined as part of this consultation; the lead option is that they should be determined by workforce and/or according to government department reporting boundaries but that the detail of these subsectors should be established in legislation to allow for the inclusion of all local government bodies and public corporations
  • Higher earners would be defined as any individual earning above £100,000; below this threshold a taper would apply – down to a second earnings threshold (proposed to be in the region of £80,000); for employees earning below this level recovery arrangements would be purely determined by the employer or through national contracts
  • These changes would represent a baseline legal requirement; they would be focussed on the highest earners in order to guard against the most unfair and poorest value for money outcomes; where employers’ existing or proposed policy go further these measures will support rather than replace them.

Danny Alexander, chief secretary to the treasury, said: “Taxpayers are rightly concerned when they hear of highly paid public sector employees leaving one job with a substantial pay off, only to return to the same or similar work in the public sector within a short time on a high salary.

“These measures will reduce the costs of this revolving door to make sure that taxpayers are getting value for money and also help protect frontline public services.”

Earlier this week local government minister Brandon Lewis told the House of Commons Communities and Local Government Committee that local authorities must be transparent over remuneration and pay for council chief executives

HM Treasury has stated that during the consultation, which will end on 17 September 2014, it wants to gather opinions on its proposals from bodies within the scope of the policy; public sector employers and their representative bodies; members of the academic community with expertise in this area; pay, pension, remuneration and HR professionals in both the private and public sectors; and anyone else who may be impacted by this consultation.

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