Civil Service Compensation Scheme – Government Response
28 September 2016
28 September 2016
The Cabinet Office ran the consultation from 8 February 2016 until 4 May 2016 and looked to consult with individuals and unions who represent civil servants on the reform of the Civil Service Compensation Scheme.
The Government consulted on making changes to the Civil Service Compensation Scheme so that it remains a suitable and appropriate tool.
Under the current terms, staff may be incentivised not to put themselves forward for consideration of an exit package and early access to pension provisions are deemed to be out-dated. The consultation document set out the intention for a reformed Compensation Scheme to support both the ability of staff to exit the organisation with dignity and security and the need for the employer to retain those with the skills that will be required in the Civil Service of the future.
The consultation set out the following principles:
- To align with wider compensation reforms proposed across the public sector including the Government’s manifesto commitment to prevent excessive pay-outs by ending six-figure exit packages;
- Supporting employers in reshaping and restructuring their workforce to ensure it has the skills required for the future;
- To increase the relative attractiveness of the scheme for staff exiting earlier in the process, and to maintain flexibility in voluntary exits to support this aim;
- To create significant savings on the current cost of exits and ensure appropriate use of taxpayers money; and
- To ensure any early access to pension provision remains appropriate.
The consultation document outlined a range of options for how the Civil Service Compensation Scheme could be reformed to align with the principles above and included a preferred package of reforms:
- The standard tariff to be three weeks’ per year of service; Voluntary Exit capped at 18 months’ salary;
- Voluntary Redundancy capped at 12 months;
- Compulsory Redundancy capped at 9 months;
- Only to allow employer funded top up for early access to pension where the member has reached the minimum pension age for a new entrant to the scheme (i.e. 55 at a minimum);
- To introduce a cap on CSCS payments at £95,000 in line with proposed legislation; and
- Set notice periods for all exits from the Civil Service under the CSCS at 3 months (notice periods are not set under the CSCS but clearly have an impact on total costs).
Full details for the process undertaken throughout this consultation can be found in the consultation document and the detail of the Government’s aim to achieve a negotiated agreement of the majority of the trade unions representing staff covered by the CSCS. However, in brief
- The following terms represent the Government’s formal offer to the trade unions:
- The standard tariff to be three weeks’ per year of service;
- Voluntary Exit capped at 18 months’ salary;
- Voluntary Redundancy capped at 18 months’ salary;
- Compulsory Redundancy capped at 9 months’ salary;
- To maintain flexibility in Voluntary Exit terms to offer between statutory terms and the standard tariff;
- Only to allow employer funded top up to pension from age 55 and for this to track 10 years behind state pension age;
- To offer a partial buy out option for employees above minimum pension age where the cash value of the exit payment is insufficient to fully buy out the actuarial reduction or where the full exit payment is otherwise affected by restrictions in legislation (e.g. the introduction of the £95,000 exit cap);
- Compulsory Redundancy notice periods to be set at 3 months for new starters;
- For the lower paid underpin to increase to £24,500; the Inefficiency Compensation tariff to be reformed to align with Voluntary Redundancy terms (i.e. a maximum of 18 months’ salary) as part of a package of reforms – which limits its use to cases of underlying ill health and includes amending the management code and associated guidance and confirms eligibility for alpha and Nuvos members;
- A revised 2016 Protocol for Civil Service Redundancies to help speed up the exit process. Key features are:
- stronger workforce planning upfront with an enhanced role for the Recruitment and Redeployment Working Group;
- minimum periods of formal consultation will be 45 days where there are more than 100 exits and 30 days where there are less than 100 employees;
- voluntary exit and voluntary redundancy notice should be served at the point an individual agrees to exit the Civil Service as part of an exit scheme;
- four weeks of redeployment support will be given to an individual if they do not accept voluntary redundancy; and
- the 2016 Protocol will include the Senior Civil Service.
The terms above are those of the Government’s formal offer to unions. In the event the offer is not accepted, the Government intends to implement a reformed Civil Service scheme with the following terms:
- The standard tariff to be three weeks’ per year of service;
- Voluntary Exit capped at 15 months’ salary;
- Voluntary Redundancy capped at 15 months;
- Compulsory Redundancy capped at 9 months;
- Only to allow employer funded top up to pension from age 55 and for this to track 10 years behind state pension age;
- Compulsory notice periods to be reduced to 3 months for new starters;
- The inefficiency Compensation tariff reformed to align with Compulsory Redundancy terms (i.e. a maximum of 9 month’s salary) and to revise the PIN40 guidance; and
- A set of central redundancy principles to be operated by departments to replace the current 2008 and 2014 protocols.