Proposal to Change the Council's Enhanced Discretionary Severance Scheme
- Meeting of Cabinet, Thursday, 7th February 2013 6.15 p.m. (Item 183.)
- View the declarations of interest for item 183.
- View the background to item 183.
A report by the Chief Executive informed the Committee that the Council was facing a considerable financial challenge to reduce its net budget. The current position was that the Council was facing a budget deficit of approximately £109m over the next three years. The projected deficit for 2013/14 was currently £39m, with exception items at £38.4m, giving a total of £77.4m for 2013/14. Consequently, this would necessitate significant changes to the manner in which the Council conducted its business and this would impact on the Council’s workforce.
The Council currently employed its workforce on national and local conditions of service. The local conditions of service were subject to local agreement through a collective agreement with recognised Trade Unions (NJC Recognition Agreement with Trade Unions). The Council had a legal obligation to consult with recognised Trade Unions and staff on options to reduce the cost of the workforce and so reduce the potential numbers of job losses. The requirements for consultation were laid out in the Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA).
The Cabinet was told that as part of the consultation, the Council was required to consult on the terms of the Enhanced Discretionary Severance Scheme. Consultation in relation to the proposal to change the Council’s Enhanced Discretionary Severance Schemehad begun on 12 November 2012. During this period of consultation, the Council had met with the recognised Trade Unions through a series of regular meetings, with the aim of seeking agreement and considering the Trade Unions feedback in relation to the Council’s budget shortfall for 2013/14.
Members noted that all employees affected by the proposal to change the Council’s Enhanced Discretionary Severance Scheme had received a letter on 23 November 2012. The letter had informed that the Council had opened consultation with the Trade Unions in relation to changing the current Scheme to a Scheme that was more affordable for the Council.
The Chief Executive introduced his report and informed that the Council had a duty to keep its Scheme under regular review and ensure that it was both practical and affordable. He advised that the application of the 2.2 multiplier was not practical or feasible. The Council would have to make deeper cuts to finance the current Scheme, placing further pressure on the Council’s budget.
Appended to the report were a range of options, with costs, for the Council’s Enhanced Discretionary Severance Scheme – based on 15% of the workforce for Members’ information.
The Chief Executive reported that there had been a number of discussions with the Trade Unions and with the Department for Communities Local Government (DCLG) with regard to the Council being allowed to capitalise the statutory element of any redundancy costs that became payable. The DCLG was considering this matter but had given a positive indication that it may allow the Council to capitalise up to £5m. The Chief Executive however, emphasised that a firm decision had not yet been made but was optimistic of a positive outcome.
It was, however, necessary for the Council to review and make a decision on its Enhanced Discretionary Severance Scheme as budget options could not fully be considered until a firm decision was made. Delaying a decision on this would come at a cost to the Council and this would need to be balanced against the risk of not being granted permission by the DCLG to capitalise. The statutory element of any redundancy costs. Moreover, potentially affected employees needed to understand what the financial implications could be to them. The Chief Executive informed the Committee that it was his view and that of the S151 Officer that it would be inappropriate for the Council to support an Enhanced Discretionary Severance Scheme that was above the statutory minimum.
The Chief Executive’s report provided the Cabinet with a range of options to change the Council’s Enhanced Discretionary Severance Scheme, including an update on the consultation process in relation to this. The Cabinet considered the options and the consultation feedback. It agreed that the Council’s current Enhanced Discretionary Severance Scheme was unsustainable going forward and Councillor P Davies proposed that the Employment and Appointments Committee be recommended to change it by applying a 1.8 multiplier instead of the 2.2 multiplier that was being applied under the current Scheme.
Joe Taylor, Unison’s branch secretary was in attendance at the meeting and was invited to address the Cabinet. Mr Taylor gave credit to the Cabinet for proposing to adopt an Enhanced Severance Scheme rather than the statutory Severance Scheme that had been recommended for adoption by the Chief Executive. Mr Taylor considered that the proposed Enhanced Scheme would attract volunteers for redundancy.
Mr Taylor referred to the cuts that the Government was imposing on the Council and also to the specific local problems the Council was experiencing and informed that a multiplier of 1.8 could provide the grounds to move forward on a voluntary basis. He reminded the Labour Administration that the Labour Party had a proud history of no compulsory redundancies in Wirral. Mr Taylor thanked the Cabinet for the decision it had made.
(1) this Administration is committed to avoiding compulsory redundancies as far as possible;
(2) in the light of the Council’s extremely difficult financial position Cabinet cannot commit to discretionary costs without identifying where the funding will come from;
(3) discussions have taken place with the minister and senior officials from the Department of Communities and Local Government regarding how the cost of severance can be met. The Council has received indications that DCLG may support a £5 million capitalisation of severance costs. Any additional funding would require us to make further savings and possible job losses.
(4) The Cabinet notes the advice of the Chief Executive to limit the cost of severance to the level of a statutory uncapped scheme. Cabinet has also listened to representations from staff and the Trade Unions to operate a severance scheme which is as generous as possible in order to avoid compulsory redundancies;
(5) as part of this Administration’s commitment to avoiding compulsory redundancies and in recognition of the commitment of our staff, Cabinet is proposing to maintain an enhanced severance scheme over and above the statutory minimum and also to maintain a scheme which is uncapped;
(6) the Cabinet would therefore recommend to the Employment and Appointments Committee, which meets on the 7th February 2013, that the Council’s Enhanced Discretionary Severance Scheme should be as follows:
(a) it will be based on the statutory scheme;
(b) it will be subject to the following enhancements:
(i) the weekly sum in the calculation will be uncapped;
(ii) the final sum of the statutory calculation (at an uncapped salary level) will be multiplied by 1.8 to a maximum of 54 weeks.
(7) The Cabinet reaffirms its support for an enhanced severance scheme and believes that the proposal set out above is the maximum the Council can afford at this time. To go any further would, we believe, require additional cuts and additional job losses. The proposal set out above means that Wirral Council will still have one of the most generous local government severance schemes in Merseyside and the North West.
(8) as part of our requirements under the Regulations to operate a severance scheme that is ‘workable, affordable and reasonable having regard to the foreseeable costs’, Cabinet further recommends that a review of the scheme proposed above takes place in December 2013.
- Cab 7-2-13 Severance Report fv, item 183. PDF 111 KB
- Appendix 1 Comparison of NW LAs fv, item 183. PDF 72 KB
- Appendix 2 - summary of options fv, item 183. PDF 33 KB
- app3a options EDS 10%_0001, item 183. PDF 555 KB
- app3b options EDS 15%_0001, item 183. PDF 558 KB
- EIA Severance 2 schemes, 20/12/2012 Cabinet, item 183. PDF 279 KB
- EIA Severance flat weeks, 20/12/2012 Cabinet, item 183. PDF 273 KB
- EIA Severance reduced multiplier, 20/12/2012 Cabinet, item 183. PDF 272 KB
- EIA Severance Statutory Capped, 20/12/2012 Cabinet, item 183. PDF 278 KB
- EIA Severance Statutory uncapped, 20/12/2012 Cabinet, item 183. PDF 281 KB