Enhanced voluntary separation program guidelines

Transcription

1 Enhanced voluntary separation program guidelines OBJECTIVE To assist Chief Executive Officers (CEOs) manage employees who are, or are likely to become surplus to agency requirements. STRATEGIES The objective will be achieved through two employment separation strategies involving: Voluntary Severance under the provisions of the Public Sector Management (Redeployment and Redundancy) Regulations 1994 (Regulations) Compensation under section 59 of the Public Sector Management Act 1994 (PSM Act) for Senior Executive Service (SES) officers employed under Part 3, Division 2 of the PSM Act. FUNDING The Department of Treasury will fund fully the total separation payment, inclusive of the leave and payment in lieu of notice elements and make necessary adjustments to agency salary budgets in consultation with the agency. A central pool of funding will be made available in Treasury, on an emerging cost basis. Agencies can apply to have the full separation costs funded and supply evidence of the termination of employee to enable transfer via a section 25 from the Department of Treasury Administered Account. Cabinet endorsed for 100 per cent of the ongoing salary expense savings to be returned to the Consolidated Account. However, agencies willing to take-up voluntary severance offers in , can utilise the associated salaries expense savings to meet their salary expense growth cap (for those agencies that have their budgets re-based, due to above-cpi expense growth). Savings over and above the salary (and on-costs) expense growth savings will still be returned to the Consolidated Account, but will be counted towards savings resulting from the VSO. This way, the savings are not double-counted. Please refer to Attachment A for a worked example. Page 1 of 9

2 The enhanced voluntary separation offer only applies to appropriation-funded general government sector agencies. All inquiries regarding these funding arrangements should be directed to your Department s Treasury Budget Analyst. It is estimated the funding assistance provided will cover the separation of approximately 1000 surplus employees through the above strategies. TIMELINES The enhanced separation program applies from 1 July Applications should be forwarded to the Public Sector Commission no later than 29 November Employees who wish to take up this offer will need to accept a formal offer before 31 December 2013 and will be required to exit the public sector by 31 March VOLUNTARY SEVERANCE General application The enhanced voluntary separation program will operate under the Regulations, targeting up to 1000 surplus employees within appropriation-funded general government sector agencies. The targeted scheme is available to: a registered redeployee a permanent employee whose position is, or is to be, abolished, and who is, or will become surplus to agency requirements a permanent employee who is, or will become, otherwise surplus to agency requirements a permanent employee who is able to leave government employment under substituted severance arrangement. This is to include the abolition of the substituted employee s position an employee engaged on a fixed term basis that is not currently eligible for redeployment or redundancy, and with no other statutory access to compensation. This category does not include casual employees or persons engaged under a contract for service. Approval for voluntary severance to be provided to an employee engaged on a fixed term contract would only occur where a clear net benefit to Government has been demonstrated. Page 2 of 9

3 Decisions to offer a separation package will be made by the employing authority subject to approval by the Public Sector Commissioner. CEOs will be expected to determine the impact of a separation request on its operations and service delivery, and in the case of a fixed term employee, demonstrate a clear net benefit to Government. There is no limit to the number of severances that can be nominated by each agency, however, consideration and approval of requests will be determined on an first in first served basis, and may be prioritised based on the nature of the employee s employment, the potential savings for Government in the longer term and/or any Government initiative. Conditions Officers who wish to take up this offer will be required to exit the public sector no later than 31 March The PSM Act and the Regulations provide the legislative framework under which offers of voluntary severance can be made. Where approval is granted, employees will be entitled to 3 weeks pay for each year of service up to a maximum of 52 weeks, plus 20 weeks payment (or part thereof) in lieu of notice of redundancy where sufficient notice is not given. Existing legislative provisions governing re-employment restrictions within the Public Sector following voluntary severance will apply. The option of substituted severance is available for permanent employees, but must be managed by the respective agency. Agencies are expected to determine the impact of a severance request on its operations and service delivery. If more than one proposal for severance is to be submitted by an agency, they are to be prioritised. SES OFFICERS - SECTION 59 COMPENSATION General application The offer is applicable to all appropriation funded general government sector agencies. Section 59 compensation is only available to SES employees employed under Part 3, Division 2 of the PSM Act. Page 3 of 9

4 Conditions Officers who wish to take up this offer will be required to exit the public sector no later than 31 March Sections 59 and 60 of the PSM Act provide the legislative basis under which the payment of compensation to certain SES employees can be made. The compensation amount payable to approved employees will be determined by the Public Sector Commissioner, and will have regard for whether the officer has a right of return under section 58 of the PSM Act. The maximum amount payable as compensation is 12 months remuneration. Compensation under section 59 of the PSM Act will be paid in consideration of each year (or part year) of the SES officer s contract remaining. SES officers who have a right of return to the public sector would normally be entitled to voluntary severance in accordance with the Regulations following them exercising that right of return. Alternatively, under section 60 of the PSM Act they may elect to take compensation as above where they forego their right of return. To maximise the flexibility under the Government s offer, in determining payment amounts for SES officers with a right of return the following will be taken into account: the amount of severance payable under the Regulations had the officer exercised his or her right of return (where applicable); the years of service remaining on the officer s SES contract; the years of public sector service that the officer has accumulated; and the maximum compensation payable under the PSM Act (12 months remuneration). Legislative provisions governing re-employment restrictions within the Public Sector following any compensation paid will apply. Requests for compensation are not to impact adversely on agency operations or service delivery. The option of substituted compensation may be considered but must be managed by the respective agency. Any approval for a compensation payment under this offer does not entitle an SES officer with a payment in lieu of notice under section 56 (3) of the PSM Act. Page 4 of 9

5 If more than one proposal for compensation is to be submitted by an agency, they are to be prioritised. PROCESS (Refer to process charts) CEOs will be responsible for implementing and managing voluntary severance or compensation offers under the approved funding arrangements. CEOs may seek to identify potential employees to whom a severance package or compensation payment may be appropriate having regard for agency priorities, ongoing staffing needs, and individual employee skill sets and their abilities to meet those priorities and staffing needs. Proposed voluntary severance offers are to be submitted to the Public Sector Commission via the Recruitment Advertising Management System (RAMS). Where a number of employees are involved and where practical these should be submitted on the same day. Such proposals are subject to the approval of the Public Sector Commission, compliance with the provisions of the Regulations and an assessment of the employee s redeployment prospects in the wider public sector. CEOs should discuss the relevant merits of a proposed compensation payment for SES officers with Dan Volaric, Deputy Commissioner Agency Support ( ) prior to providing any commitment to an SES officer. In both the case of voluntary severance and compensation requests, CEOs will need to explain briefly how that particular request will assist in meeting potential savings for Government in the longer term. Following receipt of PSC approval, a formal offer will be made to the employee. Once the formal offer has been accepted, the agency is obliged to notify Treasury. Treasury will perform a reconciliation, make final payment to the employee and adjust the agency s budget. Agencies must confirm the acceptance of an offer made, the date of cessation, and the actual severance/compensation and leave amounts paid in RAMS. Page 5 of 9

6 ATTACHMENT A Worked Example: Using the Voluntary Separation Program to Achieve the Salaries Expense Growth Cap KEY POINTS 1. Treasury will fund, on an emerging basis, the full cost of voluntary severances; 2. separately to that, agencies budgets will be re-based to CPI growth in salaries expenditure; 3. severances are a tool to assist agencies in complying with their CPI salaries cap accordingly, agencies will be able to retain the savings from voluntary severances up to their re-based budgets in point 2 above; and 4. if agencies achieve savings from voluntary severances over and above what they need to in order to comply with the CPI salaries cap, then these excess savings will need to be returned to the Consolidated Account. Worked Example 1 Agency A has an estimated outturn for salaries expenses in of $30 million; Agency A s current forward estimates include growth of 5% in salaries expenses in , taking salaries expenses in that year to $31.5 million; as the CPI cap only allows for growth in salaries expenses of 2.5%, this means that salaries expenses in are now capped at $30.75 million; as part of the Budget, agency A s salary expenditure will be re-based to $30.75 million, with savings of $750,000 (i.e. $31.5 million minus $30.75 million) centrally held by Treasury; Agency A subsequently identifies 15 FTEs for voluntary severance at an average payout (including leave and separation payment) of $100,000 per FTE (so total separation cost of $1.5 million); Treasury will fully fund the $1.5 million cost of the voluntary severances; Page 6 of 9

7 as a result of the 15 voluntary severances, agency A achieves ongoing expenditure savings of $1.2 million per year (based on an average salary (excluding leave and separation payment) of $80,000); of the $1.2 million in ongoing expense savings, agency A can put $750,000 towards achieving the CPI cap on salary expense growth as that is what is already held centrally by Treasury in respect of agency A; and Agency A s excess savings of $450,000 (i.e. $1.2 million minus $750,000) will need to be returned to the Consolidated Account. Page 7 of 9

8 ENHANCED VOLUNTARY SEPARATION PROGRAM SEPARATION WITH VOLUNTARY SEVERANCE (PERMANENT AND FIXED-TERM EMPLOYEES) Consider Voluntary Severance Requests Submit Nominations to PSC Severance Offer Severance Acceptance and cessation of employment Establish and provide internal documentation criterion and processes. Assess requests and confirm eligibility. Determine impact on agency operations or service delivery. Identify how severance will assist agency/government meet savings. In the case of a fixed term employee, demonstrate a clear net benefit to Government. Consult with employee regarding potential severance. Recommend employee seeks financial, taxation and/or superannuation advice. Prioritise requests for severance. Enter and submit employee severance request details on RAMS. Requests are to be prioritised. Estimated value of severance payment and accrued leave payment amounts to be provided. For substituted severance arrangements, confirm the name of the surplus employee who is being redeployed into the job formerly held by the employee seeking voluntary severance; whether that person is an internal or external redeployee, and if the latter, their referring Department; the title of the placement position, and the proposed placement date. Identify under approved scheme field that request relates to the approved scheme titled 2013 Severance Offer. Detail business case identifying how employee is surplus to agency requirements. Following receipt of PSC approval, provide formal offer to employee. Offer to notify employee of effective date of resignation (no later than 31 March 2014). Recommend employee seek access to relevant financial, superannuation and ATO advisory services. Formal acceptance of severance offer required from employee to confirm: o acceptance and date of resignation. o period of employment restriction, and o officer has had opportunity to receive financial advice. Update RAMS to confirm above. Notify Department of Treasury to make payment and perform reconciliation. Adjust establishment and budget reporting for each approved voluntary severance. Page 8 of 9

9 ENHANCED VOLUNTARY SEPARATION PROGRAM SEPARATION WITH COMPENSATION Consider Requests For Compensation AGENCY / PSC CONSULTATION Submit Nominations to PSC CEO to discuss proposed early termination of SES contract and payment of compensation with employee. Determine impact on agency operations or service delivery. Identify how compensation will assist agency/government meet savings. Prior to any commitment being made to an SES Officer seeking compensation, CEO/agency representative is to consult with the PSC on the appropriateness of a compensation offer being made. Following receipt of PSC s in principle support, obtain from employee s who have an entitlement to a right of return under section 58 of the PSM Act, their formal election (under s60) to seek compensation rather than exercise that entitlement. Ensure employee seeks financial, taxation and/or superannuation advice. Enter and submit a request seeking compensation using the voluntary severance screens on RAMS. Requests are to be prioritised. The estimated value of the compensation payment and accrued leave payment amounts are to be provided. Identify under approved scheme field that request relates to the approved scheme titled 2013 Severance Offer. Detail business case identifying how employee is surplus to agency requirements. Separation Offer Following receipt of formal approval by PSC (via RAMS), provide a formal offer under s59 to the SES officer. The offer is to notify the employee of the effective resignation date (no later than 31 March 2014). Separation Acceptance and cessation of employment Formal acceptance of separation offer required from employee to confirm: o acceptance and date of resignation. o period of employment restriction, and o officer has had opportunity to receive financial advice. Confirm offer and acceptance to PSC (via RAMS). Notify Department of Treasury to make payment and perform reconciliation. Adjust establishment and budget reporting for each approved compensation separation. Page 9 of 9