SOUTH CAMBRIDGESHIRE DISTRICT COUNCIL. Executive Director (Corporate Services) REVIEW OF ORGANISATIONAL CHANGE & REDUNDANCY POLICY

Transcription

1 SOUTH CAMBRIDGESHIRE DISTRICT COUNCIL REPORT TO: Leader and Cabinet 11 November 2010 AUTHOR/S: Executive Director (Corporate Services) REVIEW OF ORGANISATIONAL CHANGE & REDUNDANCY POLICY Purpose 1. The Council s Redundancy policy was last reviewed in 2007 and is now due for review in line with the timescale set then. Council in September referred this item back to Cabinet to allow further consideration of representations from the Trade Unions. In addition to those representations, the outcome of the Equality Impact Assessment and a more detailed survey of redundancy policies from other local authorities have been incorporated into this report and draft policy. 2. This is a key decision because it raises new issues of policy and it was first published in the June 2010 issue of the Forward Plan. Recommendations 3. Cabinet is recommended to (a) (b) Consider the consultation responses from the trade unions and subject to this Recommend that Council approve the revised Organisational Change and Redundancy Policy attached at Appendix 1. Reasons for recommendations 4. The revisions to this policy will ensure that the Council s approach to redundancy and its policy on calculating redundancy payments is affordable and in line with public expectations. Cabinet is asked to recommend the revised Organisational Change & Redundancy Policy be submitted for decision at the next meeting of Council on 25 November Background 5. The Council s Restructuring and Redundancy policy was last reviewed in 2007 and approved by the Resources, Staffing, Information and Customer Services Portfolio Holder at his meeting on 27 March The policy was updated at that time to reflect changes brought about by the revised Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations 2006 and to reflect the requirements of the Age Discrimination Legislation As a consequence of that review, the Council amended the provisions of its redundancy policy so that: Redundancy payments are calculated on actual week s pay, rather than the sum set out under statutory redundancy provisions.

2 A multiplier of 1½ times is applied to the redundancy payment to employees with 2 or more years continuous employment with the Council, regardless of their membership of the Local Government Pension Scheme, with effect from 1 April Broken local government service, which has not already been paid off, is taken into account in calculating the redundancy lump sum. 8. The Council has now completed the organisational change programme initiated through last year s budget round, so now is the appropriate time to bring this review forward. Considerations 9. Most local authorities, the Civil Service and many private businesses are reviewing and revising redundancy policies in the light of economic conditions and the potential burden on budgets of costly restructuring programmes. Cambridgeshire County Council revised their policy on 30 March 2010, Huntingdonshire DC are in the process of adopting a revised policy. Information from the LGE and EELGA confirms that many Councils are considering changes to the discretionary aspect and enhancements of redundancy policies. 10. The amount of any statutory redundancy payment is based on three factors; an employees age, actual salary (up to a limit of 380 per week) and length of service. The maximum number of years of employment that can be taken into account is Under the Council s current policy, the redundancy payment is based on actual weekly pay, age and length of service. Length of service includes continuous service with organisations listed in the Modification Order. The Council also includes periods of broken service, which have not already been subject to a redundancy payment (paid off). This means that an employee may have worked for SCDC for two years from , thus qualifying for redundancy payment, but they may also have worked continuously for another authority from This would give the employee reckonable service of 5 years. If they also worked for another authority from this could also be taken into account under our current policy giving a total of 10 years service. 12. A survey of redundancy policies from other local authorities (25 districts and 3 county councils) in the Eastern region has shown that: In all cases the calculation is based on actual week s pay with no limit applied. The statutory calculation method is applied, with no multiplier applied in 13 cases. 12 councils still use a multiplier but 3 are currently consulting on proposals to reduce or withdraw this. 4 councils have a cap on the maximum number of weeks With the exception of SCDC, none of the councils surveyed take account of broken service. Only continuous service at the point of the redundancy is counted. There was only one policy provided on enhanced voluntary redundancy (see below). 13. Cambridgeshire County Council reviewed its redundancy policy early in 2010 with a view to ensuring fairness and affordability. The Council, at its meeting on 30 March

3 2010, approved a change of policy to remove the 1.5 times enhancement applied to redundancy payments. 14. Two worked examples have been attached at Appendix 2 showing the redundancy settlement calculation for two notional individuals using the existing policy and that being proposed now. Further examples can be provided if helpful to members understanding of the issues arising. Voluntary Redundancy 15. In deciding whether to introduce any enhancement to redundancy policies including voluntary redundancy the organisation must consider any negative impact in relation to the protected characteristics of the Equalities Act This means that any policy where the organisation is awarding additional benefits must not be discriminatory to any particular group. If the policy does include criteria or enhancements that are either direct or indirect discrimination, these must be a proportionate means of achieving a legitimate aim. For example, the organisation wants to reduce employee numbers in a particular work area, or encourage volunteers from specific groups as part of workforce planning. 16. The Council also needs to consider whether a policy on voluntary redundancy is to be contractual or discretionary. A scheme, which is contractual, would be applied in all restructuring and redundancy exercises, a scheme that is discretionary is more flexible for the employer in terms of whether it is offered in specific restructuring cases. A voluntary redundancy scheme may result in applications coming forward from staff the Council wishes to retain and limit its flexibility to achieve the best results from a restructuring programme. 17. One Cambridgeshire district council has recently introduced a Voluntary Release scheme, for a limited period of time, to encourage volunteers for redundancy during a specific planned restructuring programme. The scheme is only open to employees on permanent contracts. The key features of the scheme are: A multiplier of 1.5 on the number of weeks to be counted for redundancy payment calculation. Guaranteed minimum payment of 13 weeks. Offered to employees in all service areas. Two stages senior managers, Heads of Service, Directors, Chief Executive and then employees from lower grades. All agreed VR s will be subject to a compromise agreement. Notice periods to be worked. This approach suits the position of this particular council in terms of its restructuring programme. However, the approach of offering voluntary redundancy across the whole organisation (blanket approach) is not suitable where particular skills and tasks need to be retained. 18. The Trade Unions have recommended that this Council consider offering an enhanced voluntary redundancy package as a means of minimising the numbers of compulsory redundancies. A recent audit of the Council s redundancy policy and procedures has also recommended that this option be considered as a means of securing staffing reductions on an agreed basis. 19. Options for an enhanced voluntary redundancy scheme could include:

4 Multiplying the number of weeks to be counted for redundancy payment calculation Multiplying the total amount of the redundancy payment by a figure of more than 1 Setting a minimum number of weeks pay to be offered 20. Cabinet in September considered this issue in some detail but concluded that it would increase the financial burden on the authority and would be inconsistent with the revised policy. In line with Cabinet s previous decision this option has not been recommended in this report or the draft policy. Options 21. The Council has a number of options: (a) To adopt the proposed draft policy (so remove the multiplier and to cease the recognition of broken service for the purpose of redundancy payment calculation). The opportunity has also been taken to amend the procedures to provide clarity and to reflect best practice. (b) To retain its current policy as recommended by the Trade Unions. (c) To adopt an enhanced voluntary redundancy scheme. (d) To adopt a policy with different combination of options Consultations 22. Council has referred this item back to Cabinet to allow for more detailed consultation on the draft policy to take place. The draft policy was discussed in some depth through the Council s formal Joint Trade Union consultation process on the 11 th October when the regional and local representatives of both GMB and Unison met with Senior Management Team. The Leader and Deputy Leader subsequently met with Trade Union representatives on the 20 th October. The Trade Unions have been offered a further follow up meeting with the Leader in early November. Should this offer be taken up, the Leader will report the outcome of that meeting directly to Cabinet. 23. Through these meetings the Trade Unions have highlighted the negative impact on staff morale that will result from the proposed revisions to the policy. As a result they have expressed their wish that the Council retain its existing policy framework but also adopt an enhanced voluntary redundancy scheme to minimise the numbers of compulsory redundancies in any future restructurings. 24. In terms of the drafting of the revised policy, the Trade Union side have requested clarity over the point in time at which an employee will qualify for a redundancy payment (in relation to broken service). The Trade Unions have also sought assurance that the Council will continue to calculate redundancy pay on actual pay. 25. In responding to these issues, the Leader and Deputy Leader have made clear that the Council will continue to base redundancy payments on actual pay with the additional protection for lower paid staff of setting a minimum 380 per week in the redundancy calculation. The Leader has also indicated a willingness to consider recognising broken service, on a discretionary basis, in the limited circumstances

5 where an individual leaves the Council s employment and returns within a short period. The attached policy has been drafted to incorporate these factors. Equality Impact Assessment 26. An equality impact assessment has now been completed in respect of the draft policy considered by Cabinet in September. An adverse impact, in relation to certain types of disability was identified as follows: The policy provides for detailed written procedures at each stage of the process which may be difficult to access for employees with certain types of literacy-based disabilities This adverse impact can be minimised through the inclusion of an explicit commitment within the policy to make reasonable adjustments for employees who are unable to deal with written correspondence and requirements due to disability. The policy at Appendix 1 has now been revised to include this commitment. Implications 27. The current redundancy policy applied by the Council is more generous than that of other local authority employers and private sector employers. The changes to the policy will bring the Council s policy into line with others, resulting in reduced redundancy costs for the Council during restructuring processes. 28. The policy has been amended to provide clarity on processes and application and to ensure that the requirements of the Equalities Act 2010 are met. This will ensure that employees have confidence in the fairness of the process. 29. The proposed changes will be unpopular with staff and perceived as a reduction in benefits, thus affecting morale. However, full consultation with the trade unions has taken place. 30. Financial See body of report the removal of the 1.5 times multiplier and the removal of general the practice of using broken service as part of the calculation of total qualifying service will result in reduced cost to the Council in the case of redundancies (see worked examples at Appendix 2) Legal The policy complies with the Employments Rights 1996 and the Equalities Act 2010 Staffing Any change to the current policy to reduce employee benefits is likely to be unpopular. However the revised policy is clearer and fair. Risk Management None Equality and EQIA has been completed and the policy revised to reflect the Diversity Equality Impact Assessment completed Climate Change recommendations from the impact assessment Yes, full EQIA completed None

6 Effect on Strategic Aims 31. There has been much interest, both within the media and by members of the public in the way that public sector employers apply redundancy benefits to staff. The recommended changes to the policy ensure that the Council demonstrates value for money in the way it works. Conclusions / Summary 32. The policy and procedure has been in place for three years and is due for review under the HR policy review timetable. Policies should be reviewed regularly to ensure that they reflect current legislation and best practice. 33. The restructuring programme initiated through the last budget has now concluded and therefore it is appropriate to review the Council s policy to take account of the financial position of the Council, and general economic circumstances. 34. Cabinet, in its consideration of the draft policy in September, was mindful both of the cost of the current scheme to the Council and of the adverse public perception of the Council from retaining a scheme that may be seen as overly generous in the current economic environment. The key amendments to the policy recommended therefore are to remove the discretionary 1.5 multiplier and to cease the recognition of broken service in most cases. 35. Cabinet also been requested to consider the development of an enhanced voluntary redundancy scheme; options for this have been set out in the report. There does not appear to be a strong business need to implement such a scheme, however, as this may reduce the Council s flexibility in any future restructuring. This option has therefore not been included in the draft policy. Background Papers: the following background papers were used in the preparation of this report: Xpert HR advisory notes and best practice policies, UNISON branch guide to best practice, redundancy policies from private sector and public sector employers. Equality Impact Assessments from other local authorities. Contact Officer: Alex Colyer, Executive Director (Corporate Services) Telephone: (01954) Susan Gardner-Craig HR Manager Telephone: (01954)