COUNTY BOROUGH OF BLAENAU GWENT
REPORT TO: /THE MAYOR AND MEMBERS OF THE SPECIAL Council
REPORT SUBJECT: /REVIEW OF THE REDUNDANCY POLICY
REPORT AUTHOR: /ANDREA J. pROSSER, hEAD OF oRGANISATIONAL DEVELOPMENT
LEAD OFFICER/ DEPARTMENT /STEPHEN GILLINGHAM, CORPORATE DIRECTOR STRATEGY, TRANSFORMATION AND CULTURE
Summary Report
1.0 /PURPOSE OF REPORT
1.1
/The purpose of this report is to propose to Council a new Redundancy Policy for staff and basis of calculation for redundancy payments.
2.0 /LINK TO CORPORATE STRATEGIES
2.1
/The review of the Redundancy Policy was identified as part of the Council’s Savings Plans (Council report 02/08/13) for 2014/15.
3.0 / SUMMARY/PROPOSALS3.1 / The Redundancy Policy has been reviewed to include selection criteria and a reduced basis for calculation for redundancy payments.
3.2 / That Council considers the recommended option from the Special Joint Corporate Scrutiny Committee for the basis of calculation for redundancy payments.
4. / RECOMMENDATIONS
4.1 / That the Council approves the implementation a new Redundancy Policy (appendix 1) from the 1st May 2014.
4.2 / That the Council endorses the basis for the calculation of redundancy payments.
Detailed Report
1. / BACKGROUND
1.1 / Blaenau Gwent Council is focused on continuous improvement in times of financial challenge and continues to be committed to providing job security for all employees however; the challenging financial situation in the future will impact on the staffing establishment of the Council. In any redundancy situation the Council will ensure that the process is fair and equitable for all concerned and will ensure that all parties are consulted and communicated with at all stages. The process, procedure and boundaries for dealing with redundancies will be set out in a Redundancy Policy.
1.2 / The review of the Redundancy Policy was identified as part of the Financial Savings Plan for 2013/14 and the urgent need for financial savings detailed in the report to Council on the 2nd August 2013 ‘Initial Revenue Budget Proposals 2014/15’.
1.3 / The internal document supporting the Medium Term Financial Strategy ‘A Strategic Approach to Meet the Workforce Challenges Relating to the Financial Climate Facing Blaenau Gwent County Borough Council 2013-2016’ also planned for review of the redundancy policy in October 2013.
1.4 / The Council’s Redundancy Policy is an implied term of the contract of employment. In reviewing the policy the Council has entered into statutory consultation and negotiation with the Trade Unions.
2. / PRESENT POSITION
2.1 / BLAENAU GWENT CURRENT REDUNDANCY POLICY
The current policy has been in place a number of years, it applies to all staff including teaching and school based staff, and offers two options based on current pay (no cap on pay):
Voluntary Redundancy
Aged 55 years and over
· Immediate access to unreduced payments of Pension benefits
A redundancy payment based on the statutory calculator of a maximum of 30 weeks multiplied by 2 (up to 60weeks).
Aged 54 years and under
· Pension benefits will be deferred until pensionable age
· A redundancy payment based on the statutory calculator multiplied by 2 ( up to 60 weeks as above)
Compulsory Redundancy
Aged 55 years and over
· Immediate access to unreduced payments of their pension benefits
· A redundancy payment based on the statutory calculator (up to 30 weeks)
Aged 54 years and under
· Pension benefits will be deferred until pensionable age
· A redundancy payment based on the statutory calculator (up to 30 weeks)
The policy also states:
‘the Council will take all reasonable steps to avoid the necessity of redundancy and use it only as a last resort’.
2.2 / NEIGHBOURING AUTHORITIES
Examples of neighbouring Council’s policies and the basis for redundancy payment calculation:
Council A
· A redundancy payment up to 36 weeks
· Capped at spinal column point 49 (£806.09) per week.
Council B
· Under 55 years a redundancy payment at current salary up to a maximum of 60 weeks.
· Over 55 years a redundancy payment based on the statutory calculator (up to 30 weeks) at current salary.
Council C
· A redundancy payment capped at scp 49 up to 51 weeks.
Council D
· A redundancy payment up to 60 weeks at current salary with possibility of 3 augmented years on pension or compensation.
Council E
· Under 55 years a redundancy payment at current salary up to a maximum of 45 weeks
· Over 55 years a redundancy payment based on the statutory calculator (up to 30 weeks) at current salary.
2.3 / All Wales Context
Approximately 1/3rd of the Councils in Wales have policies using up to 45 weeks or less as the calculation for redundancy. The remaining Councils use a range of calculations up to 78 weeks.
2.4 / Project Management arrangements were put in place in August 2013 to review our Redundancy Policy and there have been various meetings, negotiations and communications with the trade unions. Communication about the plans to review the policy has also gone to staff and is posted on the intranet via the Chief Executives Newsletter. Communication has also been undertaken with head teachers.
3.0 / PROPOSALS
3.1 / That a revised Redundancy Policy is adopted and implemented, the Policy attached as appendix 1.
3.2 / The proposed Redundancy Policy will apply to all members of staff equally employed at Blaenau Gwent County Borough Council including all teaching and school based employees, Teachers and Head teachers. The policy complies with all relevant legislation and works within the guidelines set out within the ACAS code of practice.
3.3 / Plans are in place to send a report and recommend the revised Redundancy Policy to School Governing bodies in January 2014 - however they are not obliged to adopt this policy. In such cases where Governing Bodies choose to develop their own policy, legislation must be adhered to and full consultation must take place with all relevant Unions and Professional Associations. It is proposed that if a school governing body does not adopt the recommended policy then the Council will support funding based on the Council’s adopted policy - the school would then need to fund any discretionary payment outside the Council’s Redundancy Policy.
3.4 / The Corporate Overview Scrutiny were asked to consider and make a recommendation based on the following options for the revised basis for the calculation of redundancy:
Option 1
· All Redundancy payments to be based on actual earnings as opposed to “statutory” limits with an upper limit of SCP 52 (£44,751 annual salary)
· Staff who do not have access to their Pension - A redundancy payment based on the statutory calculator multiplied by 1.5 up to a maximum of 45 weeks
· Staff who are able to access their Pension - A redundancy payment based on the statutory calculator up to a maximum of 30 weeks and have immediate access to unreduced payments of their Local Government Pension Scheme/Teaching Pension Scheme benefits
· Implementation date of the policy will be the 1st of May 2014
There is no collective agreement with the trade unions supporting this option.
Option 2
· All Redundancy payments to be based on actual earnings as opposed to “statutory” limits with an upper limit of SCP 52 (£44,751 annual salary)
· Staff who do not have access to their Pension - A redundancy payment based on the statutory calculator multiplied by 2 up to a maximum of 60 weeks
· Staff who are able to access their Pension - A redundancy payment based on the statutory calculator up to a maximum of 30 weeks and have immediate access to unreduced payments of their Local Government Pension Scheme/Teaching Pension Scheme benefits
· Implementation date of the policy will be the 1st of May 2014 with a review for the basis of calculation in December 2014
Unison/GMB/Unite support this option and have indicated their inclination to enter into a collective agreement to support the implementation of the new Redundancy Policy and this basis of calculation for redundancy.
A verbal update will be given at the Council as to which is the recommended option.
3.5 / The proposed policy does not differentiate between compulsory and voluntary redundancy. It introduces criteria where the Council is faced with the need to select for redundancy - the criteria used for redundancy selection will be fair, clear, objective and non-discriminatory, precisely defined and capable of being applied in an independent way. The criteria is based on ACAS guidance and a review of comparable policies throughout Wales. Application will be fair and consistently applied to all employees who have been identified as at risk. Processes will be developed using the following:
· Attendance records; including Number of Occasions and Number of days
· Disciplinary records; (Agreed period of time)
· Capability
· Job Knowledge and Skills
· Flexibility
· Timekeeping (Discretionary)
3. / The proposed implementation date for the reviewed Redundancy Policy for all staff is the 1st May 2013. The cut of date for applications using the current policy is the 31st December 2013 – this excludes teaching staff in line with the financial planning process in schools aligned to school terms.
4.0 / FINANCIAL IMPLICATIONS
4.1 / For 2012/13 the Council spent £1, 841,139 on redundancy payments.
Option 1
In applying the proposed policy from the 1st May 2014, assuming there were half of those employees who left with access to their pension and half without access to their pension the cost of redundancy (using current pay) would be £1,150,000 saving £524,749 – an estimated 37% saving.
Option 2
If the redundancy calculation for those without access to pension was up to a maximum of 60 weeks - In applying the proposed policy from the 1st May 2014, assuming there were half of those employees who left with access to their pension and half without access to their pension (using current pay) the savings would reduce by £230,000.
Over the past few years the majority of staff redundant have been school based staff – and an examination age data for school based redundancies for 2013/14 and 2012/13 relate to the Ebbw Vale school reorganisation proposals and therefore are not typical. In 2012 / 13 25% of redundancies were less than age 55 and in 13/14 41% of redundancies less than age 55.
As part of the savings plan for 2014/15 £300k was identified and assumed a conservative reduction in the policy to 45 weeks across the board. Taking into account the relatively high percentages above and based on a draft budget of £828k, the range of budget savings, based on 30weeks and access to pension and 60 weeks for no access to pension the saving would be between £286k and £300k.
If the redundancy calculation was reduced to the statutory limits of up to 30 weeks the saving would have been £920,569.
5.0 / RISK IMPLICATIONS
5.1 / Any reduction in the terms of redundancy provisions reduces the incentive to volunteer and is therefore likely to increase compulsory redundancy situations.
5.2 / If school governing bodies do not accept the new policy and there is a risk of there being a 2 tier system and different policies for different categories of staff.
5.3 / Any change in the timeline for implementation of the reviewed policy would have a negative impact on the identified savings for the Council from 2014.
6.0 / CONSULTATION
6.1 / There has been formal consultation with the trade unions Unison, GMB, Unite and Teaching Trade Unions and Professional Organisations. At the time of writing this report the Council does not have a collective agreement with the trade unions to support the introduction of a new Redundancy Policy with a revised basis for redundancy calculation and selection criteria. In summary formal representations from Unison, GMB and Unite are set out below:
· It needs to be appreciated that at a time of such cuts to Local Authority services and jobs, it is extremely difficult for the Trade Unions to accept any changes to severance arrangements. However, most significant changes have been accepted, most particularly in respect of the removal of enhancement for ‘pensioners’
· Not be able to enter into a collective agreement with the Council if there is any reduction in the multiplier of 2 (60 weeks maximum) on the Statutory Scheme for those made redundant who are unable or unwilling to release their pension
· The proposed policy will result in Blaenau Gwent being adversely compared to the vast majority of Councils in South East Wales
· Remain concerned about the apparent differential treatment between Teaching and School Support Staff in respect of selection criteria and implementation date
6.2 / The Teaching Trade unions and Professional Organisations feedback summarised:
· Still wish to see up to 60 weeks redundancy for those teachers not accessing their pensions
· Criteria for selection for redundancy attendance, ill-health, capability, attitude have no place in a redundancy policy and any policy containing references to them would be rejected
· The removal of the December deadline is very welcome as it will give head teachers more time to consider their staffing needs post Easter
6.3 / Reports and regular updates have been presented to the Corporate Management Team on a regular basis since August 2013.