A government cap on public sector exit payments due to take effect next month will blight the retirement of long-serving council staff and needs to be urgently reformed, says UNISON today (Thursday).
Ministers claimed the legislation, limiting payments to £95,000, was designed to reduce the level of council payouts to senior managers. But instead thousands of staff with decades of service could be caught up in problems caused by the new law, says UNISON.
Despite warning of the damaging impact of the cap, the government has ploughed ahead and now the change will come into effect on 4 November.
The new law means the £95,000 calculation will include a payment employers make to pension funds to ensure long-serving staff don’t receive reduced pensions. Any worker over the age of 55 who is made redundant will be affected by the change.
Although employees don’t directly receive the payment themselves, the legislation penalises them as if they did. This is unfair, unjustified and causing anxiety among workers who’ve given a lifetime of service to the public sector, says UNISON.
Middle-income earners taking home around £20,000 to £30,000 a year, who’ve built up their pensions over decades, are being treated as if they are after a quick payout, the union says.
Yet high earners who’ve not put in years of public service, can walk away with up to £95,000 because they haven’t built up a pensions pot, says UNISON. It makes a mockery of the years staff have worked for the public good, adds the union.
The last vote in Parliament has taken place and the final regulations are awaited.
Once this happens, there will be a 21-day window for people to finalise any pending exits – for instance, redundancies – in order to avoid being hit by the cap.
UNISON head of local government Jon Richards said: “The government must do the right thing and make sure that hard-working public servants aren’t clobbered by a poorly targeted law.
“We’re outraged that despite knowing older, long-serving staff would suffer, ministers simply ploughed on.
“The message this attack sends to public sector workers, many of whom are on the frontline as Covid infection rates rise, is that despite all you’ve done, you don’t matter.
“It’s galling that as ministers divert billions of pounds to failing private companies to fight the pandemic, the people risking all to keep us safe have been treated so callously.”
“In local government, the £95k cap includes pensions strain payments – money paid by the employer to the pension fund if someone aged 55 or over is made redundant and hence takes an unreduced early pension.
“This is money that the individual never sees – but they will be penalised anyway.
“Additionally, the Ministry of Housing, Communities and Local Government has launched a consultation on broader changes to exit payments in local government.
“These additional, terrible changes would include limiting redundancy payments to a maximum of three weeks’ pay per year of service, setting a maximum of 15 months on the amount of a redundancy payment, and setting a maximum salary of £80,000 on which an exit payment can be based.”
UNISON will continue to oppose these proposals in our response to the consultation.
We will also provide a model consultation response for branches, together with other campaign actions so that members can get involved. We are also exploring legal and political options.
For the very latest news on exit payments, please visit our exit payments web page