Agenda item

Report of the Chief Executive

The Committee considered a report of the Chief Executive, which set out the proposed approach in determining the value of exit packages to improve openness and transparency.

In accordance with Section 40 of the Localism Act 2011, the Secretary of State for Communities and Local Government issued guidance regarding “Openness and accountability in local pay”.  The guidance, which local authorities must have regard to, provided for elected Members to be offered the opportunity to vote before large salary packages were offered in respect of new appointments and large payments were offered to staff before leaving the authority.  The Secretary of State considered that £100,000 was the appropriate threshold for salary and severance packages requiring approval.

The Council’s Audit and Procurement Committee were therefore required under the Council’s Constitution to determine any salary or severance package for an employee of the Council of £100,000 or over, or such other sum as determined by legislation in respect of any new appointment of severance package.

Historically, the Committee had been asked to approve severance packages where the entitlement to be received by the employee exceeded £100,000.  This was consistent with the guidance. 

In May 2016, the Enterprise Act 2016 received Royal Assent, and would make further changes to public sector exit payments in order to increase openness and transparency and to also ensure that exit packages delivered best value for money for local taxpayers.  The changes, which were yet to come into force, would include capping the value of exit packages at £95,000.  When calculating the value of an exit package, it was anticipated that local authorities would be expected to calculate and include the costs to the authority as well as payments / benefits to the employee.  This would mean that pension strain costs (an additional one-off sum that an employer would be required to pay to the Pension Fund in order to allow the early release of pension benefits without actuarial reduction) would need to be included within the calculations.

It was recommended that the Committee authorise all exit packages where the benefits payable to the employee and costs to the Council exceed £100,000.  Whilst this would encompass some less senior, lower paid employees than previously covered, it was important that the Council was transparent as to the cost of all exit packages, particularly in light of the current ERVR programme, which was due to close on 31^st January 2017.

Having considered the report, the Committee indicated that, when considering packages exceeding £100,000, it would be of benefit to have an understanding of the overall costs of ERVR rounds on the authority in order to provide context of the impact on the Council.  On that basis, they requested that when reports are submitted for consideration, they include this information.

RESOLVED that the Audit and Procurement Committee request officers to report all exit packages where the benefits to be paid to the employee and the cost to the Council exceed £100,000 to the Audit and Procurement Committee for approval and that reports include information on the overall costs of ERVR rounds on the authority.