FDA receives new Civil Service Compensation Scheme proposals

The FDA has now received formal proposals from the Cabinet Office to reform the Civil Service Compensation Scheme (CSCS). The CSCS sets out the terms that are applicable in the event of either voluntary or compulsory redundancy across the civil service. The current arrangements provide for either a cash payment (for those under 50 or with less than five years' service) or for a pension paid on departure (for those over 50).

Key points

• proposed new compulsory terms:
  cash payment up to a maximum two years' pay depending on length of service;
• proposed new voluntary terms:
  cash payment up to a maximum of two years' pay, but with departments having discretion about what they offer; limited option, at employers' discretion for a non-reduced pension if the person is within five years of retirement;
• limited protection until 31 March 2011 of the existing compulsory early retirement and severance terms only for those who are made compulsorily redundant;
• FDA believes the proposals do not adequately protect individuals facing compulsory redundancy; and in particular fails to give sufficient recognition to any reserved rights;
• FDA Executive Committee meeting soon to consider union's formal response to Cabinet Office consultation;
• details of proposed new scheme can be found at: Proposed reforms of the Civil Service Compensation Scheme

Background

For some time it has been the Cabinet Office's intention to reform the CSCS arrangements because:

• they include a number of age-related provisions, some of which have been found to be in breach of age discrimination legislation; and
• the current terms are considered by the Cabinet Office to be "generous" in comparison with other public and private sector schemes.

Working together with our colleagues in the other main civil service trade unions (under the 'umbrella' of the Council of Civil Service Unions), the FDA has been involved in negotiations with the Cabinet Office for nearly a year on the CSCS terms. These have not been easy negotiations, both in terms of the complexity of the issues involved and the nature of the proposals.

The FDA's approach

The FDA's key objectives in approaching these negotiations were:

• to protect those who are genuinely facing a redundancy situation by ensuring that they are compensated adequately for the loss of their job and future income. The legal advice that the FDA (and other unions) has received indicates that for those made redundant on a compulsory basis there may be some reserved rights to the current CSCS terms, although the extent of these reserved rights is not yet clearly defined. These reserved rights would not prevent the employer changing the scheme for the future, but would, we have been advised, effectively preserve the current terms based on an individual's service up to the point of change; and
• ensure that any voluntary redundancy schemes would be sufficiently attractive to allow employers to manage any run down of staff in a way that would avoid the need for compulsory redundancies.

In support of these objectives, we argued that the cost savings the Cabinet Office is seeking could be achieved through more effective management of voluntary redundancy schemes and without the need to substantially change the existing terms for those facing compulsory redundancy. We spent a considerable amount of time exploring this during the negotiations and believed at one stage that developing an agreement along these lines would be possible. Ultimately, however, the Cabinet Office was not prepared to finalise such an agreement.

Cabinet Office proposals

The proposed new compulsory terms are based entirely on a cash redundancy payment up to a maximum of two years' pay depending on length of service. The current compulsory severance and early retirement terms will disappear after 31 March 2011. After this date, access to an early non-reduced pension will cease for those who are made compulsorily redundant.

The proposed voluntary terms are very similar, but with employers having discretion about what payment they offer to volunteers up to the maximum of two years' pay. Employers will also have discretion to offer volunteers who are within five years of pension age the option of a non-reduced pension.

Following intense negotiations over recent months, a series of measures were negotiated that would have protected, on a transitional basis beyond 31 March 2011, the current compulsory severance and early retirement terms for civil servants employed before 31 July 2007. The Cabinet Office was only prepared to offer this as part of the package if all the unions involved in the negotiations were prepared to agree to recommend the offer to members. That consensus between the unions was not possible and Cabinet Office has now withdrawn the offer of these extended transitional protections.

FDA's view of the proposals

The proposals, without the extended transitional protections:

• do not adequately protect individuals who may be faced with compulsory redundancy; and
• in particular, fail to give sufficient recognition to any reserved rights.

The FDA's Executive Committee will be meeting in the near future to consider the union's formal response as part of the formal consultation process announced by the Cabinet Office. We will consider the option of legal action in relation to the issue of reserved rights and continue to seek a negotiated agreement with Cabinet Office.

Details of the proposed new scheme can be found at: Proposed reforms of the Civil Service Compensation Scheme

Members wishing to comment on the proposed changes to the Civil Service Compensation Scheme should email: cscsfeedback@fda.org.uk