Public and Commercial Services Union

Last updated: 31 January 2010

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A. What is the compensation scheme?

The civil service compensation scheme (CSCS) is, in effect, the redundancy payment and early retirement scheme for the civil service and non departmental public bodies and certain other public bodies.

B. Who will be affected

The civil service compensation scheme will be relevant to members working in the civil service, or in any NDPB or public body which is part of the principal civil service pension scheme (PCSPS).

It will affect anyone (with at least two years’ service) who is made redundant in the future. This includes fixed term appointments that are not currently covered.

C. Are members transferred to another employer affected?

The civil service compensation scheme is also very relevant to members who may be TUPE transferred into other organisations in the future. For those already transferred the current scheme forms part of their conditions of employment contract which is protected by TUPE.

D. What are the main proposed changes?

The main changes from 1 April 2010 are the terms of payment for compulsory redundancy are cutting current benefits. The new changes are based on a formula relying upon length of service and salary rather than age. There is no early payment of pension unless you pay for it. There is a cap of payment for those well under pension age of the greater of £50,000 (or if less 36 months pay) and 24 months pay. For those over pension age the payment will be the greater of £12,500 (or if less, 9 months pay) and 6 months pay. For those close to pension age there is a tapering mechanism of compensation

Under the current arrangements there are aged based payments and a generous early retirement arrangement for over 50’s. The maximum payment is 3 years salary but for those with pre-87 rights it can be up to 6 years. More information on the changes can be found on the civil service website.

E. How are members affected?

The majority of members will be worse off under these proposals. It is the case that, in a compulsory situation, those over 60 who currently are quite badly treated under civil service compensation scheme will get better terms because of the impact of new age discrimination legislation.

It is also potentially the case that those with short service and those under 35 might think the new proposals are better. But as they get older that very rapidly ceases to be the case.

The Cabinet Office proposals would place everyone at greater risk of compulsary redundancy and outsourcing. 

The changes would make job cuts and privatisation easier for the employer. They make everyone more vulnerable to redundancy in the future as detrimental voluntary redundancy terms means less people are likely to opt for them and compulsory redundancies may be a route the employer therefore goes down.

F. Are the proposed changes legal?

The employer says that these changes are legal and are derive from ministerial discretion but PCS have taken legal advice on all aspects of the proposals including accrued rights, contractual obligations and have started a judicial review process.

G. Why are the changes happening?

Management say that the changes are due to age discrimination and modernisation but PCS believe that this is cost cutting in preparation for more job losses in the future.

H. When will the proposals take effect?

There will be transitional terms for those with pre-July 2007 service. Changes are proposed to take effect from 31 March 2011 in the cases of ‘genuine compulsory redundancy’ and 1 April 2010 for ‘voluntary’ payments.

However, all members with offers now and going forward need to confirm that the offer still holds.

I. Does this mean there will be a lot of redundancies?

The employer says that the same arrangements are in place as at present but PCS see this as a threat to job security paving the way for a lot more job losses, compulsory redundancies on the cheap.

J. Does the civil service job security protocol still apply?

The civil service protocol on job security stands and the employer will still be committed to trying to avoid compulsory redundancy but PCS expect the changes will make it more difficult for members ‘at risk’ of redundancy.

K. Will the same terms apply across the civil service?

Not necessarily, the compulsory terms will be the same for all areas, however subject to a maximum of 2 years pay the voluntary terms are up to the employer. They could even be as low as statutory redundancy levels.

L. Will there still be voluntary redundancies?

Yes but it will depend upon how the employer wants to make up a package. In theory but unlikely in practice they could be higher than compulsory terms but still subject to a 2 year cap.

M. Will there still be payments for dismissals on inefficiency grounds?

The current compensation arrangements for people leaving employment on the grounds of limited efficiency will continue to apply for now; these are not the subject of the present proposals, although there is undoubtedly an employer agenda to attack these in the future.

N. Does this mean changes for medical retirement or pensions?

There are no changes to the ill health retirement scheme or the pension scheme after age 60. The changes apply to early retirement and redundancy situations.

However this does not rule out possible proposals for changes in the future especially on pensions where the media and political attacks on our pensions continue to increase.

O. What if i want to rejoin the civil service or another employer that offers the PCSPS at a later date?

Rules will be tightened as such that severance will be repaid pro-rata where re-employment occurs during the notional period of the payment. The Cabinet Office will also explore the feasibility of extending this to consultants.

P. What are the views of the Conservative Party?

Francis Maude, Shadow Minister for the Cabinet Office, has said "The Government has recognised that the current levels of Civil Service severance payments are unsustainably high.

Many people are struggling financially as a result of the recession and it is simply indefensible that their taxes are being used to fund public sector redundancy payments which are inflated far above private sector levels. A Conservative Government would work With the public sector unions to reduce the levels of severance payments in the public sector to a level more akin with the private sector."

Q. Impact of CSCS on part-timers

The new CSCS will pay benefits when a member has a minimum of 24 months service.  Service for the purpose of the CSCS should not be confused with reckonable service for pension purposes under the PCSPS.

Pay for the purposes of the CSCS will be determined as the average of the individual’s actual pensionable earnings over the last 24 months of service.

Cabinet Office are clear that a redundancy payment is for loss of office and is not a long service award.  New rules are also non-age discriminatory.

R. nuvos and the CSCS

When nuvos was introduced for new entrants from 30 July 2007 it was made clear that the provisions of the CSCS did not apply as at that point no-one had built up at least one year’s qualifying service to be eligible for FES and CES benefits (PC 283 August 2007).  Post 30 July 2007 joiners would not have built up enough qualifying service to be eligible for FER or CER benefits. Read further information regarding this.

4 December “response to the consultation” makes it clear that nuvos members will now have access to the same benefits as everyone else from 1 April 2010 in a redundancy situation, and provided there is two years qualifying service. 

PCS policy remains that we want to see the best possible redundancy protection and compensation for current nuvos members and those who join in the future.