Public and Commercial Services Union

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.

PCS did not accept the proposals from the last government to cut the compensation scheme payments for civil servants with a cap at two years pay, a reduction in the calculation albeit with some limited protection for those earning less than £30,000. Other unions agreed those terms. PCS challenged this with industrial action and also proceeded to question the legality of the changes by taking a judicial review. 

In May the Judge ruled that the government had acted unlawfully. The amended scheme which had been imposed in April 2010 was therefore quashed with the exception of clauses dealing with those close to and overage 60.

The government were left with the option of re-entering negotiations with a view to reaching agreement and/or introducing legislation to overturn the basis on which the union won the judicial review.

The new government unilaterally announced on July 6th that, although we had won our court battle, they intended to bring forward changes to the scheme this time   by introducing primary legislation. A bill laid before Parliament on 15 July the effect of which, if it become law will cap redundancy payments at a maximum of 12 months for compulsory redundancy and 15 months for voluntary redundancy.  Early retirement and severance packages will be costed so as not to go over the cap, including lump sums.

The Bill has been laid as a ‘Money Bill’.

A second reading of the Bill is required before the Bill can receive Royal assent. We know the government intend that Royal assent will take place around October. We are however seeking urgent legal advice on the process.

Discussions have been offered to the unions to negotiate and agree a new scheme that is ‘sustainable and fair’! This may include protection for low paid staff. The proposals will certainly seek to change the current formula and are expected to be worse than those rejected by the union earlier this year. The removal of the Approved Early Retirement Scheme that happened earlier in the year may be reversed by a CSCS amendment scheme.

The government has implied that they would withdraw or repeal the Bill if an agreement is reached with all the unions.

If this legislation proceeds through Parliament in its current format the terms of payment for compulsory redundancy would be capped not at the previous three years but at the new limits, a cut of two thirds.

The calculations would apply as now but the cap would override the benefits that otherwise would apply.

The previous government’s proposals apart from an exception around age 60 are quashed. It seems that their aim is to show that this government is tougher in cutting current benefits than Labour.  

There would be a period where the current arrangements still apply. Changes are proposed to take effect from October 2010 depending upon how quickly the legislation proceeds through Parliament.

Any members with offers now should confirm that the offer still holds.

22 October 22 is the key date for current terms and in the case of compulsory redundancies the cap will apply where notice is issued after the legislation comes into force not date of departure. In the case of voluntary exits the key date is when terms were agreed between employer and employee.

The government also announced a two year pay freeze to be implemented immediately for all public sector employees, which includes civil service staff, earning more than £21,000. This indicates the loss in ‘real’ terms which will have a disproportionate impact in final pensionable pay for those receiving a redundancy package. Those earning a FTE salary of £21,000 or less will receive a consolidated increase of at least £250. However as progression will not be honoured in most cases this again will negatively impact on pay levels.

The government has announced its intention to changes the inflation rate used to calculate pension increases from the Retail Prices Index to the Consumer Price Index. We are also seeking legal advice on whether they can do this. As this will have a detrimental impact on member’s pensions. Including early retirement benefits both those taken and those deferred or frozen.

The government are seeking to make these changes at a time when they have announced major cuts across the public sector. The changes would make it much cheaper for them to make people redundant. We will of course resist the changes and also the cuts.

The employer says that the pay and recruitment freeze and arrangements that are in place as at present will help to minimise job losses but PCS believe there will be increased threats to job security overall .