Monday, January 05, 2015
The Tory "cap" that is not what it seems
Today was my first day back at work for an organisation facing the prospect of further redundancies following the loss of a thousand jobs since the last General Election.
There are three things to be said about the Tory proposal for a "cap" on public sector redundancy payments as reported in the link above.
The first thing to say is that this is, in essence, an unenforceable gimmick. Whilst it is possible to limit redundancy payments by statute (for example the length of service taken into account to calculate a redundancy payment has always been limited to 20 years) it is not possible to legislate for individual settlements. Indeed, another Tory gimmick of recent years has been to rename "compromise agreements" as "settlement agreements" and to introduce a new category of confidential meeting to discuss such settlements.
In the case of a high paid employee with a credible legal claim to which compensation limits cannot be applied (such as for sex discrimination) the proposed "cap" of £95,000 - since it could not be applied to a tribunal award - could only be applied to a settlement agreement by rendering the process of negotiating a settlement otiose.
The second thing to say is that the numeracy of our Tory masters fails to impress. They are keen to point out that the £95,000 cap on redundancy payments will not be applied to those earning less than £27,000.
Many local government employers (like my own) offer redundancy payments based upon the statutory calculation (but without the statutory cap on the calculation of a week's pay). The maximum redundancy payment possible on such a basis is 30 weeks' pay, and even if an employee in such a case also received their full 12 weeks' notice as pay in lieu this would clearly be less than their annual salary of £27,000 (and therefore well short of the cap of £95,000 from which they will have so generously been exempted).
Even in those parts of the public sector which still pay more generous redundancy packages (say a month per year of service) an employee on £27,000 would need to be getting a payment in excess of 42 months (three and a half years) pay before the fact that they were exempt from the £95,000 cap was relevant to them.
The "exemption" for low paid workers from a cap on redundancy payments as the Tories propose is as meaningful as exempting Council tenants from mansion tax.
The obvious laziness of the Tory proposal leads to the third and final thing which needs to be said - which is that this proposal has nothing to do with redundancy pay, public expenditure or public sector employee relations. This is no more than a percussion accompaniment to the continuing symphony of "divide and rule", demonising a "public sector" which bears no relation to reality in order to scapegoat unionised workers for a crisis not of our making.
In this case the demonised "other" can even be made to appeal to those sorry souls in the public sector tempted to vote (against their interests) for parties of the right. We have all been angry at chunky pay offs for senior managers, and the Tories seek now to turn that anger away from themselves with half-baked proposals for a cap that couldn't meaningfully be imposed modified by an exemption that could never apply.
This won't be the last such nonsense in the next few months...
Sent from my BlackBerry 10 smartphone on the EE network.