THE BLOG

The Trade Union Bill Is Not the Only Draft Legislation Attacking the Rights of Public Sector Workers

27/11/2015 17:48 GMT | Updated 27/11/2016 10:12 GMT

The Trade Union Bill is not the only piece of draft legislation currently attacking unions. Largely unnoticed the Enterprise Bill is shuffling through Parliament. Mostly uncontentious save one clause that should cause alarm to any public sector worker facing redundancy in the next few years.

The cap on six-figure exit payments for the best paid sounds on the surface of it reasonable enough. There aren't many who aren't offended by reports of top earners getting £500,000 or more when they are made redundant. But there's a catch - in fact three to be precise.

First, the cap only applies to the public sector - those in the private sector will still receive whatever astronomical sum they can agree. In fact the Bill even goes as far to exclude from its scope those public sector workers working for failed banks such as RBS. So as usual it is one rule for those in the public sector, another for the private sector.

Secondly, the cap has been set at £95,000 which means that those on moderate incomes but with very long service can be caught by it. For example someone would breach the cap if they had long service in the NHS and have reached the position of a nurse ward manager or paramedic team leader. This is because they might earn over £47,000 - including unsocial hours payments and London Weighting - and would be entitled to a maximum of 24 months' salary under new exit payment rules. These new rules were agreed following lengthy union negotiations at the highest levels, and which astonishingly were only concluded this February.

Thirdly, the exit cap actually includes payments that the person being made redundant, does not receive. The government has decided that the £95,000 cap will include not just the money paid directly but, for those 55 and over, for whom redundancy will trigger entitlement to their pension early, it will also include the payment the employer makes to the pension scheme so they can get their pension early.

Staff earning as little as £25,000 will be hit by the new rules, as the Cabinet Office has confirmed. The exit cap payments make a mockery of an agreement the civil service reached with Lord Maude during the coalition which was supposed to be "lasting" and "provide a fair balance between the interests of taxpayers and civil servants and, protect those approaching retirement and the lowest paid."

The impact in local government is particularly damaging especially for those aged 55 and over, who would be entitled to their pension early if made redundant. Take the case of Sally alibrarian earning just £27,000, who after 34 years service is made redundant aged 56. Her redundancy payment would be limited to the statutory allowance of £14k, but because her employer's additional pension payment is included, she will not receive her full entitlement. As a result, she would be forced to retire on a reduced pension, or come up with a large lump sum herself to bridge the gap.

Many people earning those below the national average wage of £31,000 will be affected by the Bill. This is no doubt why former Treasury Minster Priti Patel said: "Those earning less than £27,000 will be exempted to protect the small number of low earning, long serving public servants."

Staff in the public sector who are "offered" redundancy are quite often in their later years so Unison believes Patel is wrong to say that the Bill only affects a few long-serving staff. What is certain is that what sounds initially like a laudable attempt to peg back unreasonableness will affect many middle and even low-paid workers, not just 'the best paid'.

There is hope on Monday that the worst excesses of the Bill will be struck out by the House of Lords but there is also the fear that when this returns to the Commons the government will simply re-instate any hard won amendment.

Finally it's worth noting that government Ministers might be in the public sector but that they are of course exempt of these proposals.