Government's plans on public sector exit payments under fire

The Employment Lawyers Association (ELA) has warned that unwelcome litigation could result if the legislation to claw back exit payments from high-earning public sector staff is passed as drafted.

The government has proposed new provisions in the Small Business, Enterprise and Employment Bill to ensure that exit payments are recovered when high earners return to the same part of the public sector within 12 months of leaving.

The ELA has noted that the proposals may lead to lower settlements and increased litigation to recover payments not subject to the recovery provisions and that there may be unintended discriminatory consequences.

Maeve Vickery, partner and head of commercial and employment at Pardoes, was chair of the ELA sub-committee which examined the government's proposals: "The legislation is very poorly framed and will create doubt and uncertainty for public sector employers and employees leading to argument and litigation where none needs to exist.

"The circumstances of someone leaving a post will vary. Every instance will already be covered by a range of statutory and/or voluntary agreements and entitlements. Some entitlements may flow from collective agreements with groups of staff; dismantling them for just one person could open up a can of worms. Government has given itself an almost impossible task. It will need to provide extensive clear guidance on how its legislation is to be interpreted to avoid legal battles resulting where meaning may be in doubt."

The ELA has also raised serious concerns over the retrospective variation of contracts of employment and in relation to collectively agreed terms and agreements. Terms used, such as 'statutory payments', 'casual worker' and 'sector', are sufficiently unclear to lead to argument and dispute.

Moreover, the ELA has highlighted that, as severance payments are typically made up of a number of payments, some being statutory, it is questionable whether the entire sum could be recouped.

Vickery continued: "It pains us to say this but the draft legislation is like a poorly-prepared, hastily completed piece of homework - except that it has serious legal implications. There's a failure to distinguish between payments made on voluntary departure versus departures instigated by the employer, and uncertainty over terms such as 'same sector' regarding the person's next role.

"We can see what government is trying to do here but it risks being in conflict with statutory and contractual rights, compulsory redundancy rights, voluntary exit agreements and settlement agreements, to name but a few, if it presses ahead as things stand."