Monday, 23 March 2020

Glasgow - Making Staff Pay For Someone Else's Mess




Here's the full report to Glasgow's City Administration Committee which has been asked to approve a new round of voluntary redundancies to help pay for the cost of replacing the Council's 'unfit for purpose' WPBR pay scheme.

The key points which jump out to me are:

Paragraph 2.8 - the report suggests that the practice of 'added years' should be dropped which is probably a good thing because the major beneficiaries of 'added years' in the past have been senior council officials.

Paragraphs 2.10 and 2.14 - front-line staff are unlikely to be eligible for the scheme as they are regarded as essential or 'key workers' and so their jobs are more likely to be replaced.

Paragraph 1.5 - the report does not apply to teachers, but does not explain whether the difference in Conditions of Service is more or less favourable (eg in terms of added years) to that employee group. 

  


Glasgow City Council
City Administration Committee


Report by Director of Governance and Solicitor to the Council

Contact: Robert Anderson, Head of Human Resources, Ext: 75179

LAUNCH OF A COUNCIL-WIDE VOLUNTARY REDUNDANCY SCHEME

Purpose of Report:

To seek Committee approval to offer voluntary redundancy to employees across the Council whose severance can be justified by a business case, in an exercise, whose objective is to achieve significant savings over the next three financial years.

Recommendations:

CAC is invited to approve the following recommendations:-

(I) that a voluntary redundancy exercise is launched as soon as is practical, across the Council to provide severance dates over the next three financial years and with the objective of achieving an overall headcount reduction;

(II) that responsibility for the operational governance of the exercise is placed with the Workforce Planning Board and that it provides regular updates on the progress of the exercise to the relevant Committee; and

(III) that the scheme on offer does not attract added years but that all other aspects are as currently defined by Council policy.

Ward No(s): Citywide: 
Local member(s) advised: Yes  No  consulted: Yes  No 

PLEASE NOTE THE FOLLOWING:

Any Ordnance Survey mapping included within this Report is provided by Glasgow City Council under licence from the Ordnance Survey in order to fulfil its public function to make available Council-held public domain information. Persons viewing this mapping should contact Ordnance Survey Copyright for advice where they wish to licence Ordnance Survey mapping/map data for their own use. The OS web site can be found at "

If accessing this Report via the Internet, please note that any mapping is for illustrative purposes only and is not true to any marked scale.

1. Introduction

1.1 The Council continues to experience budget tightening and there is no reason to believe that this will abate in the future. In addition, however, there are now 2 further significant pressures- the on-going cost of the Equal Pay settlement and the unknown cost of the new pay and grading system.

1.2 On this latter point it is difficult to conclude that any new pay and grading model, designed to address inequalities in pay, can be introduced without significant costs.

1.3 That average earnings will increase appears unavoidable and this, it is suggested, is an inevitable consequence of the decision to settle Equal Pay. The total number of employees and hence the total pay bill is, however, subject to a degree of control. It is proposed that it would be prudent to seek to reduce the overall size of the workforce. That requires service reform and these reforms will require access to voluntary redundancy to be successfully delivered.

1.4 Voluntary severance, as the facilitator of service reform activity, represents both a means to deliver those immediate savings which are pressing and a prudent step to mitigate the impact of those that are still to come.

1.5 It should be noted that as different Conditions of Service apply to teachers, the terms of this report exclude that employee group.

2. A Council Redundancy Scheme

(a) Scheme Benefits

2.1 The Council is required to maintain a statement on the manner in which it will exercise its severance discretions. The Local Government Pension Regulations provide Councils with the discretion to award up to 10 added years of pensionable service in cases of redundancy. The Council’s current policy allows for up to 4 years to be added. The Local Government (Discretionary Payments and Injury Benefits) Scotland Regulations 1998, as amended, allow a one off lump sum payment of up to 104 weeks contractual pay in cases of redundancy. The Council’s current policy provides a redundancy payment of up to 66 week’s pay for those with no access to immediate payment of pension and up to 30 week’s pay for those who have.

2.3 The purpose of a redundancy scheme is to provide the Council with a means to manage its workforce. To be effective, therefore, redundancy terms need to be attractive to employees. This attractiveness, however, needs to be of set against a requirement that the exercise is also cost effective. The Scottish Government has recently published guidelines on the exercise of severance arrangements. While directly relevant only to its own pay roll these principles do establish a guide to good practice within the public sector.

2.4 Those principles are that there should be a severance cap set at £95,000 on severance payments, the maximum pay-back period should not exceed two years, recovery arrangement should be in place, payment in lieu should not exceed 6 months and that there should be improved governance arrangements. Some of these arrangements are not particularly relevant to a Council situation. For instance the Council already operates a policy whereby it will not re-employ a person who received severance terms, thus, there is no need for recovery arrangements to be put in place. As the maximum payment in lieu of notice period in the Council is 3 months there is no prospect of 6 months ever being exceeded.

2.5 In terms of the severance cap, only two payments are relevant – redundancy itself and added pensionable years of service. It is difficult to imagine a realistic scenario where the cap would be exceeded in terms of a redundancy payment. While possible it would affect so few, if any, employees that it could not reasonably be described as acting as a limitation on service reform.

2.6 An added years’ offer is, of course, attractive to employees and the concept acts to encourage acceptance of terms. Added years is, however, expensive. A recent exercise involved the collation of figures covering mid grades. Each exercise is different as the individuals involved differ but this covered 12 employees on grades 6, 7, 8 and 9. Overall the cost of 4 added years (that is the annual cost added to the one off lump sum enhancement) represented 5.6% of the total cost of the exercise (with redundancy pay equalling 17% and the cost of strain 77.2%). However, the SPF calculate what income they expect to receive in connection with added years. This illustrates the lifetime liability that falls to the Council when awarding added years. This is referred to as the capitalisation figure. This shifts the added years’ contribution up from 5.6% to a figure far more realistic cost which is 28.5%. The true cost of awarding added years is significantly higher than the cost of redundancy pay.

2.7 It is suggested that the most attractive feature of the pension element of severance is not added years but immediate access to a non-reduced pension. It is the preservation of this element, compulsory in the case of redundancy that remains the most attractive element of any scheme from the perspective of the employee.

2.8 This report, therefore, recommends that the scheme preserves the current redundancy arrangement of up to 66 weeks’ pay for those with no access to immediate pension benefits and up to 30 weeks’ pay for those who have. The scheme, however, will provide no added years.

(b) Scheme Structure

2.9 The last significant Council redundancy exercise concluded in 2013. A number of its features are of interest.

2.10 In order to maximise take up it operated on the basis that applications would be accepted. Indeed only two areas were expressly excluded from its terms – Residential Workers where minimum staffing levels exist and Social Workers where there was a deficit of resource at the time. While this approach did maximise the immediate savings available there remains doubt regarding the longer term sustainability of savings and concern regarding the impact that an uncontrolled scheme had on service provision. It also did not take into account the concept of a pay-back period and, thus, did not take proper cognisance of the relationship between the cost of the exercise and its capacity to generate a required level of savings.

2.11 The above reference to the Scottish Government’s policy on severance in the public sector is relevant in this context. That guidance is that any scheme should be subject to robust and proper governance and should operate to a two year pay-back period.

2.12 In the context of the Council, governance should ensure that severance is associated with a robust business case establishing the overall cost of a specific exercise and the overall savings being generated. There will be cases where individual posts can be deleted with little or no consequence. Such posts, given the protracted period of budget reductions will be few and far between. A more likely scenario is a service reform process that creates a sustainable headcount reduction.

2.13 The cost and savings from such might not be limited to personnel. For instance, and recently within N&S, the headcount of artic drivers was reduced on the back of efficiencies available from the operation of the new recycling centre. The actual mechanism that achieved the headcount reduction was flexi-retirement rather than redundancy, but the number of staff involved, the cost and the personnel savings generated was modest. Savings of a more significant nature came from a reduction in vehicle usage. As another example, robotics provides an opportunity to achieve headcount reductions but a degree of investment might be required to achieve that end.

2.14 Thus, when considering a business case or service reform, the full cost of the exercise needs to be taken into account as well as the full saving available. Such may not necessarily be limited to payroll savings or costs. In terms of the balance between these costs and savings the concept of a 2 year pay- back period is useful. That is, savings should be sufficient to repay the original cost of the reform exercise within a period of two years, where after that point full savings are available.

2.15 A mechanism is required to ensure the robustness of the above process. It is suggested that the Workforce Planning Board, comprised of the Executive Directors of Finance, Education and N&S together with the Head of HR, are best placed to fulfil this role.

2.16 Reference was made above to the last major redundancy exercise within the Council. One aspect of that approach proved particularly beneficial. It operated over a three year period. This allowed employees to better plan their eventual leaving but also allowed Services to plan for that release in a way that was sustainable. This represents an attractive feature when placed beside a 3 year budget saving exercise as it allows service reform activity to be implemented in less of an emergency and more of a planned manner. The balance of that convenience, however, and the timing of an individual release should be less about the convenience to the employee and more about the needs of the service.

2.17 That 3 year period defines when an employee or group of employees might be released, producing a flow of savings over that period and the following year. One would expect that as service reforms or business cases are developed, services would need to approach discrete groups of employees asking if any might be interested in severance. Employee applications, however, might prompt service reform considerations or might, individually, be acceptable. Two processes are, therefore, envisioned. One an initial trawl for registrations of interest, giving a three month period for those to take place; and secondly, a longer period where services would develop approaches that might be facilitated by severance. The launch of the scheme should, therefore, take place at the beginning of the next financial year with a request for registrations of interest, such closing at the end of June 2020.

(c) The Scheme in Operation

2.18 The Scheme would progress, largely as an HR exercise and be composed of three main elements:-

  • Launch and administration of registrations of interest.
  • Co-ordination of business cases/service reforms for consideration by the Workforce Planning Board.
  • Processing of terminations and monitoring of outputs.
2.19 Of course, behind these HR administration processes would be considerable service reform activity. The actual processes required by the exercise can be managed by HR resources available at service level and the centre with regular reports on progress being provided to the relevant Committee.

2.20 The overall project has an objective of facilitating significant headcount reductions over three years and by this means generate significant savings The entirety of headcount reductions will not be achieved solely by redundancy/early retirement. Flexi retirement will make some contribution as will attrition. Of more significance is the requirement to operate a parallel redeployment exercise. Essentially, the availability of volunteers for release will not, in all cases, align with the practicalities of service reforms. The Council will also not stop recruiting as there will always be areas of demand. A somewhat complex situation will develop where identified surpluses do not match the availability of volunteers for release and volunteers will exist in areas where no surplus has been identified.

2.21 This has been addressed in the past via redeployment exercises which would have the aim of maximising the opportunities for release and, hence, the generation of savings. The Council does have significant experience in effecting change through supported redeployment; the CDO internal recruitment exercise being the most obvious example. A particular group within HR has the necessary experience in this area. The Workforce Resourcing Group involves those HR officers from across the Services who are responsible for drawing up the Service Workforce plans. It is they who seek to marry surplus in one area with demand in another and have designed and implemented the career pathways that facilitate these processes. This will require the full co-operation of recruiting departments as well dedicated support from OD in terms of supporting employees through these transition processes.

3. Conclusion

3.1 This paper proposes the launch of a redundancy/early retirement scheme across the Council, commencing at the beginning of financial year 2020/21 and running for three years. The scheme will launch with a trawl for registrations of interest to be received by 30th June 2020. Thereafter, emerging business cases/service reforms will determine the targeting of employee/employee groups.

3.2 The scheme will have no added years’ element but will maintain the current approach to redundancy pay.

3.3 Governance will be provided by the Workforce Planning Board who will determine applications for release on the basis of a robust business case providing a pay-back period for each discrete reform or business case of no more than 2 years. Administration of the process will be provided by HR and a parallel career pathway based redeployment exercise will also be required.

4. Policy and Resource Implications Resource Implications:

Financial:

Legal:

Personnel:

Procurement:

Council Strategic Plan:

Savings should be sufficient to repay the original cost of the reform exercise within a period of two years, where after that point full savings are available.

No impact our arrangements remain relevant within employment law

The effect of the exercise will be a significant reduction in headcount.

N/A N/A

Equality and Socio- Economic Impacts:


Does the proposal support the Council’s Equality Outcomes 2017-22

What are the potential equality impacts as a result of this report?

Please highlight if the policy/proposal will help address socio economic disadvantage.

Sustainability Impacts:

Environmental:

Social, including Article 19 opportunities:

Economic:

Privacy and Data Protection impacts:

5. Recommendations

Care will have to be taken as the exercise proceeds to ensure that it operates in a way that is equality neutral. This will be achieved by the completion of EQIA’s as the exercise proceeds.

N/A N/A

N/A N/A

5.1 CAC is invited to approve the following recommendations:-

(I) that a voluntary redundancy exercise is launched as soon as is practical, across the Council to provide severance dates over the next three financial years and with the objective of achieving an overall headcount reduction;

(II) that responsibility for the operational governance of the exercise is placed with the Workforce Planning Board and that it provides regular updates on the progress of the exercise to the relevant Committee; and

(III) that the scheme on offer does not attract added years but that all other aspects are as currently defined by Council policy.


Glasgow - Making Staff Pay For Someone Else's Mess (22/03/20)



Here are the elected councillors who sit on Glasgow's City Administration Committee which considered the controversial report about a new round of voluntary redundancies.  

I'll publish the full report when I get a minute (probably tomorrow), but it's worth noting that front-line staff are almost certainly ineligible for the scheme - because they are regarded as 'key workers' whose jobs would need to be replaced.

The City Administration Committee is chaired by the Council leader, Susan Aitken, and although it's early days yet I suspect there will be a campaign to put the politicians on the spot over this idea of getting the workforce to pay the price for fixing GCC's 'unfit for purpose' WPBR pay scheme.
Kyle ThorntonMember
Susan AitkenConvener
Chris CunninghamMember
Mhairi HunterMember
Ruairi KellyMember
Bill ButlerMember
Maureen BurkeMember
Thomas KerrMember
Soryia SiddiqueMember
Matt KerrMember
Kim LongMember
Allan GowMember
John LetfordMember
Elaine McDougallMember
Martin RhodesMember
Jennifer LaydenMember
Kenny McLeanMember
Anna RichardsonMember
Frank McAveetyMember
Archie GrahamMember
David McDonald                     Vice Convener
Allan YoungMember
Michelle FernsMember

  


Glasgow - Making Staff Pay For Someone Else's Mess (21/03/20)


Glasgow City Council (GCC) may be under new political leadership, but it's up to its old tricks again with the news that council staff are to be asked to pay for fixing its discredited, 'unfit for purpose' WPBR pay scheme with a new round of voluntary redundancies.

Now I've yet to read of any Glasgow politicians - MSPs, MPs and councillors - speaking out and condemning such a move, but if I do I'll share the details on the blog site.

In the meantime, the read full report via the link below to The Herald.

  


https://www.heraldscotland.com/news/18323485.glasgow-council-looks-voluntary-redundancies/

Glasgow council looks for voluntary redundancies
By Stewart Paterson - The Herald

The council is to open a voluntary redundancy scheme to reduce the total wage bill. 

Job cuts are looming at Glasgow City Council as it looks to reduce the workforce to cope with the bill for the equal pay settlement.

The council is to open a voluntary redundancy scheme to reduce the total wage bill. It said it is necessary to cope with ever-tightening budgets and also ongoing costs following the equal pay deal agreed last year.