Commentary
Section 1: Consents required for civil service compensation scheme modifications
8.Section 1 removes the requirement in section 2(3) of the Superannuation Act 1972 to obtain the consent of civil service trade unions for reductions in benefits provided under the CSCS. But the removal of this requirement does not apply to benefits provided in respect of an exit which is the consequence of a notice of dismissal given, or an agreement made, before the scheme making the reductions comes into effect. (See subsections (1) to (3).)
9.Subsection (4) provides that the removal of the requirement for trade union consent applies to reductions given effect by a scheme made after the coming into force of section 1.
10.Subsections (5) and (6) provide that where a scheme under section 1 of the 1972 Act is made after the time when this section comes into force and consultation on the proposed scheme took place before that time, the fact that the amendments made by this section were not in force when the consultation took place does not affect whether the consultation met the requirements of section 1(3) of the 1972 Act. In other words, that consultation is not to be regarded as ineffective just because the amendments were not yet the law when the consultation took place.
Section 2: Consultation in relation to civil service compensation scheme modifications
11.Section 2 reinforces the requirement on the Government to carry out meaningful consultation with the civil service trade unions, through amendment of section 2 of the Superannuation Act 1972.
12.Subsection (2) has the effect of requiring the Government to consult with a view to reaching agreement on any provision of a scheme made under section 1 of the 1972 Act that would reduce the amount of a compensation benefit. (‘Compensation benefit’ is defined in the new section 2(3B) of the 1972 Act inserted by section 1(3) of this Act.)
13.Subsection (3) introduces a requirement for the Government to lay before Parliament a report on the consultation relating to such a provision before the scheme comes into operation, and specifies what that report must include.
Section 3: Limits on value of benefits provided under civil service compensation scheme
14.Section 3 imposes caps on the amounts payable to members of staff under the terms of the CSCS. Subsection (2) in effect imposes a cap of 12 months’ salary in cases of compulsory severance, and 15 months’ salary in cases of voluntary severance. The salary figure used is pensionable earnings. This is the rate of earnings immediately before severance on which a person was required to pay (or would have been required to pay) pension contributions under the Principal Civil Service Pension Scheme (PCSPS). Paragraph (b) of the definition of ‘pensionable earnings’ in subsection (7) is intended to cover cases such as where a person has opted out of the PCSPS. Subsection (8) covers the treatment of those whose pensionable earnings were restricted or, at the time of severance, were receiving earnings at a reduced rate.
15.The effect of section 3 will be to reduce the maximum amount payable under the CSCS. An individual currently entitled to 9 months’ salary on departure will still receive a sum equivalent to 9 months’ salary. However, an individual who under the current compulsory early severance terms might be entitled to (say) 27 months’ salary would instead have their payment capped at only 12 months’ salary if made compulsorily redundant.
16.Subsection (4) provides that, where the cost of providing an early retirement package (for example including an actuarially unreduced pension, or enhanced pension) exceeds the cap, benefits will be paid as a cash lump sum equivalent to the cap rather than as an early retirement package. In such cases pension benefits will be preserved for payment at normal pension age (or may be paid early on an actuarially-adjusted basis in accordance with pension scheme rules). Subsection (3) provides that that cost will be determined in accordance with guidance issued by the Minister for the Civil Service.
17.Subsection (5) provides that the cap applies where a person is issued with a notice of dismissal after the provision comes into force, or agrees to voluntary severance after that time.
18.Subsection (10) excludes from the capping provisions any compensation in lieu of notice and any payments made on early termination of fixed term contracts.
19.Subsection (11) confers an order-making power on the Minister for the Civil Service to relax the caps by increasing the number of months specified in subsection (2). That power is subject to affirmative resolution procedure in the House of Commons: see section 4(8) and (9).
Section 4: Final provisions
20.Section 4 provides for section 3 to expire 12 months after it comes into force. It also grants order-making powers to the Minister to repeal section 3 before it is due to expire, to extend the date on which section 3 will expire, and to revive section 3 (within three years of Royal Assent) after that section has expired or been repealed. The powers to extend the expiry date and to revive section 3 are subject to affirmative resolution procedure in the House of Commons. The power to repeal is subject to negative resolution procedure.
21.Subsection (7) provides that the expiry or repeal of section 3 will not affect the application of that section to any compensation benefits provided in connection with severance occurring before its expiry or repeal.
