The Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations 2006

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations provide a new, simplified framework for the payment of discretionary compensation to persons whose local government employment is terminated on or after 1st October 2006 by reason of redundancy or in the interests of the service or where a joint appointment comes to an end because one of the holders leaves. They revoke the Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations 2000 (“the 2000 Regulations”) but the revocation does not affect any person whose termination date is before 1st October 2006 or the rights of any person who is entitled to benefits under those Regulations in consequence of the death of such a person. In relation to such persons the 2000 Regulations continue to apply.

Regulation 4 states to whom the Regulations apply.

Regulation 5 gives a power to increase a redundancy payment made under the Employment Rights Act 1996.

Regulation 6 allows an employer to award compensation in the form of a lump sum of an amount that must not exceed 104 weeks’ pay. The regulation sets out the basis for calculating a week’s pay for an individual. Any redundancy payment under the 1996 Act or compensation paid under regulation 5 of these Regulations must be offset against compensation paid under regulation 6.

Regulation 7 requires each employing authority to have and publish a policy that they apply in the exercise of their discretionary powers under regulations 5 and 6.

Regulation 8 deals with how payments are made and any errors dealt with.

Regulation 9 provides that payments made under these Regulations must not be met out of any Local Government Pension Scheme funds.

Regulation 11 contains transitional provisions and revocations, subject to savings. A transitional provision is that an employing authority may decide to pay compensation under the 2000 Regulations in respect of a person whose employment commenced before 1st October 2006 and whose termination date is between 30th September 2006 and 1st April 2007. An employing authority may also pay additional compensation under these Regulations to a person whose termination date is between 30th September 2006 and the date on which these Regulations came into force and who has been awarded a lump sum under Part 3 of the 2000 Regulations, as long as the total amount paid does not exceed the maximum payable under these Regulations.

The Regulations take effect from 1st October 2006. Section 24 of the Superannuation Act 1972 provides that regulations made under that section may have retrospective effect. Regulation 11(5) of these Regulations provides that nothing in these Regulations shall place any individual in a worse position than he would have been if these Regulations had not had retrospective effect.

Schedules 1 and 2 make consequential amendments and savings.

A regulatory impact assessment of the effect that this instrument will have on the costs of local government employing authorities was published on 6^th November 2006 and is available on the internet at www.xoq83.dial.pipex.com. Copies can be obtained by post from the Department for Communities and Local Government, Zone 2/F6, Ashdown House, London SW1E 6DE, or by phoning 0207 944 4137. The assessment anticipated that this instrument will not increase employers’ compensation costs.