REDUNDANCY AND EFFICIENCY LEAVERS COMPENSATION POLICY

Transcription

1 REDUNDANCY AND EFFICIENCY LEAVERS COMPENSATION POLICY Date Policy Created: 2011 Committee Date Approved: 3 rd July 2014 Reviewed: June 2014 Review Schedule: 2 years Next review Date: Summer 2016 Responsibility: Finance and Premises Committee 1

2 CONTENTS POLICY 3 1. Introduction 3 2. Purpose 3 3. Principles 3 4. Calculation of redundancy payment 4 5. Discretionary compensation on redundancy 4 6. Efficiency leavers 4 7. Pension benefits 4 8. Augmentation and Conversion of enhanced redundancy payment to LGPS membership 5 9. Discretion to Purchase Additional Pension Equalities Statement 5 PROCEDURE Approval Payment of compensation 6 TERMS / ABBREVIATIONS 7 Appendix 1 Chart for calculation of enhanced redundancy payment 8 Appendix 2 Chart for calculation of enhanced efficiency payment 9 POLICY HISTORY 10 2

3 POLICY 1. Introduction 1.1. The introduction of Age Legislation with effect from 1 October 2006 has prompted the need to review other areas of legislation and policy to ensure compliance For employees who are entitled to membership of the Local Government Pension Scheme (LGPS), The Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations 2000 governed entitlement and these have now been replaced by the Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations This policy amends the previous policy on Early Retirement (DR/99/78) agreed by Executive Committee on 23 July Purpose 2.1. This policy sets out the discretions exercised by Clyst Vale Academy Trust under the 2006 regulations in the calculation of compensation payable to employees who leave the employment of Clyst Vale Community College on the grounds of redundancy or the efficient exercise of the service It also confirms how costs of early release of pension benefits will be met. 3. Principles 3.1. Employees who leave the employment of Clyst Vale Community College on the grounds of redundancy are entitled to receive a redundancy payment subject to having two years continuous Local Government service. [Note two year minimum does not apply to release of pension benefits. See Section 7.] 3.2. The redundancy payment will be calculated as detailed in Sections 4 and 5. See Appendix Employees who leave the employment of Clyst Vale Community College on the grounds of the efficient exercise of the service may be granted a lump sum payment on leaving at the discretion of the College. 3

4 3.4. The discretionary payment for efficiency leavers will be calculated as detailed in Section 6. See Appendix Any early payment of pension benefits results in a strain cost to the pension fund which in the case of redundancy and efficiency leavers will be borne by the College For leavers who have membership of LGPS, any strain cost will be funded as a one-off payment at the time of the individual leaving. 4. Calculation of redundancy payment 4.1. The calculation of a redundancy payment under the statutory regulations requires a ceiling to be placed on the weekly pay used in that calculation. Clyst Vale Academy Trust waives this ceiling in the calculation of redundancy and enhanced redundancy payments. 5. Discretionary compensation on redundancy 5.1. Subject to having two years Local Government service a one off enhanced redundancy payment of twice the number of weeks pay awarded under the statutory redundancy formula up to a maximum of 60 weeks pay will be made. The amount of a week s pay is not capped by the ceiling placed on statutory redundancy payments. See Appendix Efficiency leavers 6.1. Clyst Vale Academy Trust has the discretion to award up to a maximum of 30 weeks pay to efficiency leavers of any age using a similar method of calculation as for redundancy. See Appendix Pension benefits 7.1. Under the LGPS, employees who are aged 55 or over, whose employment is terminated either on the grounds of redundancy or in the efficient exercise of the service, are entitled to immediate payment of their pension benefits without reduction. 4

5 8. Augmentation and Conversion of enhanced redundancy payment to LGPS membership 8.1. Clyst Vale Academy Trust does not have a policy to enable augmentation of membership of the LGPS or to convert enhanced redundancy payment to LGPS membership. 9. Discretion to Purchase Additional Pension 9.1. Clyst Vale Academy Trust exercises its discretion not to purchase additional pension under regulation 13 of The Local Government Pension Scheme (Benefits, Membership and Contributions) Regulations 2007 (as amended). See LGPS Discretions Policy Additional pension is the purchase of a monetary amount of pension per year up to a maximum of 5,000 per year. This amount is paid on retirement in addition to the pension earned by membership of the scheme. It does not attract any additional cost to Clyst Vale Academy Trust, for example on redundancy, after the initial cost of purchase. It can only be purchased whilst the LGPS member is still an active scheme member: that is, still in employment Permitting the purchasing of additional pension contributions affords Clyst Vale Academy Trust the flexibility to decide how it compensates or rewards individual employees, in exceptional circumstances, without incurring the higher costs which the award of additional scheme membership can bring Additional pension can be awarded in exceptional circumstances only and is subject to authorisation by the Finance and Premises Committee. 10. Equalities Statement The Principal will ensure that employees are able to access a copy of the policy Clyst Vale Academy Trust seeks to eliminate discrimination, advance equality and foster good relations Clyst Vale Academy Trust is committed to the principle of equal opportunities in employment regardless of a person s age, disability, gender re-assignment, marital or civil partnership status, pregnancy, maternity status, race (including colour, nationality and ethnic or national origins), religion or belief, sex and sexual orientation. 5

6 PROCEDURE 11. Approval Leaving on the grounds of redundancy or efficiency is subject to approval by the Full Governing Body The College Manager requests an estimate of redundancy/efficiency compensation and/or pension benefits and employer pension strain costs as applicable When an estimate of costs has been received a proposal form is completed and the request considered by the Finance and Premises Committee After redundancy/efficiency is recommended by the Finance and Premises Committee the proposal form is forwarded to the Full Governing Body for formal approval An estimate of redundancy/efficiency compensation and/or pension benefits is provided for the employee. 12. Payment of compensation A copy of the notice letter and the completed proposal form is provided to the Finance Department For redundancies, the employee is provided with a Redundancy Payments Declaration (RPD) form, which must be returned to the Finance Department before payment can be authorised A leaver s form must also be completed and sent to Clyst Vale Community College s payroll provider in the normal way. 6

7 TERMS / ABBREVIATIONS LGPS Local Government Pension Scheme Membership is open to most Devon County Council employees with the exception of teachers. Redundancy Occurs when the type of work undertaken ceases or reduces considerably. Efficient exercise of the service Efficiency Where, by mutual agreement, Clyst Vale Academy Trust and the employee agree to bring the employment to an end by reason of effectiveness, economy, health or compassion. Strain cost The cost to the pension fund of paying a pension earlier than Normal Retirement Date (usually age 65). Pension benefits An annual pension and one off lump sum payment calculated on length of membership and pay on retirement. Augmentation Awarding added years of pension membership. Weeks pay A weeks pay will be calculated using contractual pay. It will not include non contractual pay for example overtime pay. Where an employee is a member of the Childcare Voucher Scheme a weeks pay will be calculated using notional salary; that is the presacrifice level of pay. 7

8 Appendix 1 Chart for calculation of enhanced redundancy payment Service (Years) (+) Age

9 Appendix 2 Chart for calculation of enhanced efficiency payment Service (Years) (+) Age ½ ½ ½ 2 2½ ½ 2 2½ ½ 2 2½ 3 3½ ½ 3 3½ 4 4½ ½ 4 4½ 5 5½ ½ 5 5½ 6 6½ ½ 6 6½ 7 7½ ½ 7 7½ 8 8½ ½ 8 8½ 9 9½ ½ 9 9½ 10 10½ ½ 10 10½ 11 11½ ½ 11 11½ 12 12½ ½ 12 12½ 13 13½ ½ 13 13½ 14 14½ ½ 14 14½ 15 15½ ½ 15 15½ 16 16½ ½ 16 16½ 17 17½ ½ 17 17½ ½ 18 18½ ½ ½ 42 2½ 3½ 4½ 5½ 6½ 7½ 8½ 9½ 10½ 11½ 12½ 13½ 14½ 15½ 16½ 17½ 18½ 19½ 20½ ½ 5½ 6½ 7½ 8½ 9½ 10½ 11½ 12½ 13½ 14½ 15½ 16½ 17½ 18½ 19½ 20½ 21½ ½ ½ 6 7½ 8½ 9½ 10½ 11½ 12½ 13½ 14½ 15½ 16½ 17½ 18½ 19½ 20½ 21½ 22½ ½ 6 7½ ½ 6 7½ 9 10½ 11½ 12½ 13½ 14½ 15½ 16½ 17½ 18½ 19½ 20½ 21½ 22½ 23½ ½ 6 7½ 9 10½ ½ 6 7½ 9 10½ 12 13½ 14½ 15½ 16½ 17½ 18½ 19½ 20½ 21½ 22½ 23½ 24½ ½ 6 7½ 9 10½ 12 13½ ½ 6 7½ 9 10½ 12 13½ 15 16½ 17½ 18½ 19½ 20½ 21½ 22½ 23½ 24½ 25½ ½ 6 7½ 9 10½ 12 13½ 15 16½ ½ 6 7½ 9 10½ 12 13½ 15 16½ 18 19½ 20½ 21½ 22½ 23½ 24½ 25½ 26½ ½ 6 7½ 9 10½ 12 13½ 15 16½ 18 19½ ½ 6 7½ 9 10½ 12 13½ 15 16½ 18 19½ 21 22½ 23½ 24½ 25½ 26½ 27½ ½ 6 7½ 9 10½ 12 13½ 15 16½ 18 19½ 21 22½ ½ 6 7½ 9 10½ 12 13½ 15 16½ 18 19½ 21 22½ 24 25½ 26½ 27½ 28½ ½ 6 7½ 9 10½ 12 13½ 15 16½ 18 19½ 21 22½ 24 25½ ½ 6 7½ 9 10½ 12 13½ 15 16½ 18 19½ 21 22½ 24 25½ 27 28½ 29½ ½ 6 7½ 9 10½ 12 13½ 15 16½ 18 19½ 21 22½ 24 25½ 27 28½ 30 9

10 POLICY HISTORY Policy Date Summary of change Contact Version/ Implementation Date New policy written following the introduction of Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations 2006 Correction to Appendix 1 chart for enhanced redundancy payments. Amendment to paragraph 3.6. Strain payments can no longer be funded over three years. They must be paid as a one-off sum by the Service. Addition of This applies to: All DCC Staff including School Support Staff but excluding Teachers Note added to Para 3.1 (pension release does not have 2 year time limit) Para 4.1 and 5.1 updated cap figure. Update to Procedure section as Paras 11 and 12 is not applicable to school staff. Amendments to job titles, service and form names, and some reformatting. Contact details for School Personnel helpdesk added to paras Error! Reference source not found. and Error! Reference source not found. P&S Review Date Para 4.1 and 5.1 updated cap figure. Para 7.1 updated by removing reference to pension benefits at age 50. Section 9, Equalities Statement, updated. Job Titles changed in line with restructure. Directorate amended to Service Addition at para. 10 of the Discretion to Purchase Additional Pension agreed by Corporate Leadership Team on Addition to Terms/Abbreviations of the definition of a weeks pay. Revision of Procedure section. Sections 4.1 and 5.1 amended statutory cap. Updated to contact HR Direct P&S P&S HR Direct 12 July