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The Government has published detailed legislative proposals on how individuals earning over £100,000 who take a new job or contract in the same part of the public sector within twelve months of being made redundant will have to repay all or some of their redundancy payment.
The precise amount will on a pro-rata basis depending on the length of time between exit and re-employment.
This will mainly affect NHS and local government administrators, many of whom have taken redundancy payments only to go back into the public sector.
Of the 19,000 NHS who were made redundant between 2010 and 2013, almost 20 per cent were rehired by the NHS. Similarly, 16 per cent of local government chief executives who left by mutual agreement between January 2007 and September 2009 had been employed by another council within a year.
The legislative proposals make it clear that this will apply to contractors, sometimes referred to as 'off-payroll' in the public sector, as well as employees.
The Government's response to the consultation process, Recovery of public sector exit payments says:
“2.1. These proposals will: Recover exit payments in cases where an individual returns off-payroll to a similar role within their sub-sector”
“5.24. The government does not believe that it is fair for high-paid individuals to receive exit payments from the public sector and then return off-payroll to the same or similar role, for instance as a contractor. The Government therefore intends to legislate to ensure that these individuals are included within the scope of these proposals.”
Unfair
Chief Secretary to the Treasury Danny Alexander said: "It’s only fair that highly-paid executives who receive a redundancy payout from the public purse and then quickly return to the same part of the public sector repay the taxpayer."
Priti Patel, Exchequer Secretary to the Treasury, said: "It’s not fair that hardworking taxpayers were forking out for redundancy payments for people who then went straight back in to another public sector job.
"We are ending the revolving door where highly-paid public sector workers can leave with redundancy only to rejoin a short while later – and making sure this hard-earned taxpayers money is not being wasted."
Almost all of the public sector will be covered by these new regulations, including the Civil Service, local government and the NHS. However, it will not apply to the Army, or institutions including national museums, public broadcasters, and the Bank of England to protect their independence.
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Susie Hughes © Shout99 2014
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