Date posted: 01/10/2006
Audience:
- HR Managers responsible for recruiting and appointing staff, and writing staff guidance
- HR Managers responsible for handling early departures
Action:
- To ensure that new contracts of employment, letters of appointment (and associated literature) do not provide specific details of current CSCS arrangements
- To note changes to the CSCS as a result of amendments to the statutory redundancy payments scheme.
Timing: Immediate. Changes to the statutory redundancy payments scheme affect staff made redundant from 1 October
Background
- We are currently reviewing the terms of the CSCS, taking into account the new age discrimination legislation. We are not yet in a position to provide information about the extent and timing of any changes, but we expect to be able to provide employers with details of what we propose within the next few weeks. Whilst we recognise that some employers and staff have questions about the compatibility of the CSCS terms with the forthcoming age discrimination legislation, it would be premature to try to answer them at this stage.
- For the time being, the current CSCS terms will continue to apply, subject to changes stemming from amendments to the statutory redundancy payments scheme which are outlined in paragraphs 4 to 7 below.
Contracts, letters of appointment and associated literature
- It is important that new contracts and letters of appointment (and associated literature) for members of staff do not set an expectation of a certain level of CSCS benefits by providing specific details of the current arrangements. When talking about the benefits payable on the early termination of an appointment, you should refer generally to the provisions of the CSCS, not the current benefit structure (individuals leaving on early departure terms receive the benefits provided by the rules in force at the time that they leave). No action is required in relation to new contracts for members of the Senior Civil Service as the model contracts already follow this approach.
Statutory redundancy payments scheme
- Civil servants are not covered by the statutory redundancy payments scheme, but rule 1.14 of the CSCS provides that those covered by the CSCS never receive less on redundancy than they would under the statutory scheme. Rule 1.14 provides for a top-up payment to be made if the amount of pension and compensation payable on redundancy is less than the level of the statutory redundancy payment.
- There are two important changes to the statutory redundancy payments scheme from 1 October which affect the impact of rule 1.14 of the CSCS: • the lower and upper age limits (at 18 and 65 respectively) and the taper from 64 (whereby the payment reduces by one-twelfth for each complete month over age 64) have been removed. This means that continuous service at any age will count towards the calculation of the statutory redundancy payment (up to a maximum of 20 years), and rule 1.14 of the CSCS will be relevant no matter what age an individual is made redundant; • employers can no longer offset pension scheme benefits when calculating statutory redundancy payments. This means that you will only be able to take into account the amount of lump sum compensation payable on redundancy under the CSCS when assessing whether a top-up payment is necessary. You can no longer offset either pension benefits or Annual Compensation Payments (ACPs).
- You should apply these changes from 1 October 2006 in anticipation of our amendment of rule 1.14 of the CSCS (we will ensure that the formal rule change has retrospective effect). This means that civil servants made redundant after 1 October who are over age 60 will be eligible for compensation. Because pension benefits can no longer be taken into account, they will receive compensation equivalent to what would be payable under the statutory redundancy payments scheme.
- Details of the statutory redundancy payments scheme are provided at www.dti.gov.uk/employment/redundancy/index.html. We are providing separate guidance to APACs about the calculation of the top-up payment.
Contacts
Enquiries about content, distribution or to receive in a different format
employerhelpdesk@cabinet-office.x.gsi.gov.uk
01256 846414
Employer Helpdesk
Civil Service Pensions
Grosvenor House
Basing View
Basingstoke
RG21 4HG
