Contact: Nick Weaver, Head of Pension Services (01962) 847587 [email protected]

1 Summary

1.1 The Age Regulations introduced from 1 October 2006 required the Local Government Compensation Regulations to be repealed from that date as the Government considered them to be discriminatory.

1.2 The Compensation Regulations had provided, amongst other things, a discretion for employers to award Compensatory Added Years to employees leaving on redundancy or efficiency of the service grounds

1.3 New Compensation Regulations were introduced in the Local Government (Early Retirement) (Discretionary Compensation) (England and Wales) Regulations 2006 (new DCR) effective from 1 October 2006.

1.4 At its 29 March 2007 meeting this Committee considered the options for new policies, required by the new DCR, to compensate early leavers on redundancy and efficiency of the service grounds and made new policies.

1.5 At a recent Pensions Internal Dispute Resolution hearing the interpretation of one of the new policies was challenged and consequently clarification is required.

2 Recommendations

2.1 The wording for policy (c) of the revised Early Retirement Policy for non teaching staff is amended to:

· Total lump sum compensation for employment terminated on the grounds of redundancy will not exceed the value of the redundancy payment. The option to use additional lump sum compensation of up to 104 weeks pay will not be used.

2.2 The wording for policy (d) is amended to

· Augmentation can be awarded as an alternative to the lump sum compensation above the value of the statutory redundancy payment.

3 Current Policies

3.1 Following changes in Regulations and related statutory issues, the Committee agreed on 29 March 2007, that with effect from 1 April 2007, the discretionary compensation policy for early retirement on the grounds of redundancy or efficiency of the service be that:

a) Redundancy payments are based upon actual pay and not the statutory maximum (currently £310 per week).

b) Compensatory added years are not awarded for terminations in the period from 1 October 2006 onwards.

c) Additional lump sum compensation for employment terminated on the grounds of redundancy will be equal to the redundancy payment.

d) Augmentation can be awarded as an alternative to the additional lump sum compensation above the value of the statutory redundancy payment.

e) Payments for efficiency terminations be awarded at the discretion of each department, up to the equivalent of a redundancy termination.

f) For Chief Officers or Hampshire Management grade employees in the situations listed above the case will be submitted for prior approval to the Executive Member for Policy and Resources, subject to the agreement of the Director of Human Resources and the County Treasurer.

4 Interpretation challenge

4.1 The interpretation of policy (c) has been challenged.

4.2 Having considered all the options set out in the original report the Committee's intention was to limit the total payment under the compensation regulations (new DCR) in cases of redundancy to the basic value of the redundancy payment using actual pay in accordance with policy (a).

4.3 However, the use of `additional' has been interpreted to mean that a payment equal to the redundancy payment will be made in addition to the actual value of the redundancy payment. This would effectively double the employer's costs for all redundancies.

4.4 Clarification of the intention of policy (c) is, therefore, required. The related policy (d) also needs clarification by removing the word `additional'.

5 Financial impact

5.1 The proposed changes are intended to clarify the current policy and therefore do not alter current costs

Section 100D - Local Government Act 1972 - background documents

The following documents discuss facts or matters on which this report, or an important part of it is based and have been relied upon to a material extent in the preparation of this report.

NB: the list excludes

1. Published works

2. Documents which disclose exempt or confidential information as defined in the Act.