Archived decisions
Hampshire Fire and Rescue Authority Human Resources Committee Item 20th January 2010 Re-employment of Hampshire Fire and Rescue Service Employees Report of the Chief Officer |
Contact: Keely Stafford, HR Business Manager, Tel: 023 8064 4000 ext 5425 E-mail: [email protected] |
1 |
Summary |
1.1 |
On 1 December 2006 the Senior Management Team (SMT) agreed that eligible Grey Book employees may request to commute their pension lump sum and, following a break in service, be re-employed in their existing role. This was endorsed by the Hampshire Fire and Rescue Authority (HFRA) Human Resources (HR) Committee. On 20 April 2007, the policy was extended to eligible Green Book employees. It was further agreed that this policy would be reviewed on an annual basis to ascertain the impact on the Service's Equality and Diversity targets and career progression. |
1.2 |
In November 2008, a recommendation was made to SMT and the HR Committee that the Service should continue to offer re-employment to eligible employees, and that the policy should be reviewed on an annual basis to consider it's affect on the workforce profile and People Impact Assessment. This was agreed. |
1.3 |
For clarity, Grey Book Employees are eligible to be in the Firefighters Pension Scheme (FPS) and/or New Firefighters Pension Scheme (NFPS) depending on when they joined the Fire & Rescue Service. These are operational posts and include firefighters and their line managers up to Area Managers. Those above this level are conditioned to Gold Book terms and conditions of service but are covered by the same pensions schemes as their grey book colleagues. Therefore the policy applies equally to these 2 staff groups. Green Book Employees are eligible to join the Local Government Pension Scheme (LGPS). |
2 |
RecommendationsError! Bookmark not defined. |
2.1 |
That the HR Committee endorse Hampshire Fire & Rescue Service's policy to continue to offer re-employment to eligible employees. |
3 |
Introduction Error! Bookmark not defined.and Background |
3.1 |
Prior to 6 April 2006, tax legislation required any payments received from pension schemes as a lump sum payment to be paid as non-taxable if the employee actually retired. The advice given from Her Majesty's Revenue and Customs (HMRC) was that if employment was then taken up which utilised the skills from their previous employment (under which a pension was paid) then to all intents and purposes they were not `retired' and as such could become subject to penalties over and above normal taxation rates. |
3.2 |
From 6 April 2006, under the Tax Simplification Rules, employees were able to receive their lump sum from the pension scheme and could take up similar employment without incurring any penalties. In order to receive the lump sum payment the employee must retire from their present post, which requires a clear break of at least 7 calendar days (to span two clear Sundays). If, following this retirement, the employee is re-employed; their monthly pension payment is abated, either in part or in whole, whilst they are in receipt of a salary payment. The monthly pension payment is based on their final salary prior to any period of re-employment. |
3.3 |
Employees who are re-employed can also request to join a pension scheme appropriate to their individual circumstances to build up benefits within that scheme under their new contract of employment. For Grey Book employees, this would be the New Firefighters' Pension Scheme (NFPS) if they are re-employed into the role of a Watch Manager or below. If they are re-employed into the role of a Station Manager or higher, or are a Green Book employee, they can request to join the Local Government Pension Scheme (LGPS). There is no longer an option to join the Firefighters Pension Scheme (FPS). |
3.4 |
The decision on whether or not to re-employ an employee who retires is for individual employers to determine. |
4 |
Analysis of Data |
4.1 |
Since the introduction of this policy a total of 53 employees have opted to take their lump sum pension and commence re-employment to the same role. In November 2008 this figure was 29, therefore there has been a significant increase in the number of employees taking re-employment in the past 12 months. Of this 53: · 2 are Green Book employees · 7 are firefighters · 23 are supervisory managers · 17 are middle managers · 4 are senior managers · 53 are `white British' · 53 are male · 53 are aged between 50 and 60 years |
4.2 |
Of the 53, 10 have subsequently resigned since taking re-employment. When the policy was first introduced, approximately 50% of individuals taking re-employment subsequently left the Service within approximately 12 months. However, the data now shows that there is a significant increase in individuals taking re-employment and remaining employed by HFRS for longer periods. |
4.3 |
Over the next three years, a further 52 Grey Book employees will become eligible to request re-employment. |
5 |
Contribution to Corporate Aims and Objectives |
5.1 |
To ensure that the current policy does not have a detrimental impact on the Services' aim of achieving a more diverse workforce, it has been and will continue to be reviewed on an annual basis. |
5.2 |
This policy has potential to impact upon the Service's Efficient and Flexible Crewing (EFC) project and therefore Corporate Objectives 2 and 7 within the Service Plan. See 6.1.1 below. |
6 |
People Impact Assessment |
6.1 |
The People Impact Assessment for this policy indicates there are some risks and advantages to consider. These are as follows: |
6.2 |
Risks |
6.2.1 |
In the short term, it could be a barrier to HFRS in its aim to increase the diversity of the workforce, and in particular could have an adverse impact on recruitment opportunities for the wider community. However, it should be noted that the EFC Project is predicated upon a reduced recruitment burden for the service and therefore the opportunities to benefit from this would be significantly reduced over the life of the project. |
6.2.2 |
Within HFRS, there is currently emphasis on exploring flexible working options for employees. Grey Book staff in particular have historically been employed on a full time basis only and constrained with a ridged shift pattern if working within an operational station role. Evidence suggests that a number of those Grey Book employees who have been re-employed under this policy have also requested part time working. There is a risk that, if allowed, all part time working options within the Service will be filled by this employee group, leaving restricted opportunities for other employee groups to alter their working patterns, or for the Service to employ people directly on a part time basis. This could affect the ability to attract diverse and under-represented employee groups in the future. |
6.2.3 |
Direct re-employment without advertising a vacancy could be seen as not openly recruiting. However, if the Service did not allow re-employment, eligible employees could remain in work but just not have access to their lump sum pension. If this was the case, eligible employees could equally argue that they are being penalised for this, or discriminated against on the grounds of age as they were employed when the workforce was not so diverse (see below). |
6.2.4 |
Not allowing re-employment could potentially be considered discriminatory on the grounds of age. Due to the changes to tax legislation and the pension schemes, as well as the introduction of Age Discrimination legislation, employees who are eligible for direct re-employment under the FPS, NFPS or LGPS can remain in employment regardless of this policy. Those who are eligible both since this policy was introduced and in the near future, were employed at a time when the demographics of the workforce of HFRS was predominantly made up of white British males. Therefore, preventing access to their lump sum pension, which they have given many loyal years of service to accrue, could be considered penalising those who are now eligible. This is partly why the annual review of this policy was put into place. |
6.2.5 |
Retention of existing employees has potential to prevent recruitment of individuals on Direct Entry basis. For instance, recruitment for Grey Book roles at Crew Manager and above can now include external applicants who have not previously worked as a firefighter. Again, this could affect our ability in the future to attract diverse and under-represented employee groups. |
6.2.6 |
Predicted recruitment at Firefighter level is likely to be severely limited given if EFC is introduced to utilise resources more effectively. There is some anecdotal evidence that had they not been able to access their lump sum, some individuals who have taken re-employment may have retired and left the organisation permanently when they became eligible for retirement. However, this is hard to fully establish. It could be considered that employees are incentivised to take the re-employment option and continue working for the Service when they would have otherwise retired permanently. In general terms, this reduces the opportunity for the Service to recruit a more diverse workforce, as well as reduce the salary budget. Those that take re-employment will inevitably attract higher salaries and benefits than new starters. In respect of the EFC project, it is more likely that this policy will simply slow down the `vacancy factor'. |
6.2.7 |
Promotion activity is also limited currently for the same reasons as outlined above. |
6.3 |
Advantages |
6.3.1 |
There is increased potential for the retention of business critical specialist skills and knowledge within the Service that may be difficult to replace in the short to medium term. This policy will enable the Service to retain the skills, knowledge and experience required in order to achieve and improve upon the standard of performance it is striving for. There are business benefits to the continuity that this can bring. |
6.3.2 |
Financial savings on recruitment and selection costs, plus opportunity costs are also saved. |
6.3.3 |
This policy is attractive to employees, therefore those that are able to benefit from it are likely to engage with the organisation positively. |
6.3.4 |
There are a number of unseen and less tangible benefits that the retention of this policy brings. The organisation will be entering a difficult period in terms of financial pressures and the changes that will be required to put in place to ensure our continued delivery and improvement of services. The retention of this policy sends a clear signal to our staff that they will continue to be valued and that long and valid service will be recognised. |
7 |
Resource Implications |
7.1 |
Physical Resources There is no impact on physical resources. Arguably, there is a cost saving as Grey Book employees who are re-employed will retain their existing Personal Protective Equipment which would otherwise have to have been purchased for new employees. In addition, there would be a cost saving on training for the same reason. Employees who are re-employed would not require the same level of training as a new operational employee. |
7.2 7.2.1 7.2.2 |
Financial Implications Retirement and re-employment is attractive to pension scheme members because it gives them a tax free lump sum through commutation, whilst allowing them to remain in employment in the same or similar role. Potential positive financial impacts are that it could result in increased movement from the FPS to the NFPS or LGPS where employer contributions are lower. The overall cost implication is that individuals with the required length of service to take re-employment will be paid the maximum possible in their roles. For example, a Green Book employee is likely to be at the top salary point scale within their pay grade. In addition to this, they will have the maximum annual leave allowance available to them. Therefore, the cost of employment is higher the more continuous service an individual has. If HFRS no longer permitted re-employment, whilst it is likely that some individuals would continue in their employment regardless, others could leave in order to access their lump sum and pension. If this were the case, the vacancy factor would increase at a faster pace with recruitment normally taking place at `entry level' would lead to lower comparative salaries. |
8 |
Consultation |
8.1 |
Prior to the policy for re-employment being agreed in December 2006 formal consultation was undertaken with all relevant trade unions, i.e. the Association of Principal Fire Officers (APFO), the Fire Brigades' Union (FBU) including the Black and Ethnic Minority Members (B&EMM) section, the Retained Firefighters' Union (RFU), the Fire Officers' Association (FOA), Unison and GMB. |
8.2 |
At that time, both APFO and the FBU confirmed their support for the facility for re-employment following retirement as it provides greater flexibility and choice for their members and consider the retention of talent and expertise outweighs any potential adverse equality impact. The RFU had no preferred approach, as they do not believe the policy impacts on their members. Unison, GMB, the B&EMM section of the FBU and FOA did not submit any comments. The views of a number of external organisations were also sought, including the Age Positive team at the Department for Work and Pensions (DWP), the Commission for Racial Equality (CRE), ACAS and the Equal Opportunities Commission (EOC). |
8.3 |
No further consultation has been carried out since, as it is not considered necessary where little has changed with the circumstances of this policy. Any decision made to change the existing policy, will require consultation with Representative Bodies. |
9 |
Conclusion |
This policy was introduced a number of years ago with the changes to tax and pensions legislation. Whilst there are both risks and advantages to it's retention, on balance the over-riding factors lead to the conclusion that it should remain for a further year. Given that it could be removed at a subsequent annual review, there was potential for a change in policy if future financial or other considerations warranted it. | |
Background Information (Section 100D of Local Government Act 1972) | |
The following documents disclose the facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of the report: Firefighters Pension Scheme Circular 8/2006 - 11 April 2006 http://www.communities.gov.uk/pub/280/FPSC82006UpdateonamendmentstotheFirefighters PensionSchemeFPSandtheFirefightersCS_id1165280.pdf Note: The list excludes: (1) published works; and (2) documents that disclose exempt or confidential information defined in the Act. | |