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Civil Service Compensation Scheme

Published Thursday, October 26, 2017

This briefing provides an overview of reforms to the scheme providing compensation to civil servants for loss of office.

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The Civil Service Compensation Scheme (CSCS) is a statutory scheme which provides compensation for loss of office for reasons including compulsory and voluntary redundancy. 

2016 amendments

The CSCS was amended on 9 November 2016 following a consultation that ran between 8 February and 4 May 2016.  The proposed changes were generally opposed by those who responded to the consultation, comprising mainly Civil Service workers affected by the changes.  In parallel with the consultation, the Government undertook negotiations with trade unions, who also opposed the changes.  The Government set out its final offer to the unions on 26 September 2016.  Following changes in the law enacted in 2010 there is no longer any statutory requirement to obtain consent from unions before amending the main terms of the CSCS, although there is a duty to consult.  In amending the Scheme the Government sought to reduce the cost of exits from the Civil Service, facilitate staff turnover enabling recruitment of younger workers and incentivise voluntary exits as compared to voluntary or compulsory redundancy. 

2017 judicial review

On 18 July 2017 the High Court held that the Government had failed to comply with the duty to consult prior to amending the CSCS, in that it had imposed conditions on union participation in the consultation process.  As such, the 2016 amendments were unlawful.  The Court’s decision is at the time of writing subject to appeal to the Court of Appeal.

2010 amendments

The 2016 amendments replaced earlier amendments to the CSCS made in 2010, implemented under the Coalition Government.  The 2010 amendments followed failed attempts to amend the CSCS under the Labour Government, which had been quashed by the High Court.  In July 2009, the Labour Government set out proposals to reform the CSCS in order to control costs and address elements that were thought to be age-discriminatory.  In broad terms, the CSCS provided severance for those under 50, and early retirement for those aged 50 to 60.  The Civil Service unions opposed the proposed changes on the grounds that they represented a reduction in terms for most of their members, did not adequately compensate those faced with compulsory redundancy and compared unfavourably other public sector schemes. 

In February 2010, the Cabinet Office announced a modified set of proposals on which it had reached agreement with five of the six Civil Service unions. This agreement limited the maximum payment on compulsory redundancy to three years’ pay, where this led to a payment of no more than £60,000, and to two years’ pay for higher earners.  Additional protection was provided for those closest to retirement.  The CSCS was amended accordingly.  However, the Public and Commercial Services Union (PCS), opposed the changes and applied for judicial review.  On 11 May 2010 the High Court ruled in favour of the PCS. The amendments to the CSCS were quashed, with the exception of certain changes to address elements considered age discriminatory.   

On 6 July 2010, the Coalition Government said it would legislate to cap payments at 12 months’ pay for compulsory redundancy and 15 months’ for voluntary redundancy.  It hoped to negotiate a permanent and sustainable agreement with the unions, at which point the caps would be withdrawn.  The unions objected that the proposed cap was less than in other public sector schemes, where a limit of two years’ pay was the norm.  The Superannuation Bill 2010-11 was published on 15 July 2010 and received Royal Assent on 16 December 2010.  The Act imposed the aforementioned limits although these were repealed almost immediately, and new, higher limits put in place.  Those limits remained unchanged until the 2016 amendments.

Commons Briefing papers CBP-7827

Author: Douglas Pyper

Topics: Civil Service, Employment, Public administration

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