EPN584 - Efficiency Compensation

Audience

  • Pension leads
  • HR managers
  • Payroll managers
  • Finance managers

Summary

This EPN replaces the instructions in EPN 471 on the calculation of Efficiency Compensation.

Actions

  • Employers and Payroll providers to ensure correct basis for compensation is being utilised

Timing

  • Immediate Detail

Background

1. In EPN 471, we advised of changes to efficiency compensation, which linked the tariff basis to voluntary redundancy terms and provided revised guidance on the process for granting compensation. 

2. Subsequently in EPN 513 we confirmed that following a Judicial Review the 2016 voluntary redundancy terms were no longer available and that Employees who leave via an efficiency departure in future should have their award processed under pre-2016 terms going forward (equal to what would have been paid under the old (pre-2010) Flexible Early Severance terms).

3. We have been asked to clarify the position for the efficiency calculations and details are provided in this EPN.

Guidance

4. The guidance note provided in EPN 471 remains valid and is attached to this EPN as Annex A.

5. The 2016 Judicial Review quashed the changes to the calculation of the award but it did not quash the changes to the process of determining whether an award was due.

6. In considering whether employees are to be compensated when dismissed on efficiency grounds, the decisions about compensation should be based only on the employee’s health condition(s) and circumstances. The guidance note includes a guide for calculating the proportion of compensation payable. The scale is a sliding scale and any percentage figure from 0 to 100 percent can be used.

Tariff

1. EPN 513 confirmed employees who leave via an efficiency departure should have their award processed under pre-2016 terms going forward.

2. The maximum lump sum payable to someone dismissed on efficiency grounds under the pre-2016 terms is equal to what would have been paid under the old (pre-2010) Flexible Early Severance terms.

3. Broadly, this means a compensation payment calculated as follows:

(a)  two weeks' final pensionable earnings for each year of reckonable service during the first five years of qualifying service;

plus

(b) three weeks' final pensionable earnings for each year of reckonable service during the next five years of qualifying service;

plus

(c) four weeks' final pensionable earnings for each year of reckonable service after the first ten years of qualifying service;

plus

(d) two weeks' final pensionable earnings for each year of reckonable service after the fortieth birthday, up to a maximum of two years' final pensionable earnings.

(Note: For any member who joined, or re-joined, the Civil Service on or after 1 April 1997, only their current period of continuous Civil Service employment counts towards this lump sum.)

4. MyCSP will provide quotes for efficiency compensation upon request.

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