Tens of millions spent terminating staff contracts
The Bureau has discovered that in the past three years councils across the UK spent nearly £50 million on the early termination of employee contracts.
Between April 2007 and April 2010, 7,993 local government employees had their contracts terminated in such a way, at a total cost to councils of £47.7 million.
The highest spender over this period was Manchester City Council, which paid out over £4.6 million in such payments to 416 members of staff, an average payment of £11,204 per employee.
They’re followed by another authority in the Greater Manchester area, Tameside Metropolitan Borough Council, who spent over £2.2 million on terminating the contracts of 192 employees, at an average of £11,885 per employee.
Scottish Borders Council paid out over twice that amount on average per employee, £26,492, terminating the contracts of 47 staff members. The total bill came to over £1.2 million in the past three years.
Related story: TOP 10: Council bills for ‘early termination payments’
Our figures for early termination of contract payments include the cost of severance payouts associated with compromise agreements.
These agreements were heavily criticised by the Audit Commission in a report published in March 2010. Compromise agreements are arrangements that employees enter into when they leave their job, in return for which they agree not to pursue any claims they may have against their employer through an employment tribunal.
The Audit Commission report, ‘By Mutual Agreement’, highlighted how severance payments were used in the termination of senior staff contracts, including 37 council chief executives in a 33 month period surveyed. The Commission found that ‘not all such deals are justified, that competent chief executives have sometimes lost their jobs needlessly, and that less effective individuals have been paid-off rather than dismissed’.
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