Lancashire councils spend £1.5m on pay offs

Lancashire councils have today defended shelling out millions in compromise agreements with former employees.

Monday, 8th August 2016, 5:04 am

Lancashire County Council had the largest sum of the seven authorities we contacted with Freedom of Information requests, asking how much had been paid out when terminating employees’ contracts.

Thirty-three former LCC workers picked up £766,274 over the last five years. Some 16 left when the council was under Tory control with pay outs of £246,964 between 2010-13.

When Labour came to power, they handed over £519,310 in payments between 2013-15, saying goodbye to another 17 workers.

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Typically, compromise agreements can include confidentiality or gagging clauses, preventing the former employee from disclosing information about their former employers and vice versa.

A spokesman for Lancashire County Council said: “Like many employers, the county council sometimes uses compromise agreements to help end an employment relationship in a mutually acceptable way, where we anticipate it may be more costly to go through employment tribunal proceedings.

“It’s normal to include a confidentiality clause for the benefit of both parties - for the employee, this usually means they receive an agreed reference that the council will not add to if asked about their employment.

“Given that throughout the period dealt with by these figures, the county council had a workforce of between 13,000 and 16,000 people, their use is relatively uncommon.”

October 2013 saw the high profile departure of Chief Executive Phil Halsall from the county council following a disciplinary investigation. His £190,000 per annum employment was “terminated by mutual consent” but a council spokesman confirmed this week he had not received any compromise payments.

Chorley Council also opened its coffers to send 29 staff on their way with payment totalling nearly half a million pounds - £490,468.

The highest number - 18 - left in 2010/11 pocketing £330,246. Another four went the following year taking £63,526, four in 2012/13 taking £66,869, just two in 2013/14 taking £26,000 and one person was asked to sign a compromise agreement in 2014/15 receiving £3,827,

Gary Hall, chief executive of Chorley Council, said: “The costs associated with the agreements signed in the past predominantly relate to the restructuring costs associated with reducing the size of the Council a number of years ago as many other local authorities did.

“The driver behind any changes is to offer value for money for our residents and the council has done this whilst protecting all our services.

“The policy prior to 2012 was to encourage staff to leave via the compromise route which protects the council from any subsequent litigation in relation to their employment.

“This practice is no longer pursued and only in very rare circumstances, and where appropriate, are compromise agreements made now.

“This is reflected in the significant reduction in the number of agreements and cost since that period, and a reduction in staff leaving the authority generally.”

Coun Alistair Bradley, leader of Chorley Council, said: “When we came into administration in 2012, we immediately reviewed the approach to restructuring of the previous Conservative administration, which we had been highly critical of in the years prior.

“This has ensured that the previous practice has been changed to reflect this administration’s more considered approach to downsizing the organisation, and we believe that we now have virtually erased these costs while ensuring we continue to offer excellent services to residents.

“I personally believe that if a council is well run, there should not be any need for any kind of compromise agreements of any kind, and I am happy to pledge to continue our policy of avoiding such unnecessary methods of management.”

In Preston, 17 council staff signed compromise agreements over a four-year period at a cost of £169,699. Ally Brown – Director of Corporate Services at the city council said: “Settlement agreements can be helpful to both employers and employees in certain circumstances. Every case is judged on its merits and we only use them when we consider it is in the best interests of the council to do so. It’s always a difficult balancing act about protecting the position of the council whilst also considering the potential for both costly and time consuming litigation. A settlement agreement provides certainty, which is often helpful to both parties involved.”

South Ribble Council, meanwhile, said goodbye to one employee over the 
five years paying £5,000 out in 2014.

Ribble Valley Council had approved compromise agreements with 11 staff at a cost of £24,294. Fylde Council approved five redundancy related compromise agreements at a cost of £79,756.

Wyre Council signed up to five but declined to provide exact numbers or figures.

The details were disclosed following Freedom Of Information requests.

In 2013, the National Audit Office (NAO) criticised a lack of transparency, consistency and accountability in the use of compromise agreements in the public sector.

Following an investigation into the use of such agreements it said an imbalance of power between employer and employee could leave the system open to abuse, they meant poor performance or working practices were hidden and lessons remained unlearned and agreements were a significant cost on the public purse.

The National Audit Office said it was important that compromise agreements do not leave staff feeling gagged, or reward the failure of 
either an employee or organisation. It noted such agreements were widely and often legitimately used.

The details of such agreements can vary, for example including confidentiality clauses preventing an individual from revealing they are bound by such a clause. The agreements can also be known as “special severance payments” and the Audit Office noted that: “Public sector workers are sometimes offered payment for terminating their employment contract and agreeing to keep the facts surrounding the payment confidential.”

Unison did not respond to a request for a comment.