Restriction of Public Sector Exit Payments Regulations 2020

Baroness Falkner of Margravine Excerpts

Wednesday 23rd September 2020 Lords Chamber

[Baroness Falkner of Margravine (CB)]

My Lords, I begin by assuring the Minister that I too have no objections at all in principle to the imposition of a payment cap on public sector employees. I only wish that the private sector would voluntarily incorporate some form of limit on what employers pay as golden goodbyes, but I fear that that is not imminent. However, I am troubled by the immediacy of these regulations, by their seemingly sweeping application—particularly as it impacts older workers on modest levels of pay—and by the burden imposed on individuals.

The rush to implement these regulations within 21 days seems inappropriate. Surely a longer period is required for the plethora of public sector bodies to examine the implications and communicate with employees who might be affected in the next several months, when finances and workloads will be particularly stretched. Why not pause the implementation for a reasonable period while HMT deals with the significant concerns that employers have and issues appropriate guidance after listening to those concerns?

I turn to the human rights implications. The briefing from West Midlands Employers concerns the impact on employees who might be caught by these regulations, who are mainly long-serving but on relatively modest incomes and disproportionately female. When the original legislation was passed in 2015, we expected it to deal with high-earning executives, but it now appears that it will also catch those I have mentioned due to pension strain costs. This is an issue on which almost every speaker has commented. The briefing gives an example of an employee who

“on a salary of £40,000, with 37 years of service, on early retirement, would require the county council to pay approximately £97,000 into the fund, without adding redundancy pay, notice, or holiday pay.”

The Minister has mentioned that a waiver might be available for a limited number of cases. Could he indicate whether guidance will be issued to explain what those circumstances might be?

The BMA highlights different issues and I hope the Minister will reclarify its main charge—that the regulations are unlawful because they capture individuals who have claims against their employer which arise during their employment. These might relate to claims for damages for race or sex discrimination, or any form of discrimination under the Equality Act 2010. They point out that this is a significant change from the 2015 statutory wording. My interpretation of Regulation 6(f) is that such payments would come under its terms. Could the Minister clarify what would happen if an employer settled a claim without resorting to a tribunal—that is, where Regulation 6(f) is too narrow in its scope and does not take into account this kind of settlement?

Why are such onerous terms of a requirement to inform placed on the individual by Regulation 9, rather than on the employer, as required by the 2015 Act? Here I have sympathy with the example of junior doctors frequently moving between NHS employers, particularly as the sums concerned are nowhere near the £95,000 cap. I look forward to the Minister’s reply.