By Peter Law
Cardiff Council spends £26m on ‘gagging orders’ for former employees
1 Jul 2013 06:25
Conservative group leader David Walker says the amount of money spent ‘buying the silence’ of ex-staff is a ‘scandal’
Cardiff Council offices at Cardiff Bay Cardiff Council offices at Cardiff Bay
Cardiff council has been accused of spending more than £26m of taxpayers’ money over the past five years to ‘buy the silence’ of ex-staff.
Council leader Heather Joyce said since Labour came to power in May last year the authority had spent about £4m on 230 non-schools ‘compromise agreements’.
This is on top of the tens of millions of pounds paid to former employees in the years prior under the previous Liberal Democrat/Plaid Cymru-led administration, she said.
Compromise agreements are legally-binding contracts in which departing workers receive a severance package.
In return for the pay-off, they are not allowed to challenge their departure at an employment tribunal or in court. It also prevents them from speaking about their former employer in the media.
Coun Joyce told a meeting of the full council: “I understand that the vast majority of the compromise agreements were agreed during the previous administration, not necessarily gagging, but as I understand it, it also covers things such as unfair dismissal.”
Describing the revelation as a ‘scandal’, Conservative group leader David Walker said at City Hall: “Paying this amount of money to buy people’s silence is coercive and unethical.”
He later told WalesOnline: “These are huge sums of public money paid out to buy peoples silence when they leave the council.
“Most councillors were staggered to hear Heather Joyce reveal the enormous sums of public money wasted on these so called ‘gagging orders’.
“Cardiff taxpayers will be outraged to hear the huge sums wasted in this way. It is a scandal and it must be stopped.”
The figures were first uncovered by the Channel 4 Dispatches programme entitled “How councils waste your money”.
The documentary surveyed every council in Britain and found Cardiff had spent the most on compromise agreements – £30.4m on 1,192 agreements since 2007.
A council spokesman clarified that this figure included payments to “schools-cased staff” that were not the subject of compromise agreements.
He said the actual spend between 2008 and the end of March this year was £26,228,049 – with an average payment per former employee of £26,736.
The maximum payment is £29,700, which equates to a ceiling of £450 pay per week and a maximum of 66 weeks salary, depending on age and length of service.
The maximum prior to April 2011 was £32,868.
The spokesman said while the council’s discretionary redundancy payments scheme is more generous than that of the statutory redundancy scheme, it is less generous than other organisations.
“Compromise agreements are used where there is a mutual agreement to bring the employment relationship to an end usually by way of an agreed compensation package (including voluntary severance),” he said.
“Cardiff has always used this method (other than for redundancies in schools) and it applies irrespective of the grade of the person exiting the organisation.
“The use of compromise agreements protects the council from potentially costly employment tribunal proceedings which may be brought by an employee (i.e. unfair dismissal).”
Because of the council’s financial position it’s workforce headcount has shrunk, mostly through voluntary measures – hence the number of compromise agreements,” he said.
Councillor Judith Woodman, leader of the Liberal Democrats, which ran the council between 2004 and 2012, said the agreements related to the settling of single status pay claims.
“There were hundreds of council staff who had not been paid what they should have, mainly women. Equal pay had to be done,” Coun Woodman said.
“The council reached agreements with individuals on their back pay etc and settled on this, with union agreement, and in return staff signed away their rights to take legal action.
“If such agreements were not done, in effect many hundreds of staff could have taken legal action which would have cost this council far in excess of what was paid out.”
Plaid Cymru councillor Neil McEvoy, who was deputy leader in the previous coalition administration, said he was “completely unaware” of the use of the agreements.
“It was kept from me, which I am not happy with at all,” Coun McEvoy said.
“As far as I know people were given ‘packages’. It was never made clear to me that compromise agreements were involved. If that had of been the case, I certainly would not have approved.”