Civil servant redundancy payouts to be capped
Civil servants made redundant will have their payouts capped at one year's salary under plans announced by Cabinet Office minister Francis Maude.
He also said the maximum on offer for those taking voluntary redundancy would be limited to 15 months' salary.
Unions have threatened strike action, describing the proposals as "absolutely outrageous".
Mr Maude said the measures were "an inevitable consequence of current economic circumstances".
He said current arrangements - in which some senior civil servants were eligible for severance packages equivalent to six years' pay - were completely "untenable".
On average, civil servants receive pay-offs worth three years' salary under its current redundancy scheme.
Mr Maude said this was not affordable and he urged unions to begin negotiations on finding a "permanent and sustainable" solution to the issue.
"I want to make it absolutely clear that we see today's bill as the basis for immediate discussions to start," he said, outlining plans for immediate legislation.
"What is on offer now is simply untenable and completely out of kilter with that on offer in the wider public sector and private sector."
While there was scope for negotiation to agree a "fair and practical settlement", he said ministers were unlikely to give ground on the caps for compulsory redundancy payouts.
The PCS union - the largest union representing civil servants - sought legal action to block a cap at twice annual salary proposed by the previous government, and have warned of industrial action.
"It is absolutely outrageous that the government is seeking to change the law to get around the clear decision of the High Court, which has ruled twice in our favour," said general secretary Mark Serwotka.
"The court has ruled that detrimental changes to our members' terms and conditions cannot be made without their agreement. This is clearly an attempt to make massive job cuts, which makes no economic sense at a time of recession."
The union said thousands of jobs had been lost across the civil service in recent years and it was a "myth" that civil servants were overpaid and enjoyed handsome pension benefits.
According to the union, 40% of their members earn less than £20,000 a year while the average salary in the civil service is £22,850 - £2,000 lower than the equivalent figure in the private sector.
In addition, it said many civil servants had seen their living standards decline since 2007 as pay increases had not kept pace with inflation.
In a letter to the Council of Civil Service Unions, Mr Maude said the proposed steps were "necessary" due to the PCS union's "unilateral action in contesting the previous government's scheme".
However, he stressed that he was determined to put in place a replacement compensation scheme which provided "additional protection" for lower-paid staff.
The Office of Budget Responsibility has estimated 600,000 public sector jobs could be lost as part of far-reaching spending cuts designed to reduce the budget deficit.
The government says it cannot rule out compulsory redundancies in the civil service but will try to avoid them.
Source: BBC
