Further to our recent article in which we highlighted the issues relating to local authority settlement agreements, the Government of the Isle of Man has stated that it is now conducting a review of its position in relation to settlement agreements and the amount of money that is being paid out to those leaving Government jobs.
Settlement Agreements
A report on local authority settlement agreements conducted by the TaxPayers Alliance revealed that between 2016-19, local authorities nationwide entered into 6,980 settlement agreements overall, with £98,059,105,00 paid out in total
The average payout according to the report was £14,048.59, whilst the highest total amount paid out was by Stoke-on-Trent City Council, who paid out £8,552,433.00 in relation to 371 settlement agreements. This was also the highest number of settlement agreements entered into by any one Council, and included a pay out of £195,463.00 to just one particular individual, the highest known individual pay out by a local authority during the 3 period in question.
The highest average payout during the 3 year period was by Basingstoke and Deane Borough Council, with an average payout on their settlement agreements of £79,628.00. That Council paid out a total of £398,139.50 on 5 settlement agreements.
Isle of Man
A freedom of information request has revealed the following in relation to settlement agreements and severance packages relating to the Isle of Man:-
- 27 settlement agreements have been entered into during 2022/23
- 215 settlement agreements have been entered into over the last 5 years
- £1,978,144.11 has been paid out during 2022/23
- £9,800,703.80 has been paid out over the last 5 years
- The average payout over the last 5 has been £45,584.67. However, during 2022/23, the average has increased to £73,264.60. This compares to an average payout amongst UK local authorities of £14,048.59 and an average payout amongst NHS trusts of £20,573.00
Commenting upon the situation, the Minister for the Cabinet Office, Kate-Lord Brennan, stated: "In any large organisation, redundancy, performance or disciplinary issues will inevitably mean that employers seek to terminate the employment relationship. In some cases this can, and may need, to be achieved by way of a conciliated settlement agreement, meaning that some employees exit the organisation with some financial recompense in order to end the employment and to avoid costly legal claims."
Brennan added: "Nevertheless, the use of conciliated settlement agreements within the Isle of Man Government, and the figures involved over a number of years, has been a matter of concern for me and so we are reviewing the use of these types of arrangement to ensure they are only used in exceptional circumstances.....The Public Services Commission is actively working on a policy which will provide guidance to Accounting Officers of Government Departments and the Office of Human Resources, as to the use and approval process required for all conciliated settlement agreements."
Freedom of Information Requests
Both the Isle of Man data and that acquired in relation to the TayPayers Alliance report was obtained through the making of freedom of information requests. Indeed, the freedom of information request relating to the Isle of Man was made on the 24th January 2023, with the data being issued by the Isle of Man Cabinet Office on the 13th March 2023
Increased Scrutiny
The large amounts being paid out by local authorities and other organisations have been coming under growing scrutiny in recent times, with more and more freedom of information requests of this nature being made by the media and other organisations, such as the TayPayers Alliance
One freedom of information request, for instance, revealed that the City of York Council had entered into 33 settlement agreements, with a total pay out of £523,427.00 during a 4 year period between 2016 –20, with an average pay out of £15,861.42.
NHS Trusts
Moreover, research conducted by the TaxPayers’ Alliance using freedom of information requests found that NHS trusts spent £27,978,661.00 on 915 settlement agreements between 2015-18, with an average pay out of £20,573.00
