The Government risks undermining its own bid to crackdown on public sector exit payments by making its clawback regulations over-complicated and unclear, say legal experts.
The Employment Lawyers Association (ELA), a non-political group of employment law specialists whose 6,000 plus members advise both employers and employees, is urging Government to make adjustments to ensure the new measures are effective. The regulations flow from deep-seated concerns that highly-paid public sector executives were walking into new roles within months of receiving five-figure sum exit payments to leave their previous roles. Government was keen to be able to clawback these payments in such circumstances.
ELA, responded to an initial consultation in 2014 when action was first proposed and acknowledges that Government has taken on board some of the concerns expressed then. However, ELA says the draft regulations are “unnecessarily complicated” and likely to be unhelpful to all involved be they employees, employers or prospective employers. Paul McFarlane, chair of the ELA sub-committee responding to a consultation on the draft regulations, said: “As ever, the devil is in the detail. The regulations as drafted would create unnecessary confusion which could prove costly to any one of the parties involved and could discredit Government efforts to crackdown on a perceived wrong.
“It also seems unnecessary to make those seeking to comply with the Regulations have to refer lots of other legislation before being clear about what they need to do. Some extra time now spent on ironing out all of the wrinkles is much more likely to deliver an effective end product for Government.” In particular ELA highlights, for example: Lack of clarity around the earnings taper which would trigger a “qualifying exit payment” (those who earned £80,000 are not affected but the regulations do not make clear how those earning between £80,000-£99,999 would be affected);
Confusion around the date when an exit payment is deemed to have been paid; Confusion between the terms “hiring authority”, “subsequent authority” and “responsible authority” in various sections of the regulations – these need to be defined clearly; The definition of the “minimum amount repayable” is contained in the detail of a different piece of legislation. It should be included in the new regulations for ease of use; Lack of clear guidance on when a hiring authority can decide not to take action to initiate an exit payment repayment.
