Compensation scheme: HMRC halts redundancy process following High Court ruling

Non-ministerial department was forced to delay launch of new redundancy scheme after court quashed existing terms


The court ruling could see former HMRC staff receiving improved redundancy settlements. Credit: HMRC

By Richard Johnstone

09 Aug 2017

HM Revenue and Customs has halted the department’s redundancy programmes after judges ruled that the Whitehall compensation scheme they are based on was unlawful.

An update posted to HMRC’s website yesterday, and seen by Civil Service World, confirmed the department had both halted existing redundancy schemes and delayed launching a proposed new scheme after the High Court ruled the Civil Service Compensation Scheme was unlawful.

Senior judges last month decided that the Cabinet Office acted unlawfully in introducing changes to the compensation scheme in November without consulting the Public and Commercial Services trade union as part of the adoption process.


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A remedy ruling published on Friday following the judicial review ordered the Cabinet Office to pay the PCS and its co-claimants’ costs, and refused the department the right of appeal.

As a result of the ruling, HMRC paused its redundancy schemes, and yesterday’s announcement confirmed that the scheme would remain paused after the final decision quashed the 2016 compensation scheme terms.

As the government is still considering a further application to appeal, HMRC stated it would provide a fuller update as soon as possible. It was also writing to colleagues who left HMRC under the reformed terms, and those currently waiting for voluntary redundancy offers or for the new voluntary scheme to launch.

The court ruling could mean that hundreds of civil servants given redundancy packages under the terms could see their settlements improved.

The revised compensation scheme, introduced in November 2016, made a series of cuts to entitlement under the compensation scheme, including reducing the standard “tariff” used to calculate exit payouts by more than 25%.

Previously, all three forms of exit – voluntary exit, voluntary redundancy, and compulsory redundancy — awarded departing staff a month's pay for every year served. The change saw this cut to three weeks’ pay for every year served, while voluntary exit payments will be capped at 18 months’ salary. This was down from the current level of 21 months, but higher than the 15 months initially proposed by government. Voluntary redundancy payments were capped at 18 months’ salary, down from 21 months.

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