Agenda item

The Committee had before it a report by the Director of Corporate Governance which requested that the Committee determine whether to exercise the Council’s discretion to make provision for a one off limited lump sum payment to an employee, in circumstances where employment is terminated on grounds of ill health or infirmity of the body or mind, but the employee is not eligible to receive ill health retirement benefits.  This payment was referred to as the Third Tier Ill Health Gratuity.

By way of background the report advised that the Third Tier Ill Health Gratuity was detailed within Regulation 49B of the Local Government (Discretionary Payments and Injury Benefits) (Scotland) Amendments Regulations 2009, which was an amendment to the Local Government (Discretionary Payments and Injury Benefits) (Scotland) Regulations 1998, and should be read alongside the Local Government Pension Scheme (Benefits, Membership, Contributions) (Scotland) Regulations 2008.  The Regulation could apply only in cases where an employee had been an active member of the Local Government Pension Scheme for at least two years, so, should the Council decide to terminate employment on the grounds of ill health or infirmity of the mind or body and the employee in question was not entitled to ill health retirement benefits (if they were not permanently incapable of discharging the duties if their current post), the Council could make a discretionary grant - the Third Tier Ill Health Gratuity.

The report continued that the Council had the option to apply the discretion for the payment or not.  If the Council chose to apply the payment, it would consist of a lump sum equal to one week’s pay for every whole year of employment with the Council. The amount of gratuity could not exceed 30 weeks’ pay and the amount of one week’s pay would be equal to the annual rate of the employees pensionable pay on the day before employment would be terminated, divided by 52.

The report author suggested that due to the costs involved, the Third Tier ill Health Gratuity should not be applied.  Further, it was felt that the provisions within the pension regulations of tiers one and two for ill health retirement cases already contained within the Local Government Pension Scheme regulations were generous and sufficient.  A benchmarking exercise had been undertaken with other local authorities, and seven out of the nine Councils that had been approached had confirmed that they would not intend to apply the policy, with the remaining two undecided.

The report proposed that should the Committee choose to not apply the Gratuity, that the policy statement should read as follows:- ‘Aberdeen City Council has determined NOT to apply the discretion to make payment of a third tier Ill Health Gratuity provided in Regulation 49B of the Local Government (Discretionary Payments and Injury Benefits) (Scotland) Amendment Regulations 2009’.

The report highlighted that should this course of action be agreed, any sickness absence cases falling under this category would continue to be treated under the Council’s Managing Attendance Policy as capability dismissals on grounds of ill health, with the employee receiving pay in lieu of notice and any untaken holiday entitlement at termination.  In this circumstance, the employee will have been deemed not to be permanently unfit for their current employment and able to undertake further employment at a point in the future.

The report concluded that comments had been received from the trades unions who were of the view that the gratuity should be applied.

The Committee resolved:-

(i)         to request that officers report back in much more detail in three months, in order for a final decision to be taken with regard to the Third Tier Ill Health Gratuity;

(ii)        to agree not to apply the Third Tier Ill Health Gratuity until the above report is brought back to this Committee for final decision; and

(iii)       to note that if there are any staff that would be detrimentally affected by this decision prior to the report coming forward, that Standing Orders could be suspended in order for specific cases to be considered on their own merits.