Are unions right to fear mass sackings are on the way?

ONE OF THE changes which the Tower Rewards contracts have brought into Tower Hamlets Council staff terms and conditions is a massive reduction in the contractual redundancy pay to which staff were previously entitled.

Unions and service users alike are left asking themselves why this particular condition of employment in Tower Hamlets has been singled out for change. Unison records that it has heard Executive Mayor John Biggs stating in public that the Council spends £1.7 million a year on severance (redundancy) payments and implying that the Council should reduce the spend on staff who are leaving in order to invest in increased pay for those who remain working for the Council. It’s a glib soundbite – but rather misses the point.

Let’s remember what redundancy is. It’s is not about sacking individuals for incompetence or bad behaviour. It is about a Council ceasing to carry out a certain function – not contracting it out but actually ceasing to do it – and the staff who used to perform that function therefore having no function to carry out. The law states that workers who are made redundant must be paid redundancy money. This “statutory redundancy” is not a fortune, but it helps tide a worker over till he or she can find another job.

The statutory (legal) amount of redundancy payment is often enhanced by employers in the contracts they offer their staff (“contractual” redundancy entitlement). Unison believe that Executive Mayor John Biggs has been arguing publicly that the contractual enhancement which Tower Hamlets Council used to offer its staff was too generous – leading to the alleged £1.7 million/year spend on staff who are leaving.

Unison believe the figure of £1.7 million may relate to a three year period, rather than just one. Either way, it is shocking that Tower Hamlets Council has got rid of £1.7 millions-worth of staff. What functions have they shed which led to this number of workers no longer having a job to do?

The pre-Tower Rewards contractual redundancy deal was calculated as a sum, depending on age and length of service, which was then multiplied. It seems that Tower Hamlets Council management initially wanted to remove the multiplier altogether and, in negotiation, agreed not to remove it but to reduce it – perhaps to 40% of its previous level.

No one can remember why Tower Hamlets Council had a generous contractual redundancy scheme. (Ironically, it may date from the last time John Biggs was Leader of Tower Hamlets Council and negotiating contracts and the like to re-structure the Council from a Neighbourhood-based to a central organisation.) But the point of the contractual redundancy was to make the Council think very seriously before shedding functions and workers to cope with central government cuts.

Union members claim to have heard Executive Mayor John Biggs stating that the pre-Tower Rewards offer was particularly generous – and costly – for the highest paid staff. It would have been open to Tower Hamlets Council management to reduce the statutory redundancy offer for senior staff, if that was the case. Such an imbalance would not justify reducing contractual redundancy across the board, as Tower Rewards has done – particularly at time when the UK is in an economic depression and redundant staff know it is going to be very hard indeed to find a new job.

The quickest, easiest and least controversial way to reduce the Council’s spend on redundancy would be, of course, not to make any workers redundant.  It is quite common, in times of economic downturn, for Labour Councils to recognise that its staff are a huge asset, in whom the Council has invested, and to pass a “no redundancies” policy. The fact that Tower Hamlets Council has not done so, but has instead imposed a “let’s make redundancies cheaper” condition across the board, is ominous. Given the financial reports to the last Tower Hamlets Council Cabinet meeting, which addressed the Council’s over-budget spending during the Coronavirus Lockdown, it is very ominous indeed.

•Read more about Tower Rewards:
Tower Rewards

•Read more about the Biggs Administration:
Executive Mayor John Biggs