Workers face severance pay recall

First Edition

North Tyneside Council workers who lost their jobs as part of a cost-cutting programme may have to repay a substantial part of their redundancy money after the Court of Appeal ruled that enhanced payments were illegal, writes Haydn Price.

Councillors decided not to contest the ruling because of the high costs. The Audit Commission, which brought the original test case, argued that the council could only make the statutory minimum payment. The council contested the judgment, and the case was referred to the Court of Appeal in June.

The illegal payments totalled pounds 1.8m and were paid to 396 workers. The council must now seek ways of retrieving the extra payments from former employees, many of whom are unemployed and claiming state benefits. Council officials said that the payments, which ranged between pounds 500 and pounds 15,000, were not excessive. However, the court ruled that as the council had no powers to make enhanced payments, the additional monies could be recovered.

Brian Flood, leader of the Labour-controlled council, said: 'What the council is being asked to do is absolute nonsense. Enhanced severance schemes are widely accepted practices in both the private and public sectors.'