Agenda item - Settlement Agreements

Joint report of the Executive Director of Finance & Resources and the Head of Law & Monitoring Officer (copy attached).

24.1         The Committee considered a joint report of the Executive Director of Finance & Resources and the Head of Law & Monitoring Officer in relation to Settlement Agreements. It was noted the Executive Leadership Team (ELT), as the body responsible for corporate employment matters, had recently agreed a new policy on the use of settlement agreements to reflect best practice. The policy was being bought before the Committee to provide added assurance.

24.2         Councillor Summers welcomed the report as an example of good governance and asked if it reflected on the use of settlement agreements in the past by the Council. In response the Executive Director of Finance & Resources explained that it had recently become apparent the authority needed to keep a better profile of those who had been the subject of settlement agreements; there also needed to be a more sophisticated management of when they were used and for whom. It was also noted that there were times the authority had used settlement agreements in an overly cautious manner where there may have been a simpler mechanism. In response to a further query it was explained that the report provided an average cost of voluntary severance payments.

24.3         In relation to a query about the comparative authorities it was explained that, whilst these were not geographical, they related to language set out by the Chartered Institute of Public Finance and Accountancy (CIPFA); there had been more attention in relation to this topic nationally and further guidance had been issued.

24.4         Councillor Summers went to ask about the media perception of the matter and the Council’s obligations under the Freedom of Information Act. In response the Executive Director of Finance & Resources confirmed that had been a lot of national attention on this topic, and the Council had been using settlement agreements more than some other authorities. In relation to disclosure under the Freedom of Information Act it was clarified that the case for non-disclosure fell within strict criterion, and this generally related, in this area, to data protection issues; however, this was not a blanket reasons for non-disclosure as senior officer settlement agreements were disclosed in the financial statements.

24.5         In response to a further question from Councillor Summers the Executive Director of Finance & Resources explained that the Council needed to be cautious about the judgement of the legal risk, and it might have been this judgement that had led the authority to use settlement agreements more than others. Whilst there may be times when it would be acceptable for the authority to avoid a higher level of risk this would need to be considered on a case by case basis against the other potential routes that could be taken. It was also confirmed that the panel consisted of the Executive Director of Finance & Resources; the Head of Law & Monitoring Officer and the Head of Human Resources & Organisational Development; however, appointed deputies were also able to attend.

24.6         Dr Horne asked about the reporting to the Chief Executive, and it was confirmed that the reporting took place after the agreement; however, the Chief Executive would be required to approve any agreement over £50K or any that related to a member of the corporate management team. Dr Horne stated he was of the view that the Chief Executive should have greater oversight, and the Executive Director confirmed that she would feed these comments back; it was also added that the initial decision to review had come from the Chief Executive in relation to the number of settlement agreements. It was also added that following on from the review it was expected that the number of settlement agreements would be reduced.

24.7         Dr Horne went on to ask about the involvement of the external auditors, and how their role worked in the process. The Executive Director of Finance & Resources explained that the key factors were the value of the agreement and the seniority of those involved in the decision. If the agreement related to a member of the senior management team or the Chief Executive then the external auditors would be alerted; however, the external auditors would not approve the agreement, but they would play a role in scrutinising it – this would be the continuation of the current practice.

24.8         Dr Horne proposed that the use of settlement agreements be published in the Statement of Accounts, and the Executive Director of Finance & Resources noted that this would be a voluntary disclosure and she could consider the inclusion, but a better course of action might be to bring an annual report to the Committee.

24.9         Councillor Deane asked a series of questions and the Executive Director of Finance provided the following responses: there had not previously been a set formula for settlement agreements and they had been undertaken on a case by case basis; however, one of the advantages of the new tighter arrangements was the panel would be able to take consistent decisions. The comparators in the report were the most recent availability, and there was more movement for local authorities to share this sort of information and encourage best practice.

24.10    Councillor Sykes raised concerns in relation to potential volume of work, and in response it was clarified that the agreements would be used less in future following the review.

24.11    RESOLVED – That the Committee note the Statement of Council Policy on the Use of Settlement Agreement set out in Appendix 1 to report coming into effect on 1 October 2013.