A severance policy for Scotland: consultation

5 Impact analysis

5.1 Economic and fiscal

Between 2010‑11 and 2019‑20, the Scottish fiscal revenue budget (which funds discretionary expenditure on public goods and services in Scotland) will fall by around nine per cent in real terms. As the public sector paybill represents a large proportion of devolved public expenditure, action to make savings in paybill costs are an important part of the response that all public bodies have been and will continue to make in the challenging financial context.

Question 18

You are invited to provide evidence of where an exit cap or other changes to exit payment terms would further support your organisation's ability to manage paybill costs?

Question 19

What do you think are the positive and negative economic and fiscal impacts of an exit cap, changes to exit payment terms and recovery arrangements?

What evidence do you have?

5.2 Social Impact

Scottish Ministers recognise that Scotland's geography means it has a dispersed workforce in rural and island areas. In such areas employers can have more limited recruitment options. Employers may have no option but to consider former public sector employees when filling vacancies and such employees often have valuable skills and experience to offer. However, the recruitment of former public sector employees could be impacted if mandatory recovery of exit payments within 12 months of leaving means that such employment opportunities become less attractive.

Furthermore, due to the size and nature of Scotland's public sector, close relationships exist between certain aspects of the public sector, for example, between NHS and local government, which mean there is a degree of churn across these areas of the public sector. The impact of new provisions on recovery could slow down or hinder this type of workforce movement.

Question 20

What do you think are the positive and negative social impacts of an exit cap, changes to exit payment terms and recovery arrangements?

What evidence do you have?

5.3 Environmental and regulatory impact

The Scottish Government considers there to be no direct environmental or regulatory impact.

Question 21

What do you think are the positive and negative environmental and / or regulatory impacts of an exit cap, changes to exit payment terms and recovery arrangements?

What evidence do you have?

5.4 Financial impact

To enable employers to re‑shape services in light of budget challenges, exit packages are one way of achieving this. Ensuring that exit packages offer flexibility to employers, support to employees and value for money to the taxpayer, are key drivers of any decision around the implementation of an exit cap or recovery arrangements.

Question 22

What do you think are the positive and negative financial impacts of an exit cap, changes to exit payment terms and recovery arrangements?

What evidence do you have?

5.5 Equalities impact

Alongside any policy development resulting from this consultation, legislation requires the Scottish Government to equality impact assess any new policy and publish the results. We will therefore be carrying out an Equality Impact Assessment. This is an important part of the policy making process and will assist in the assessment of how any resulting policy impacts on people who share 'protected characteristics': age, disability, sex, gender reassignment, sexual orientation, race, marriage and civil partnership and religion or belief. It also presents an opportunity to promote equality.

Specifically in relation to the three needs of the public sector equality duty in the Equality Act 2010, any new policy will need to have due regard to the need to:

• Eliminating unlawful discrimination
• Advancing equality of opportunity
• Promoting good relations

The Equality Impact Assessment will consider the potential impact of any new policy with each of the key features of the proposed policy on the protected characteristics.

Whatever transpires, individual employers will still be required to ensure that they do not introduce or perpetuate any direct or indirect discrimination for individuals in their application of the policy outcome.

Question 23

What do you think are the positive and negative equalities impacts of an exit cap, changes to exit payment terms and recovery arrangements?

What evidence do you have?

5.6 Unintended consequences

With the exception of maintaining the status quo, there may unintended consequences related to implementing certain options which reduce the value for money aspects or the ability of public bodies to function effectively.

Initial comments on possible consequences have included:

• Lower exit payments may discourage employees from applying for early exits - this could affect the ability for public bodies to manage their staffing levels and cost effectively
• There may be a rise in the number of those seeking to exit before any changes take place - this could impact capacity and the ability of public bodies to operate effectively
• Public bodies may instead engage individuals in ways beyond a normal employer/employee relationship, such as on a consultancy or contractor basis to avoid the need for recovery action

There may be other outcomes which have not been foreseen and we would welcome your thoughts.

Question 24

What unintended consequences do you think might arise from proposals that go beyond the status quo?