Essex: Council criticised for wasting money after spending £1m on 69 employee settlement cases
- Credit: Eastern Daily Press � 2008
A local authority has been accused of wasting money after spending more than £1million to settle disputes or contract obligations with 69 employees.
Its records show that since 2010, Essex County Council has spent £1.1m on so called “compromise agreements” – typically paid to close down a dispute or claim from a member of staff.
The council says this is a cost-effective way of dealing with such issues but critics have hit out at the expenditure and say the agreements are in effect gagging orders. The leader of the Labour opposition group, councillor Julie Young, raised a question about the cost at a recent council meeting and said the payments were a waste of money at a time when the authority was making deep cuts in areas like youth services.
Speaking later, she said: “The council is promoting as one of its core principles openness and transparency with the public, yet this very recent data published on compromise agreements does not provide any reassurance to the public that the council is doing enough.
“Spending over £1m of public money to effectively silence 69 departing employees is nothing short of excessive. These agreements should not be used as a costly tool to brush under the carpet possible council failings at the tax payer’s expense.”
The data, obtained through a Freedom of Information request, shows that money was paid to employees involved in cases relating to employment tribunals, sickness and absence, grievance and work performance. The highest amount paid to one employee was over £80,000.
Robert Oxley, the campaign director at the TaxPayers’ Alliance, also criticised the practice.
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He said: “It’s deeply worrying to see tens of thousands of pounds wasted on gagging clauses. Council bosses should not use compromise agreements as they are an opaque and unaccountable way to spend taxpayers’ money.
“If staff aren’t up to the job then they should be let go, not paid off with tens of thousands of pounds. Any payoffs should be out and in the open so residents can scrutinise their value and be assured that their money is not being used to hide council bungling.”
But a spokesman for Essex County Council said the authority does not use compromise agreements to silence staff.
He said: “The use and terms of any compromise agreements, or settlement agreements as they are known, are considered on a case by case basis.
“A compromise agreement is only authorised when it can be justified as being a cost-effective way of closing down a dispute with or claim from an employee or ex-employee and minimises unnecessary expenditure or time being incurred in defending claims which would otherwise divert resources away from the council’s business of providing public services.”