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The NHS spent £15 million in three years on gagging whistleblowers, according to the Daily Mail. In just three years there were 598 ‘special severance payments’, almost all of which carried draconian confidentiality clauses aimed at silencing whistleblowers. They cost the taxpayer £14.7million, the equivalent of almost 750 nurses’ salaries.
Whistleblowers have found them at the end of such agreements, and why the NHS culture is not one of transparency and trust is a damning observation. Compromise agreements have also been used in ‘genuine’ situations of redundancy. Redundancy arises when an employer either:
- Closes the place of work; or
- Reduces the number of employees which are employed by it.
The employer is under an obligation to pay a redundancy award to any employee who is dismissed by reason of redundancy if that employee has two years’ service or more. From an employee’s perspective, it is quite common that when employment ends, you and your employer agree to enter into a “Compromise Agreement”. The purpose of the compromise agreement is to regulate matters arising from the termination. A compromise agreement is a legal document that records the agreement between an employee and employer whereby the employee agrees to ‘compromise’, or not to bring, a claim against the employer in relation to any contractual or statutory claims they may have in relation to their employment or the manner of its termination. This type of agreement is typically in return for the payment of a sum of money from the employer to the employee. It may also contain details of additional ancillary agreements between the parties on topics such as: ongoing confidentiality/ restrictions, agreed form references etc.
Compromise Agreements can be very effective and, in essence, amount to a ‘clean break’ that, hopefully, benefit both parties and enable everyone to move on. They are enshrined in law through s.203 Employment Rights Act (1996). A dismissal by reason of redundancy can amount to an unfair dismissal. There are other statutory reasons for unfair dismissal which are allowed, which are cited earlier in the Employment Rights Act.
A dismissal by reason of redundancy can amount to an unfair dismissal. Issues which render such dismissal unfair often include:-
- The selection of a pool of employees from which the redundant candidate is chosen;
- The criteria for such selection; and
- Failure to consult appropriately.
The House of Commons Committee of Public Accounts published a document “Department of Health: progress in making NHS efficiency savings: Thirty-ninth Report of Session 2012–13″ on 13 March 2013. The discussion between Meg Hillier and Mike Farrar talks about redundancy payments, but interestingly this document does not refer to ‘compromise agreements’ once.
“Q29 Meg Hillier: Maybe at chief executive level, but I know for a fact that there are people out there who have taken generous redundancy payments—they may genuinely have thought they were not going to work in the NHS again—but there is such demand for their skills and services that they have been brought back in. There seems to be no real ability to have safeguards. I know they are your members, so maybe it is in your interests for them to get these positions, but this is about all taxpayers’ money, and in the end it affects everyone.
Mike Farrar: We have tried to support the management of people through the system to the best possible place to get the best value for taxpayers; that is what we would want to see. The reforms have abolished authorities and organisations. People have not been able to take redundancy unless they were eligible for redundancy on the basis that their organisation has been abolished. That has allowed management cost savings of a significant level—
Q30 Chair: Well, we do not know, because you might have had a whole load of management costs in terms of redundancy, with people then re-emerging elsewhere. We are very sceptical.
Mike Farrar: I think the reforms of this House are responsible for certain people having been eligible for redundancy. There is a notion that those individuals leapt at the chance to be made redundant in order to deploy their services back, but that has only been created in terms of an opportunity because of reforms passed by the House. Some of these points were made during the passage of the Bill. “
HM Government has never published its “Risk Register” for the Health and Social Care Act (2012), despite the guidance involving the Information Commissioner. Today’s Report published by the National Audit Office on the use of compromise agreements makes for depressing reading:
“There is a lack of transparency, consistency and accountability in the use of compromise agreements in the public sector and little is being done to change this situation, an investigation by the National Audit Office has found.
Public sector workers are sometimes offered a financial payment in return for terminating their employment contract and agreeing to keep the facts surrounding the payment confidential. The contract is often terminated through the use of a compromise agreement and the associated payment is referred to as a special severance payment.
The spending watchdog highlights the lack of central or coordinated controls over the use of compromise agreements. The NAO was not able to gauge accurately the prevalence of such agreements or the associated severance payments. This was down to decentralized decision-making, limited recording and the inclusion of confidentiality clauses which mean that they are not openly discussed. No individual body has shown leadership to address these issues; the Treasury believes that there is no need for central collection of this data.”
It could be there that there is a fundamental faultline in how performance management in the NHS is currently being implemented, in which commercial lawyers are not quite silent bystanders. That is, the NHS has found itself in a situation where it is generating efficiency savings, which do not get ploughed back into frontline care. A reasonable place to start is also the implementation of the Health and Social Care Act (2012), and this complex strategic restructuring has obviously had its opportunity cost, even as described on Wikipedia here:
When you have CEOs and NHS Foundation Trusts being judged by their ‘efficiency savings’ which may involve redundancies (though these parties will argue that many of these staff are mostly employed back), the performance management system is heavily weighted against long-serving staff with experience and skills of working in the NHS who ought to be cherished for ‘adding value’. This is clearly a massive fault with how the NHS rewards ‘success’ in the NHS (and if the CQC’s recent scandal and more are anything to go by does not appear to punish ‘failure’ in the regulatory system, either.) And when you add to that that the experience of NHS whistleblowers, often at the receiving end of compromise agreements with suboptimal legal advice (whereas the NHS has access to the best commercial and corporate lawyers), is that whistleblowers tend to get humiliated and marginalised to such an extent that they never work again, you can see how compromise agreements, while certainly enshrined in law for a legitimate person, along with an alleged lack of teeth of the Public Interest Disclosure Act (1998), has successfully allowed a ‘toxic culture’ to perpetuate very successfully indeed?