Taxpayers on hook for Federal Public Servants’ severance pay
Federal public servants’ buyout packages could top $2 billion
Taxpayers could be on the hook for more than $1 billion in severance pay to federal public servants who remain in their jobs, …..voluntarily quit their positions …….or retire from government.
The eye-popping payout packages are in addition to an estimated $900 million in “workforce adjustment” payments — including 22 weeks pay for one year of service — that will be granted to thousands of federal employees losing their jobs due to federal budget cuts.
Combined, the two sets of payments could cost taxpayers $2 billion.
More than two dozen collective agreements signed between the federal government and public sector unions allowed, up to October 2010, for the accumulation of severance to be paid out to employees for resignations, retirements, lay-offs and other reasons.
The government is now in the process of settling the 27 collective agreements that allowed for the accumulation and voluntary pay-out of severance.
Hundreds of thousands of core public servants who accumulated the benefits are allowed to voluntarily cash out the severance while they remain in their jobs. They also can wait until they resign ……or retire to collect the cash, ……or receive some of it now and the remainder when leaving the public service.
To date, nine of the 27 agreements that allowed for the accumulation and voluntary payout of severance have been settled, while also eliminating the lucrative perk going forward, according to the federal government.
Those nine deals, which cover more than 100,000 of the 212,000 employees in the core public administration, already are costing the government $850 million in expected severance payouts.
Additional cash will be needed in the future as Ottawa slowly settles all of the collective agreements — which means the severance pay-out to remaining, resigning and retiring employees likely will top $1 billion.
The cash settlements are on top of an additional $900 million in compensation, announced in the March budget, that the government expects to pay out to public servants as Ottawa eliminates 19,200 federal jobs over the next three years.
The Privy Council Office, the hub of the public service that supports the Prime Minister’s Office and cabinet, paid $10.5 million in voluntary severance to 483 employees for the 2011-12 fiscal year that ended in March, averaging out to around $21,739 for every worker who requested the severance.
Paying severance to employees who remain in their jobs or voluntarily leave is “absolutely insane,” said Dan Kelly of the Canadian Federation of Independent Business, which represents more than 109,000 small-business owners across the country.
“The average Canadian who may have lost their job during the recession would be shocked to learn that civil servants, when they quit or choose to retire to their gold-plated pension, we as taxpayers give them a nice big fat [severance] cheque,” he said.