NAO report on confidentiality clauses and special severance payments
Over the summer, the Committee of Public Accounts of the National Audit Office (NAO) heard evidence on confidentiality clauses and special severance payments across government. The Committee requested another hearing to allow time for HM Treasury to develop proposals for a framework, and for the committee to complete further work on the health; culture, media and sport; and defence sectors. The Comptroller and Auditor General has recently published its follow up investigation which is critical of the practices of some government departments, and will be of interest to all employment law practitioners who advise the government sector.
Specific findings highlight the need for: better guidance on the use of confidentiality clauses and special severance payments in compromise agreements (now known as settlement agreements); and improved transparency and oversight to identify and address patterns of behaviour.
- Treasury has approved some severance payments, where business cases refer to failure or inappropriate behaviour
The report stressed that the Treasury has approved some severance payments, where business cases refer to failure or inappropriate behaviour. The Treasury’s guidance states that payments that reward failure, inappropriate behaviour or dishonesty should not
be approved. Yet the committee found business cases referring to elements of alleged gross misconduct or staff harassment.
The report highlights that four out of the 19 cases tested in the follow-up review involved examples of alleged failure or inappropriate behaviour. The Treasury approved all of these special severance payments, with a combined value of £251,000, despite references to performance and behaviour issues in the business cases.
- Examples of severance agreements being agreed in response to failure to comply with internal policies and procedures
The report refers to examples where severance payments were agreed in response to failure to comply with internal policies and procedures. Including three cases, in the defence sector, where managers had not followed the internal policy in relation to the employment of staff, and that severance payments were approved to avoid claims for compensation.
The NAO confirm that they received two agreements which include clauses where the employee agreed not to pursue further complaints with a number of organisations including the Care Quality Commission and the Department of Health. The report highlight the risk that clause like those might discourage employees from raising genuine concerns about service failure with appropriate oversight bodies. They also set out a particular their case study about an employee who had previously reported concerns of fraud and patient safety.
The follow up investigation includes an appendix setting out the recommendations from their original report, which practitioners should review if negotiating terms of a settlement agreement in the government sector.
Click here for a link to the follow up investigation.