Compensation payments policy

(Updated 01.04.19)

1. Purpose 

The purpose of the Compensation Payments Policy is to, in prescribed circumstances and subject to certain conditions, provide a period where compensation is paid to enable an employee to adjust to a reduction in salary or contracted hours, or to recompense employees who incur additional travel expenses. 

2. Eligibility 

Where an employee is eligible for pay or other compensation payments by virtue of the application of the following policies and/or procedures, the provisions of this policy will apply: 

  • Redeployment to an alternative post under the Council's Restructure and Reorganisation Policy;
  • Redeployment to an alternative post under the Council's Vacancy Management Policy (priority 1/1A employees only[1]);
  • A reduction in contracted hours;
  • The implementation of a grading review affecting an employee's substantive grade;
  • The relocation of an employee's workplace, subject to the terms of individual contracts of employment[2]. 

The provisions of this policy do not apply to: 

  • Teachers, whose pay is determined by reference to the School Teachers Pay and Conditions Document (including Teachers directly employed by the Council);
  • Non-teaching employees who are directly employed by the school;
  • Employees who have been transferred to Lancashire County Council in accordance with TUPE regulations who retain different pay and terms and conditions of employment;
  • Employees with less than 24 months Lancashire County Council continuous service;
  • Fixed term employees.

3. Pay Compensation Arrangements

Where an employee experiences a reduction in salary, following the application of one of the policies and/or procedures detailed in paragraph 2 above, the following will apply: 

For a twelve month period from the date of their appointment/redeployment/change of grade, the employee will receive an additional payment, to be added to their new, reduced salary based on the following: 

  1. The equivalent of four increments above their new annual salary/spinal column point (SCP) (pro rata for part-time employees)[3], or up to £10,000 (pro rata for part-time employees), whichever is the lower amount; or
  2. If the difference between their substantive salary and their new annual salary/SCP (pro rata for part-time employees) is less than four increments, the actual difference in pay.  

 

Example 1

An employee who is currently paid at the top of Grade 7, SCP 25, and who moves into a Grade 6 post, will receive a payment equivalent to the difference between the top of Grade 6, SCP 19 and four increments above, which is SCP 23. 

Example 2

An employee who is currently in a Grade 8 post, but is at the bottom of the grade, i.e. SCP 25, and who moves into a Grade 7 post, will receive no protection if the implementation date of the change is prior to the date of their next increment. If the increment to SCP 26 (in the Grade 8 post) is applied prior to implementation, the compensation payment will be based on one spinal column point.

Example 3

An employee who is currently paid at the top of Grade 13, SCP 57, and who moves into a Grade 12 post, will receive a compensation payment equivalent to the difference
between the top of Grade 12, SCP 48 and four increments above, which is SCP 55.

No other payments previously received in addition to basic pay will be protected, for example, contractual overtime, shift allowance, etc. Overtime and enhancements payable in the new post will be payable at the SCP of the employee's new substantive grade and will not be payable at the compensation rate.

In the event that an employee's grading level is further reduced during any period of compensation, the existing level of protection will continue until the original expiry date. At the point that this original compensation period expires any remaining 'balance' of the compensation period relating to the latest redeployment/assignment will then apply.

Example 4

An employee who is currently paid at the top of Grade 10, SCP 40, and who moves into a Grade 9 post, will receive a payment equivalent to the difference between the top of Grade 9, SCP 35, and four increments above, which is SCP 39, for 12 months. If, however, they then subsequently move to a Grade 8 post after 6 months, they will continue to receive SCP 39 for the remaining 6 months of the original period of compensation, after which their salary will reduce to SCP 34 for a further 6 months.

No annual increments or pay award increases will be applied to the compensation amount during the period of compensation. 

4. Application of Compensation to other Elements of Pay

During the period of compensation, entitlements to the following elements of pay will be paid in accordance with the compensation salary rate until the arrangements are terminated: 

  • Sick pay
  • Holiday pay
  • Maternity, adoption and shared parental pay
  • Paternity pay
  • Special leave pay
  • Redundancy calculation 

Once the pay compensation arrangements cease, entitlements will be paid in accordance with the rate of pay for the post. 

5. Compensation for Compulsory Reduction in Contracted Hours

Where a reduction in working hours is required that result in an employee's weekly contracted working hours reducing, the following compensation arrangements will apply: 

The compensation payment will be a one-off payment based on a total number of weeks' pay, calculated in accordance with the table below, subject to a maximum entitlement of 30 weeks, multiplied by the weekly working hours lost. A week's pay will be based on actual or the statutory maximum weeks' pay (pro rata), whichever is the lowest amount. 

The amount of compensation paid will be on the basis of completed years of service with Lancashire County Council (subject to a maximum of 20) counted backward from the relevant date of the change and on the basis of the following table:

For each completed year of continuous service up to the age of
21

 0.5 weeks' pay
For each completed year of continuous employment from the 
age of 22-40		 1 weeks' pay
For each completed year of continuous employment from the 
age of 41		 1.5 weeks' pay

 

Example 5

An employee aged 39 with 7 years' continuous service with LCC and whose contracted weekly working hours were reduced from 25 to 20 would receive a one-off compensation payment based on the loss of 5 hours pay per week x 7 weeks.

Example 6

An employee who is 42 with 10 years' continuous service with LCC and whose contracted weekly working hours were reduced from 32 to 28, would receive a one-off compensation payment based on the loss of 4 hours pay per week x 10.5 weeks.

6. Excess Travel Allowance

An employee who is entitled to claim additional travelling expenses as a consequence of their relocation will be paid the following: 

An allowance equal to the difference between the cost of travelling: 

  • from his/her home to his/her new place of work and
  • from his/her home to his/her old place of work. 

This allowance will be paid for a period of 12 months from the date of change and will be based on either: 

  • Mileage allowance in respect of the additional mileage actually involved in the change of place of employment at the excess travel mileage rate set out in the Allowances and Expenses Table, or
  • Standard rail and/or bus fares reimbursed upon production of receipts.  

The agreed allowance will only be paid for journeys undertaken and excess travel costs actually incurred. 

Payment of the allowance is subject to the approval of the employee's line manager who is required to ensure the employee is entitled to claim in accordance with this Policy. Line managers are expected to check and confirm the journey details and any mobility clauses contained within the individual's contract of employment before authorising an application form to claim excess travel. 

7. Termination of Pay and other Compensation Arrangements

Pay and other compensation arrangements will terminate in the event that: 

  • The date of expiry of the compensation period is reached;
  • The employee applies for and is appointed to a new post, as the compensation only applies to the post into which they have been redeployed/assigned;
  • The employee's employment ends with the Council, unless the reason for ending employment is because they are transferring to another employer under TUPE regulations in which case the pay compensation provisions contained within this policy still apply. 

8. Conditions

For the avoidance of doubt, compensation payments will not apply where the Council is informed by the employee that he/she wishes to be offered a post at a lower grade, and/or work reduced contracted hours, and/or work at a different location, than his/her substantive post regardless of whether the Council can make an offer of a post which would not involve the employee suffering any detriment in grade, hours or location. 

[1] Fixed term employees are not eligible to receive compensation payments.

[2] Line managers are required to check an employee's entitlement to claim excess travel before authorising a claim, this includes checking the employee's contract of employment and ensuring they have 24 months continuous LCC service.

[3] For salaries that are not on the Lancashire Pay Spine, the starting salary to be used will be the nearest match on the Lancashire Pay Spine to current salary.