Dr. Brendan McCormack:

I thank the Chairman and members for the invitation to appear before the committee. IT Sligo, formerly known as Sligo Regional Technical College, will have been in existence for 50 years in 2020. We have a strong track record of performance in the provision of education in the north west. This includes the provision of further education apprenticeship awards and higher education awards from level 6 to level 10. Much of this education is delivered online.

The institute is well managed and has never been in financial deficit. As part of our risk management policy, we have a requirement to put 3% of our annual revenue into our reserves and have done this consistently year on year. It has allowed us to invest €35 million of our own funds in new on-campus developments in the past ten years, in addition to €16 million in funding received from the Department in the same period.

The Comptroller and Auditor General carried out the review under consideration and completed the report in June 2018. The report examined whether the resources of the higher education institutes had been used and disposed of economically and efficiently and on the most favourable terms reasonably obtainable with respect to the remuneration of certain senior staff. Chapter 5 of the report deals with a single severance payment made by IT Sligo. It was a once-off payment related to one individual. It is not cyclical and has not been repeated by the institute.

In summary, a severance package was approved by the Department of Education and Skills for an employee whose five-year fixed term contract was set to expire in August 2015. At the end of the five-year contract, the institute offered the employee a new specific-purpose contract, pending the recruitment of a candidate as part of a proposed restructuring of management roles. Employment contractual issues and other matters with the employee developed soon afterwards. The institute was incurring ongoing legal fees in dealing with the individual's claim for permanency. It was also incurring ongoing legal costs to resolve other outstanding issues.

With the approval of the governing body, the president at the time engaged legal advisers to mediate to resolve matters with the employee, chaired by an accredited mediator. The negotiations, in which both sides were legally represented, resulted in a redundancy payment, supplemented by paid time off, which was agreed to be and characterised as a sabbatical, although it was not within the terms of the 2004 pilot project circular on sabbatical leave. On legal advice, the institute signed a confidentiality agreement on the termination of employment by reason of redundancy, with effect from February 2017. As a consequence, it became liable for a higher level of severance pay than originally approved by the Department. The institute acknowledges that such an agreement and the use of the sabbatical leave policy should not have been entered into without sanction from the Department.

The report makes one conclusion and three recommendations. The conclusion, as we have heard, is that IT Sligo entered into a settlement worth over €202,000 with a former employee when it only had sanction to pay just over €37,500. The recommendations have been referred to by the Comptroller and Auditor General, the Department and the HEA. The institute accepts the conclusion and agrees with the recommendations. It will no longer enter into sabbatical leave or confidentiality agreements that preclude the disclosure of details of the agreement reached in the financial statements, unless it obtains formal approval from the Department, or on foot of legal advice.

A new code of governance for institutes of technology has been adopted by the governing body. IT Sligo is striving to ensure ongoing compliance with the code and the necessary systems will be put in place to ensure approved processes are followed. The institute is compliant with the Civil Service and public service circular letters DPER 09/18 and Department of Education and Skills 66/18, as circulated in 2018. It is also amending its risk management policy to incorporate the requirements mentioned and the guidance included in the good practice framework on severance payments.

The agreement related to a single severance payment made by IT Sligo was based on legal advice to mitigate the ongoing financial exposure, given the circumstances. The institute acknowledges that it should have informed the Department of Education and Skills of the new severance arrangements agreed with the individual concerned and that it should not have used the sabbatical leave policy as a vehicle to enact the agreement. The conditions that led to the individual case will not arise again.