Mr. Ian Tegerdine:

I thank the Chairman and members of the joint committee for the invitation to attend to provide an update on the implementation of the recommendations in the HSE's internal auditor's report on the remuneration of staff in section 38 agencies. This issue was discussed by the committee in July 2014.

I am interim national director of human resources in the HSE. I took office on 1 December 2014 and have been with the HSE for a period of six to nine months. I am joined by my colleague Ms Lawler who is deputy national director of human resources.

Members will be aware that the internal audit report contains 22 recommendations which deal, in the main, with issues of compliance with approved public sector remuneration levels for senior management in agencies funded under section 38 of the Health Act 2004. A report detailing progress in the implementation of the 22 recommendations has been made available for members. Some 13 of the recommendations were dealt with through the development and implementation of an overall health sector pay policy which was issued in September 2013 to the statutory and voluntary health sector by way of Department of Health Circular 11/2013. The circular reflects Government policy on senior public service pay. The policy makes it clear that bodies funded under section 38 of the Health Act 2004 may not supplement approved rates of remuneration, either with Exchequer or non-Exchequer funding.

A total of 17 recommendations have been implemented in full; a further three are still in progress - Nos. 10, 20 and 21; while it has not been possible to implement two of them, Nos. 14 and 19, owing to information gained or decisions made since the audit was completed.

Recommendation No. 9 is still in progress and is awaiting decision from the Departments of Health and Public Expenditure and Reform as it relates to decisions in respect of applications to red circle remuneration arrangements on a personal to post holder basis owing to legal contractual entitlements. These applications have been made under section 7(4) of the pay policy and have been made by the agencies after they obtained independent legal advice to ensure action taken by the agency as an employer is done in a legally compliant manner. This mitigates the risk of future legal action to the greatest extent possible.

Where support has been given for cases it is on the very strict understanding that once the current post holder no longer holds that post, the non-compliant red-circled remuneration shall cease. In addition, when the post holder vacates the position, all future appointees will be remunerated in line with the Department of Health consolidated pay scales and the practice of paying the particular non-compliant remuneration will therefore cease.

If I may, I will correct something from the report. On recommendation No. 9, the report refers to 85 individually named employees. My apologies. That should read 85 cases. A total of 85 cases have now been submitted for consideration from 25 agencies. We are disappointed that one agency has declined to engage fully with the process and this is being dealt with through the management arrangements described in the service arrangements between the Health Service Executive and that agency.

Recommendations Nos. 20 and 21, which are also reported as in progress, relate to a sizing exercise undertaken to determine appropriate pay rates for chief executives of section 38 agencies, which was undertaken by the Department of Health in conjunction with the HSE. This resulted in a proposal on the recommended sizing which has been submitted to the Department of Public Expenditure and Reform, and we await its decision.

Recommendations Nos. 14 and 19 are reported as not implementable as these relate to access to the public pension scheme and the recoupment of payments under the provisions of the Financial Emergency Measures in the Public Interest, FEMPI, Act. We have information and decisions from the Departments of Health and Public Expenditure and Reform that it is not possible to recoup the payments under FEMPI. As far as the issue of the public sector pension scheme is concerned, the requirement is that employees have access to a pension scheme, not necessarily the public pension scheme.

Members will be aware that since the findings of the internal audit report was accepted by the HSE board at its meeting in July 2013 and subsequently implemented as reported to this committee, this has been challenging for a number of parties. We should not underestimate the impact of public and media attention on senior executives in the public service and the complexity of the legal contractual relationships this has brought under scrutiny. It is important to hold focus that this process was started to ensure public funding is directed appropriately to patient care.

The HSE has implemented enhanced governance arrangements in 2013 through the development and implementation of an annual compliance statement process as part of the requirements of the service arrangements between the HSE and the section 38 organisations. This, together with the twice yearly meetings between the HSE and the chairs of section 38 agencies, will ensure a better working relationship between funder and provider in maintaining compliance with Government policy. The HSE is committed to building on this process to ensure continuous improvement of effective governance arrangements with the sector in line with legislative and good practice requirements.

That concludes my opening statement and, together with my colleague, I will endeavour to answer questions members may have.