Alan Shatter (Dublin South, Fine Gael)
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Question 391: To ask the Minister for Finance the guidelines that exist with regard to the procedure applicable to the dismissal of a public servant or a chief executive or an employee of a State or semi-State body; the circumstances stated in such guidelines in which it is said to be appropriate to effect such dismissal; the financial arrangements applicable to same; if he will provide a copy of the said guidelines; if it is intended to make amendments to them. [34592/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The area for which I have direct responsibility is the civil service. A Disciplinary Code for civil servants is set out in Circular 14/2006: Civil Service Disciplinary Code revised in accordance with the Civil Service Regulation (Amendment) Act 2005.The Code came into effect on 4 July 2006 and replaced the previous Code as set out in Circular 1/92. The Civil Service Regulation (Amendment) Act 2005 allows certain provisions contained in the Public Service Management Act 1997 to take effect. The 2005 Act gives each Secretary General/Head of Scheduled Office, as appropriate authority, responsibility for managing all matters relating to performance, conduct and discipline of civil servants below Principal Officer level. Ministers continue to be the appropriate authority for these matters in relation to civil servants at or above Principal level in accordance with the Civil Service Regulation Acts 1956 to 2005. The code is available on the personnel code website: www.personnelcode.gov.ie.

Specific arrangements apply to disciplinary matters affecting employees in other areas of the public service and these are the prime responsibility of the relevant Ministers. For instance, procedures for the suspension and dismissal of teachers have recently been agreed and these are available from the Department of Education and Science.

Guidelines are available on the contracts, remuneration and other conditions of chief executives and senior management of commercial state bodies. The guidelines are available on my Department's website — www.finance.gov.ie.

Contracts for Chief Executives of individual non-commercial state bodies contain provisions relating to circumstances in which the employment of the chief executive may be terminated. The circumstances in which employment may be terminated normally include misconduct or gross default affecting the business of the Body concerned, bankruptcy, incapacitation and conviction of a criminal offence, other than an offence which in the opinion of the Body concerned does not affect the position as chief executive.

As regards severance/early retirement arrangements for chief executive officers, there are guidelines set out in the letter to all Heads of Departments of 26 May 1998. The provisions in that letter may be applicable where the board and the responsible Minister consider that a fresh approach is needed in the interest of the efficiency and effectiveness of the organization. A copy of the letter is as follows:

Ref: P18/126/98

26 May 1998

To: All Heads of Department

A Chara,

Severance and Early Retirement for Chief Executives of State Sponsored Bodies

1. I am directed by the Minister for Finance to say that he has considered the issue of severance/early retirement payments for Chief Executives of State Sponsored Bodies (SSBs). This consideration has had particular regard to the fact that it is becoming more common for Chief Executive Officers of State Sponsored Bodies to be employed on fixed term contracts, and that there may be times when the Board of a State Sponsored Body and the relevant Minister may conclude that it is in the best interests of the efficiency and effectiveness of the SSB concerned to terminate or not to renew the contract of an incumbent CEO. This need not necessarily arise as a result of any dissatisfaction with the performance of the individual concerned, but perhaps because a new and fresh approach needs to be introduced. In such circumstances, the Minister will not object to the application of special early retirement/severance provisions, subject to certain conditions and safeguards.

2. The Minister has therefore decided that this Department will not object to the making of severance payments or grant of early retirement terms to Chief Executives of State Bodies within the following maximum limits and subject to the conditions specified, from a current date. Departments may deal with cases within the guidelines and limits without reference to this Department except where such reference is specifically required (drafts of any consequent changes in the relevant pension schemes would need to be cleared in the normal way).

a) Payment of pension and lump sum, based on actual reckonable pensionable service, increased as appropriate in accordance with paragraph (b) following, may be allowed at age 55 for a CEO who retires from that position, who has served at least 6 years in that capacity and who has at least 15 years actual service overall in the public sector only service with the body from which the CEO is retiring or service which has been transferred into the scheme of that body may reckon.

b) In determining the pension and lump sum to be paid, one added year of pensionable service may be granted for each year in excess of 15 years overall actual service in the public sector1 (i.e. including service in capacities other than as a CEO) subject to a maximum of 5 added years;

c) Actuarially reduced benefits may be made available without age restriction — this means that a person might receive a pension benefit or lump sum before age 55, provided that the cost of providing these benefits at the earlier age are entirely offset by a reduction in the amount of benefits payable: the amount of such reduction would require to be determined by the relevant scheme's actuaries;

d) Where an immediate pension (other than on an actuarially reduced basis) is not payable, a severance payment of four weeks pay per year of continuous service, up to a maximum of 26 weeks pay, may be made. However, where pension becomes payable within 26 weeks of retirement, the amount of the severance should be reduced to the amount of salary which would have been payable between the date of retirement and commencement of pension.

3. Application of the foregoing terms would be strictly conditional on completion of contract, unless the Board, in agreement with the appropriate Minister and the Minister for Finance, decides to terminate the CEO's employment before the termination of the contract. It is not therefore appropriate to make such payments where the initiative for the termination of a contract comes from the CEO concerned.

4. Application of these terms would also be conditional on there being no re-employment, direct or indirect, of the individual concerned by the body from which s/he is retiring, or another public sector body in the same sector.

5. Where subsequent employment is obtained in the public sector such that pension plus pay in the new job exceeds the equivalent of the retirement salary on the basis of which the pension is payable, then pension will be abated to bring the total down to the level of that salary. This abatement will not apply in relation to work after age 65. Where pension rights are acquired in respect of post-retirement work, the original pension (if based on actual service plus added years) would be reduced and based on actual service only. In such circumstances the uprated portion of the lump sum attributable to the added years would be required to be repaid. It should be explicitly stated that any grant of early retirement terms would be subject to these conditions.

6. The terms set out above are intended to be maximum ones, and a Board would be free to apply lesser benefits or not to apply early retirement benefits at all. Early retirement benefits might be denied, for example, if the Board wanted the contract renewed for a further term. It is not, therefore, intended to interfere with the freedom of Boards in this area, but rather to indicate the maximum limits which the Minister would be prepared to approve.

7. Adjustment to the terms set out above will be necessary where a retiring CEO has already availed of a severance or early retirement package from a public sector body, and in such cases this Department should be consulted.

8. The arrangements set out in this letter should be allowed strictly on the basis, accepted in writing by the CEO, that they are in full and final settlement of any claim which the CEO may have in relation to the early retirement or termination or non-renewal of a contract.

9. The Minister does not anticipate approving any improvement on the terms set out above, even in individual exceptional cases, other than on foot of a Government decision.

10. It is essential that Departments should convey to the Pensions Section of this Department details of each case dealt with under the terms of this letter. The contact point in this Department for telephone queries is Mr. Kevin Cardiff at (01) 604-5476.

Yours sincerely,

John Hurley

Secretary General, Public Service Management and Development.

An Roinn Airgeadais

Department of Finance

Ref: P18/126/98

4 June 1998

To: All Heads of Department

A Chara,

Severance and Early Retirement for Chief Executives of State Sponsored Bodies

I am directed by the Minister for Finance to refer to this Department's letter of 26 May 1998, in regard to the above. For the purposes of clarification, Departments should note that the grant of added years in accordance with paragraph 2(b) of that letter is subject to the following conditions, in accordance with the normal practice in relation to such added years, viz.

i. A person may not receive a greater number of added years than the additional service s/he would have if s/he served to his/her maximum retirement age. Thus a person retiring from a CEO position at 63 cannot receive more than 2 additional years service.

ii. The grant of additional pensionable service may not lead to a person having more than the maximum pensionable service for the relevant pension scheme (i.e. 40 years in most cases).

Yours sincerely

Kevin Cardiff

Alan Shatter (Dublin South, Fine Gael)
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Question 392: To ask the Minister for Finance the guidelines that exist with regard to the procedure applicable to the early retirement of a public servant or a chief executive or an employee of a State or semi-State body; the circumstances stated in such guidelines in which it is said to be appropriate to effect such early retirement; the financial arrangements applicable to same; if he will provide a copy of the said guidelines; if it is intended to make a amendments to them. [34593/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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In the civil and public service, Cost Neutral Early Retirement (CNER) has been available since 1 April 2004 for individuals who wish to retire with immediate pension up to 10 years before normal retirement age. More recently, the Incentivised Scheme of Early Retirement (ISER) has been available. The procedures and circumstances whereby these arrangements may be availed of are set out in Circulars 10 of 2005 (CNER) and 12 of 2009 (ISER). Civil and public service superannuation schemes provide for early retirement on grounds of ill-health, which may include some additional years of notional service, depending on age and service.

There are specific early retirement provisions in various areas of the Public service. Gardaí, prison officers and psychiatric nurses who are not new entrants as defined in the Public Service Superannuation (Miscellaneous Provisions) Act 2004 may retire on reaching the age of 50 if they have 30 years of service. This means that they have qualified for full pension entitlements because under their schemes each year of service in excess of 20 years reckons as 2 years of service for pension purposes. Primary and secondary school teachers may retire on or after age 55 if they have 35 years of service. In the Defence forces, officers who are not new entrants under the 2004 Act may retire with immediate pension after 12 years service regardless of age and similar enlisted personnel may retire with immediate pension after 21 years service also regardless of age.

Section 6 of the Superannuation Act 1909 and sections 6 and 7 of the Superannuation and Pensions Act 1963 set out rules governing early retirement of civil servants as a consequence of abolition of office or for the purposes of facilitating improvements in the organisation of the department in order to effect greater efficiency and economy. Section 6 of the 1909 Act allows for the immediate payment of pension on retiring. Section 6 of the 1963 Act allows for the addition of up to 10 years of notional service and section 7 of that Act allows for the grant of a special severance gratuity of up to one-half of annual salary. In the wider public service the provisions of the 1909 and 1963 Acts serve as guidelines in dealing with similar cases. In operating these provisions, the practice in the main is not to grant additional years of notional service and a severance payment to any one individual.

The Government agreed that these provisions could apply in the case of Secretaries General who retire on completion of their contracts with the addition of up to 10 years of notional service and up to 6 months pay in severance regardless of age. Similar provisions are included in the Local Government Superannuation Scheme in relation to County Managers.

For full-time board members and equivalent positions in the Competition Authority, Labour Court, Environmental Protection Agency and Bord Pleanála retirement is normally between age 60 and 65; however, members who have their appointment terminated (other than for stated misconduct), or are not re-appointed on expiration of their period of office, are entitled to immediate pension and lump sum where they have accrued more than two years' service. Preservation of benefits applies only in case of voluntary resignation after two or more years' service.

The Department of Finance letter of 26 May 1998 to all Heads of Departments sets out the enhanced retirement/severance terms for chief executive officers of non-commercial semi-State bodies whose contracts are not renewed or are terminated, and the conditions under which they may be made available. Such non-renewal or termination might arise where the board and Minister conclude that there is a need for a fresh approach in the interest of efficiency and effectiveness of the organization. As regards this letter about CEOs, consideration will be given to the possible need for clarification of the terms provided for and the conditions attaching to them.

It is not possible to cover all the early retirement arrangements across the public service. The Deputy might wish to consult respective Ministers about specific circumstances pertaining to agencies and bodies under their aegis.