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BBC redundancy payments - the unanswered questions

The BBC has come under fire for the high level of redundancy payments made to departing employees. Philip Henson, head of employment at law firm DKLM,gets to grips with the real issues.

BBC:Clouding the issues Udra 11

The recent furore over the redundancy payments given to Mark Byford and Sharon Baylay has led to accusations that one of the UK's venerable organisations, the BBC, is little more than a well-fuelled gravy train.However, despite the recent headline grabbing accusations from the Public Accounts Committee (PAC), the written evidence submitted to the PAC by Mark Thompson clearly explains the long history of why we can expect such high level payments, and how the BBC has taken steps to limit the levels of redundancy pay in the past.

Rapid growth in pay across sector

Mr Thompson’s written evidence explains that in the 1990s and early 2000s there had been rapid growth in executive pay in commercial broadcasting and that executive pay at the BBC grew significantly as well. He goes on to state that in the early 2000’s the entitlement of executive directors (for redundancy payments) was capped at a maximum of 12 months’ pay, no matter how many years of service the director in question had given.

Mr Byford had 31 years’ service with the BBC and the written evidence explains that Mr Byford had signed a contract capping his entitlement at 12 months’ pay for past service and twelve months’ notice.  Thus the finger may eventually be pointed towards those who were responsible for setting and reviewing the levels of remuneration, and agreeing the contractual terms of the executive directors.

The unanswered questions

1. Did ex-employees enter into compromise agreements (now known as settlement agreements) as a condition of any settlement? If so, did the BBC pay for (or contribute towards) the professional costs of any ex-employee who entered into a compromise agreement?

It is common, although not obligatory, for employers to contribute towards the legal costs that the ex-employee incurs for receiving independent legal advice on the terms of the compromise agreement (now known as settlement agreements). Those contributions typically vary from £750 - £1,850. However, contributions can be substantially more depending on the complexity of the issues. For senior executive exits employers often also pay for (or contribute towards) the employee’s accountancy and/or tax advice, and sometimes for additional outplacement services.

2. If compromise agreements were used, did the BBC consider saving public money by utilising the free pre-claim conciliation service offered by ACAS?

3. Does the BBC have separate redundancy policies for executive directors?

4. Did the ex-employees enjoy the use of any benefits (such as private car) after they left the BBC?

5. Were any additional payments made to the pension schemes of the ex-employees?

6. Were any of the ex-employees allowed to retain (or purchase at a discount) any BBC property, such as cars, computers or telephones as part of their settlements?

7. Were ex-employees paid enhanced sums to guarantee their assistance with internal inquiries, court or tribunal proceedings?

8. Are there any claw back provisions in the compromise agreements?

9. Have any ex-employees been re-employed by the BBC, or engaged as consultants, after their positions were made redundant? 

10. Who was responsible for benchmarking the pay of senior executives at the BBC, and what criterion did they use?  Has this criterion changed?

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11 September 2013

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