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Winnipeg Free Press - PRINT EDITION
Cost of federal payouts hits $2B
Public servants owed hefty severance
OTTAWA -- Taxpayers could be on the hook for more than $1 billion in accumulated severance payments to federal public servants who remain in their jobs, voluntarily quit their positions or retire.
The payout packages are in addition to an estimated $900 million in "workforce adjustment" payments -- including 22 weeks pay for one year of service -- that will be granted to thousands of federal employees who lose their jobs due to federal budget cuts.
Combined, the two sets of payments could cost taxpayers $2 billion.
More than two dozen collective agreements signed between the federal government and public-sector unions allowed, up to October 2010, for the accumulation of severance to be paid out to employees for resignations, retirements, layoffs and other reasons.
The government is in the process of settling the 27 collective agreements that allowed for the accumulation and voluntary payout of severance. The new deals being negotiated eliminate the accumulation of severance pay for resignation and retirement.
However, hundreds of thousands of public servants who accumulated the benefits are allowed to voluntarily cash out the severance while they remain in their jobs. They also can wait until they resign or retire to collect the cash, or receive some of it now and the remainder when leaving the public service.
To date, nine of the 27 agreements that allowed for the accumulation and voluntary payout of severance have been settled, while also eliminating the lucrative perk going forward, the federal government said.
Those nine deals, which cover more than 100,000 of the 212,000 employees in the core public administration, already are costing the government $850 million in expected severance payouts.
Additional cash will be needed in the future as Ottawa slowly settles all of the collective agreements -- which means the severance payout to remaining, resigning and retiring employees likely will top $1 billion.
The cash settlements are on top of $900 million in compensation, announced in the March budget, the government expects to pay to public servants as it cuts 19,200 jobs.
The severance deals far outstrip anything found in the private sector, where compensation is often only offered for layoffs and isn't paid out to employees who continue working, quit or retire.
Paying severance to employees who remain in their jobs or voluntarily leave is "absolutely insane," said Dan Kelly of the Canadian Federation of Independent Business.
-- Postmedia News
Republished from the Winnipeg Free Press print edition May 24, 2012 A10
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