When you make people redundant, should you get them out of the organisation immediately or make them work out their full notice period?
It is becoming increasingly common in the private sector for people not to work their full notice periods when they are made redundant. Even when people have year-long notice periods, they are often given a large chunk of that as pay in lieu of notice, known in the trade as PILON. There are sound commercial reasons for this, as there often are when private firms adopt a practice. PILON enables the employer to give more cash, which encourages people to accept a deal, and it means they can get the employee out of the office before he or she causes any damage. Often, people will be put on ‘gardening leave’, effectively paying them for staying at home doing nothing but preventing them from working for a competitor.
But PILON and gardening leave are frowned upon in the public sector. No CEO or HR Director wants to be accused of paying public servants to do nothing or of giving them money instead of squeezing everything out of them until the bitter end. Paying redundant staff in lieu of notice is therefore much less common in the public sector. There is nothing in the Civil Service Code which prevents it, it’s just that senior managers and their political bosses are scared the potential adverse publicity. The Daily Mail and others would have a field day with stories about public servants lounging around at home on full pay or walking out with huge payoffs when they could have been made to work until the last day.
Public sector organisations often avoid commercially sensible decisions out of fear of the media. As Esther Harris said earlier this year, public bodies are scared to spend £10k to save £100k or £300k to save £10 million. Regardless of the long-term rationale, it’s the £10k or the £300k that would be trumpeted in the tabloids. The same is true of PILON. It might make commercial sense but few public sector managers dare use it.
Consequently, redundancy in the public sector, rather than being a swift coup de grâce, is often a slow bleeding to death of the sort described so eloquently by the Redundant Public Servant on his blog and in the Guardian. Sometimes it can take months. Interpretations of rules and policies vary between organisations. In some parts of the public sector, stages in the redundancy process which legally could run concurrently are, for any number of reasons, run in series. So people are told they are ‘at risk’, then there is the period of negotiation with the unions, then people go into the redeployment pool and then, finally, they are given notice but still required to work it. In some circumstances, public servants can spend a year at their desks knowing they are being made redundant yet still being expected to turn up for work. The impact this has on staff morale and productivity, even among those who are not being fired, is easy to imagine.
Despite the reputation (not always deserved) that the public sector has for treating its employees more fairly, its redundancy process often borders on the inhumane. Furthermore, while it might look as though it is saving money, the process is almost certainly counterproductive. Private sector firms realised this a long time ago. That’s why they tend to fire people and pay them off on the spot, rather than putting them through the slow morale-sapping process that the Redundant PS and his colleagues are going through now.