Revealed: Havering Council paid out more than £270,000 in settlement agreements to former employees last year
PUBLISHED: 07:00 12 February 2020 | UPDATED: 08:12 12 February 2020
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Havering Council spent more than £900,000 over the course of three years in “golden goodbye” settlement agreements to former employees.
Data collected by the TaxPayers' Alliance through Freedom of Information (FOI) requests to local authorities, reveals how much councils spent on reaching settlement agreements with ex-employees from 2016/17 to 2018/19.
Settlement agreements are legally binding agreements between an employer and an employee that set out the terms surrounding the termination of employment.
Their purpose is to resolve any disputes between the two parties that could not be resolved as part of internal procedures, and prevent future related claims.
Havering Council reached a total of 85 settlements amounting to £914,494 between 2016/17 and 2018/19.
That equates to an average settlement of £10,758.75 for each employee.
Last year Havering Council spent a total of £272,087 on 23 settlement agreements.
The highest number of settlements Havering Council reached across that period came in 2016/17 when 36 different agreements came to a total of £396,942 in pay-outs.
A Havering Council spokeswoman said: "We only use settlement agreements in exceptional circumstances, when there is an employment dispute between the council and an employee either to agree the terms of their departure or to resolve disputes with existing employees, where their employment is not to be terminated.
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"Between 2016 and 2019 a number of cases were resolved via a settlement agreement.
"In November 2019, the council introduced a protocol to reduce its expenditure on settlement agreements and to cut down on the expectation that poor performance or conduct will be rewarded in a financial agreement.
"It also aims to reduce any perceptions that we will avoid tackling management issues."
Between 2016 and 2019, almost 7,000 agreements were agreed between local authorities and former employees, totalling at least £98 million.
The highest known settlement agreement paid to an individual was £195,463 at Stoke-on-Trent, which was also the council with the highest number of settlement agreements.
Newham, with a total pay-out cost of £1,581,940 from 2016 to 2019, is among the top 10 local authorities to have paid the most for settlement agreements.
Of all of the councils who responded to the FOI data, 45 local authorities reported no spend on settlement agreements at all.
Darwin Friend, researcher at the think tank TaxPayers' Alliance said: "Though settlement agreements are sometimes necessary, councils need to remember that it's ratepayers who foot the bill.
"These settlements have been signed at the same time that the vast majority of local authorities have increased council tax, meaning some have spent huge sums on hush money while hiking up local rates.
"Given that almost 50 councils have managed to spend nothing on these deals, it should be perfectly possible for those paying the most to do better and keep down the costs of individual golden goodbyes."
Havering Council has been contacted for comment.
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