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Severance

Published on May 12, 2023

Last update on June 1, 2023

Table of contents

Overview

Discretionary severance terms can arise in situations where it is considered to be in the best interests of an organisation, and is deemed appropriate as part of best human resource management practice, to provide for the ending of an existing employment contract. Severance can also arise under certain statutory provisions, broad programmes of redundancy, voluntary early retirement schemes, abolition of a role or organisational restructuring, etc.

Although the specific severance arrangements in place across the civil and public service may differ, Circular 09/2018 set out guidance on the procedures to be followed where the offer of discretionary severance terms is being considered in any case, including requirements relating to prior approval of a severance agreement, calculating the cost of severance terms, maintaining proper records, and complying with disclosure requirements.

Severance arrangements for temporary employees whose roles are co-terminus with a minister (such as special advisers and civilian drivers) are separate to those covered by the provisions of Circular 09/2018.

The specific terms of a severance agreement can vary depending on the unique circumstances of each case. As such, severance policy allows for some discretion in the terms that may be offered as part of a severance agreement. Notwithstanding this degree of flexibility, severance agreements are, in all cases, governed by the procedures set out in Circular 09/2018 and require a written business case to be submitted to the Department of Public Expenditure, NDP Delivery and Reform to obtain formal sanction prior to any agreement being made.

Basic criteria

Any discretionary severance agreement should meet the following basic criteria:

  • there is clear rationale for the payments
  • available alternative options are considered
  • legal costs are kept to the minimum level necessary to ensure legally sound agreements
  • the amounts paid comply with the rules of the scheme (if applicable)
  • payments are authorised at an appropriate level
  • payments are appropriately disclosed in the employers’ financial statements’

The procedures and guidelines set out in Circular 09/2018 are in place to ensure consistency, correct application, proper disclosure and proper use of public money in any case of discretionary severance, while also taking into account that different policies relating to severance terms apply across the civil and public service.

Supporting information