WITH ALL THE talk of lucrative exit packages in the public sector, we wanted to know how common are they? In what sectors are they found, and why do employers sometimes consider them the best move?
Exit packages at RTÉ are back in the news this week after Minister for Media Catherine Martin was quizzed on a package paid to former RTÉ executive, David Nally.
This came after it was revealed last week that RTÉ’s former chief financial officer Breda O’Keeffe received an exit package worth €450,000 when she left the broadcaster and former strategy director Rory Coveney was paid approximately one year’s salary – roughly €200,000.
It was also reported today that a redundancy (rather than exit) package of almost €400,000 was agreed this week for a senior HSE executive.
To help us get a better grasp on things, we spoke to two employment lawyers working in Ireland who kindly brought us up to speed with what they say isn’t actually all that unusual of a practice.
However, they did make the point that based on what we know about some of the recent high-profile exit packages in the public sector appear, from what we know of them, to be out of whack with private sector norms.
As Ciarán Ahern, an employment lawyer and partner at McInnes Dunne Murphy told The Journal: “The settlements that have come into the public domain are at the higher end of what you would see in the private sector”.
So first things first, what is an exit package and how common are they?
Karen Killalea, an employment lawyer who is head of Maples and Calder’s Employment team in Dublin told us exit packages are not a common feature of employment relationships in general.
She said, however, there are a wide number of reasons why an employer might agree an exit package with an employee.
For example, a “no-fault” reason such as illness, redundancy or retirement or perhaps for a more “disruptive” reason like misconduct or a performance issue.
Ahern made the point that redundancy packages and exit packages sometimes overlap, with employers sometimes adding a “sweetener” on top of a redundancy package.
By and large, exit packages are used as a way of getting someone out of a business or organisation in cases where there is no disciplinary procedure at play.
Ahern said: “Someone might become an inconvenience to an organisation, or as happened in RTÉ – a new CEO was appointed, and wanted to bring in their own team at the top of the organisation.
To do that, you have to sort of clean house a little bit and get rid of people.
“And to exit people who haven’t necessarily done anything wrong is very difficult and time-consuming, and potentially costly.”
Killalea explained that a very common scenario where an exit package might be used is where there is a dispute between an employer and the employee that may have been ongoing for some time.
“That might be an allegation of misconduct that is challenged by the employee, an allegation of poor performance or a loss of trust and confidence.
“All of these areas can be complex, time-consuming and expensive to navigate,” Killalea said.
“In these situations sometimes the employer and the employee will agree to settle their differences rather than both parties facing into litigation possibly in public and with the cost and distraction of managing a dispute.”
Yes.
As Killea put it exit packages are “sector agnostic”.
“We advise employers across a range of industries and sectors and we have seen exit packages used to reach a sensible conclusion to matters where the relationship has broken down or for those “no-fault” reasons I mentioned,” she said.
Employers generally will conduct a cost-benefit analysis which informs their approach to exit packages.
“No case is ever perfect. No one is 100% right on all counts and the use of an exit package where disputes arise between employers and employees recognises the reality of that,” Killalea said.
Erm, not exactly.
First of all, there isn’t really a “norm” – all exit packages vary depending on the facts.
Killalea explained that packages can range from a couple of weeks’ pay to three or six months’ pay or more.
Ahern made the point that from what we know about the packages in the public sector, they do “seem more generous”.
However, he said there could be any number of reasons for this -for example, there could be precedent that could be hard to break or people could have song service, and therefore potentially longer notice periods which may be wrapped up in the final figure.
To embed this post, copy the code below on your site
have your say