Colleges facing long delays for severance pay approvals 

One college still awaiting for approval on a retrospective exit payment

One college still awaiting for approval on a retrospective exit payment

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Colleges are waiting months longer than expected for government approval on severance payments to outgoing staff, in the latest red tape headache imposed on leaders since reclassification.

Following the Office for National Statistics decision in November 2022 to class colleges as public instead of private sector bodies, the government outlined that colleges must apply for approval for special severance payments to departing employees.

Approvals must be sought for payments of £50,000 or more, where they are equal to three months’ salary or more, an exit package of £100,000 or more, or where the employee earns over £150,000.

The application must go to the Department for Education, who claim the process should take just a few weeks to confirm or deny approval. The process can however take longer if it decides to consult with the Treasury department or requires further information about the payment.

Experts told FE Week that the process of seeking severance approval has been “inconsistent” in cases to date.

“We advise clients that they should expect at least a couple of months on any application, even for a fairly straightforward one. In some cases, they have seen it has taken a lot more than that,” said Ben Wood, a partner at law firm Eversheds Sutherland.

“What we’re hearing from clients is that there is some uncertainty around timescales and information, particularly in regard to decision making processes. Efficiency is key here, and colleges are seeking a consistent, streamlined process.”

In one case, involving Bishop Burton College, leaders appear to have applied for approval retrospectively.

According to its latest 2023 accounts, the land-based college made two special payments of £15,636 during the financial year and £12,430 on 31 August 2023. 

Both payments were equivalent to three months’ gross salary and fell under the rules for approval.

The accounts state: “The college has applied for retrospective approval from the ESFA for both cases and await their response.”

It is not clear why the college made the payments before going to the ESFA for approval. 

Bishop Burton College declined to comment when approached by FE Week, but it is understood it is still waiting for a response.

Wood said: “I think it’s so easy to fall foul of some of these rules. We’re always saying to be cautious, be prudent about these things. But I can see how some colleges wouldn’t think about it necessarily.”

Wood, an employment law expert who works with colleges on reclassification rules, added that he didn’t understand why FE colleges are subject to the three-month salary contingent when academy trusts are not.

“Colleges are uncertain why they are subject to that extra limit. I don’t believe that applies to government departments or academy trusts,” he said. 

Julian Gravatt, deputy chief executive of the Association of Colleges, also questioned the rule.

“The three-month threshold is low, and with college pay averaging £30,000. This means DfE sign-offs will be required for payments of less than £10,000 in some cases.

“There will be odd cases where a college made a mistake, and we assume that officials will take a sensible approach to allow everyone to focus on the more important issues.”

In the government’s support and intervention guidance, published a month after reclassification, the DfE said it could place a college into intervention if it makes a “significant or recurring” unauthorised transactions.

Concerns over the severance approvals delays come just weeks after college leaders raised issues about delays in receiving government permission to hire senior staff on salaries of £150,000 or more which is causing waiting times of up to five months.

DfE admitted approvals were taking longer than planned and promised to “streamline” the assessment process an update the guidance.

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