The Government has announced reforms to the Civil Service Compensation Scheme, which sets out the terms of compulsory and voluntary redundancy for civil servants. The changes follow months of negotiations with the Unions, and have been implemented under new powers in the Superannuation Act 2010. The Superannuation Act removed the unions' previous power of veto, and requires the Government only to consult with the unions with a view to reaching agreement before implementing new terms. The terms of the new Scheme have been agreed between the Government and five of the major unions.

The key provisions of the new Scheme are for one month's pay for each year of service for redundant civil servants, subject to a maximum of 21 months' pay for voluntary redundancy and 12 months' pay for compulsory redundancy. All staff facing compulsory redundancy will have first had the opportunity to exit under the voluntary arrangements. Upper and lower pay thresholds of £149,820 and £23,000 apply for the purpose of calculating the payments. Reduced entitlements apply to those at or nearing pensionable age. The terms of the new redundancy scheme are set out in the Civil Service Compensation Scheme (Amendment No.2) Scheme 2010.

The new, agreed, Scheme means that the temporary caps recently imposed by the Superannuation Act 2010, of 15 months' pay for voluntary redundancy and 12 months' for compulsory redundancy, with no upper or lower pay thresholds, will no longer apply.

However, the PCS union has indicated that its members have voted to challenge the new Scheme in the courts. The union argues that the ability of the Government to impose reductions amounts a gross abuse of its unique power as both employer and legislator and that the changes breach the European Convention on Human Rights. We may not yet have heard the final word on Civil Service redundancy payments.