Quango accused of feather-bedding as laid-off staff get six times base rate

SCOTLAND's main jobs agency was accused of "feather-bedding" last night, after terms of a multi-million-pound severance deal for staff were published.

It emerged that Scottish Enterprise spent £41 million over the past four years paying off 350 employees, at an average cost per person of £115,000.

The jobs agency offered applicants over the age of 40 lump sums equivalent to two months' salary for every year served – almost six times statutory rates.

Members of staff who took redundancy over the age of 50 were also able to begin claiming their pensions immediately.

Critics of the agency said last night that the deals were far in excess of similar redundancy deals being offered to thousands of staff in the private sector. But Scottish Enterprise defended the pay-outs as "in line with most public-sector organisations" and they were contractually obliged to pay out.

Under statutory rates, employees aged over 40 are entitled to 1.5 weeks' pay for each full year of service, while those under 40 get just a week per year.

The redundancy packages have been offered over the past few years as part of a major restructuring, as the agency has been reduced in size by the Scottish Government. So far, 350 staff have left, in an effort to cut costs.

With running costs reduced, Scottish Enterprise says it will recoup all the money spent on severance deals within two years.

But MSPs from all parties yesterday questioned the size of the pay-outs. Under the terms of the scheme, an employee aged over 40, earning £50,000 a year, with ten years' service at the quango, would have received a redundancy pay-out of £83,000. If 50, the employee would also have been able to start claiming a "gold-plated" pension as well.

Staff under 40 were offered one month's salary for every year served, capped at a maximum of two years' gross salary.

Scottish Conservative deputy leader Murdo Fraser said last night: "This is a very good example of the kind of feather-bedding of the public sector we are seeing now. The average public-sector salary is now higher than in the private sector. You would expect that, at a time when the private sector is suffering a very serious recession, that there would be more rigour applied."

Mr Fraser went on: "Scottish Enterprise has been given money to spend on economic regeneration and supporting Scottish businesses. This money is not designed to be splashed out on substantial pay-offs for highly paid ex-members of staff."

Beneficiaries of the scheme include former board member John Philips, whose severance package came to £390,000.

The agency said last night that, from next year, staff must be 55 before they are able to claim early retirement packages.

A spokeswoman added: "Scottish Enterprise has a contractual redundancy payment policy, which is in line with most other public-sector organisations. Payments are based on the age and length of service of employees. The policy also includes an early retirement facility for staff nearing retirement, rather than an enhanced severance payment.

"We remain committed to helping to deliver the objectives of the Scottish Government's economic strategy, and over the past year this has seen us reduce our management expenditure on a like-for-like basis by £17m."