BBC Severance Pay
The controversy over the BBC’s severance pay policy is unlikely to have reached its peak as the ex-director general, Mark Thompson is questioned by the Commons Public Accounts Committee this week. Thompson has already submitted a statement to the committee claiming that the Chair of the BBC Trust, Lord Patten and Trustee, Lord Fry have been “fundamentally misleading” members of the committee and that their appearance before the committee contained “important inaccuracies”.
The row has developed since the National Audit Office criticised the BBC for paying out £25 million in severance payments to 150 of its senior BBC managers. It is estimated that £2.9 million pounds worth of payments have gone beyond the contractual entitlement of the former BBC managers. In response to these allegations the BBC has introduced a raft of measures
Severance Pay and Wider Benefits for Senior BBC Managers
- A severance pay cap of £150,000 effective from 2013
- Reduction in redundancy entitlements for new starters from 24 to 12 months pay
- No further Pay in Lieu of Notice
- Shortened notice periods if staff take up alternative employment during their notice period
- Require the approval of severance payments in excess of £75,000 by the Senior Management Remuneration Committee
- Made the Senior Remuneration Committee accountable to the Executive Remunerations Committee (which is made up of non-executive directors)
Prior to these new measures, the top ten payments to BBC staff amounted to £5,298,900. The most controversial of which included a £1,022,000 paid to Mark Byford, the BBC Deputy General in 2011 and a payment of £670,000 to the former BBC Chief Operating Officer, Caroline Thompson, in September 2012. Perhaps most surprisingly however was the payment made to former BBC Director General, George Entwhistle, when he resigned after 54 days receiving £450,000. This was double the six months pay he was contractually entitled to.
What are severance payments?
These are the payments made to staff when they leave or retire; they may be paid upon redundancy or even dismissal. Usually containing a measure of enhanced pay, severance payments might also include payments in lieu of notice (PILON) and other financial compensation for holidays not taken or for benefits such as healthcare packages and stock options.
The measures taken by the BBC will go some way towards plugging the gap between the money paid to those leaving the BBC and the level of remuneration received by the average worker on being dismissed through redundancy or otherwise. Maximum statutory redundancy pay, for example, is £13, 500 and would only be payable at that level for those 20 years service or more. This is in stark contrast to the severance package received by George Entwhistle with just 54 days service.