Financial crisis causes Birmingham City Council to launch employee-wide resignation scheme

Birmingham City Council has launched an employee-wide resignation scheme in a bid to reduce its wage bill and tackle its financial crisis. All 10,600 of the council's employees have been invited to apply to quit under its Mutually Agreed Resignation Scheme, which was launched earlier this week.

The council says it will offer a non-negotiable severance payment.

The move is said to have hit staff hard, with several employees describing morale as being 'at rock bottom.'

Reducing the wage bill is thought to be critical to the council's bid to recover from the economic turmoil it finds itself in.

The financial crisis is triggered by a massive equal pay bill that could rise to a billion pounds, a £100 million bill for a broken computer and finance system, as well as rising costs for homelessness, adult care and children's services in the city.

The council has so far not set out what its targets are, how many staff it needs to take up the offer, or what happens if too few do so.

The move has been greeted with dismay by some staff, who claim it is proof that ordinary workers are going to pay the price for alleged 'failings and incompetence' by senior leaders.

They believe forced redundancies or other measures will follow if too few staff apply. "The mood inside the council is terrible, awful. Morale is at rock bottom," they said.

Chief Executive, Deborah Cadman, wrote to staff this week to launch the scheme.

In her emailed letter, Ms Cadman told them: "Many of you live in Birmingham, as I do, and want to continue to see our city go from strength to strength. Our focus continues to be the delivery of quality services the communities of Birmingham deserve, especially the most vulnerable."

"To do this, we need our workforce to be brave, be curious, to go that extra mile, and be the best that we can be. I want you all to be inspirational, high-achieving, engaged, supportive and innovative colleagues. However, as you know, the extent of our ongoing financial challenges means difficult decisions are needed on financial savings and budget recovery plans. Part of our budgetary savings for 2023/24 response includes MARS."

Ms Cadman thanked colleagues for their hard work and commitment but said the scheme "will give some colleagues, who may wish to leave, an option to exit the council in a considered manner through an agreed process."

At the last official count, just over 10,600 people were directly employed by the council, with some 32% of them aged 50 or over.

Among those to have received the letter is an administrator who has voiced his anger at the plans, which he described as 'redundancy on the cheap'.

He claimed the proposed scheme fails to protect workers' pension rights and that anyone taking up the offer would have to sign away their right to existing or future equal pay claims against the council - a move that could potentially cost an individual tens of thousands of pounds.

Another employee, who has worked for the council for more than two decades, said the severance pay offer might appear attractive to older, long-serving employees but advised everyone to 'get advice' before accepting.

The council says the offer aims to offer its employees the opportunity to voluntarily resign in return for a non-negotiable severance payment - and any applicants will receive up to £250 towards legal advice.

The offer is only available to permanent employees and does not include school-managed staff. Contractors, interims or temporary staff also do not qualify.

The council says all applications will be considered by a panel and weighted against the impact on services and the impact on the delivery of the council's financial targets.

Settlements agreed will be legally binding, with a severance payment made "in return for your agreement to resign from (the council) and to not pursue any current or future claims in a Tribunal or a Court."

It adds that the terms of the agreement must remain confidential.

A series of reviews and inquiries are underway and a budget recovery plan is being drawn up as Birmingham City Council faces a desperate financial crisis and attempts to avert a Government takeover.

A Birmingham City Council spokesperson said: “The Mutually Agreed Resignation Scheme (MARS) was launched on Monday (21 August), with information on the scheme sent to all the city council's employees. As part of the council’s budgetary savings plan for this financial year, MARS is a voluntary scheme open for employees to apply."

“During this period and beyond, our focus continues to be on delivering high-quality services that our city's residents and communities deserve.”