Sacking the DIP - Shooting the messenger?

DCLG has written to a limited number of stakeholders seeking their views on draft Amendment Regulations that remove the requirement for a Designated Independent Person (DIP) to investigate allegations of misconduct by senior local government officers in England. The consultation period is short - DCLG has asked for responses by 14 March 2013.This Alert highlights our principal areas of concern regarding the proposals.

28/02/2013

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Sarah Lamont

Partner

DCLG has written to a limited number of stakeholders seeking their views on draft Amendment Regulations that remove the requirement for a Designated Independent Person (DIP) to investigate allegations of misconduct by senior local government officers in England. The consultation period is short - DCLG has asked for responses by Thursday 14 March 2013.

The proposed regulations amend the Local Authorities (Standing Orders) (England) Regulations 2001 (the Standing Orders Regulations) to: 

  • remove the requirement for a DIP in disciplinary proceedings in respect of any of the three statutory officers (the Head of Paid Service, the Monitoring Officer and the Chief Finance Officer); and 
  • remove the requirement that any disciplinary action must be in accordance with the report and recommendation of the DIP, replacing it with a requirement that the final decision to dismiss a statutory officer must be taken by full Council.

This proposal has been trailed by the Secretary of State in previous statements as being aimed at reducing the level of severance payments and ensuring that authorities are able to dismiss incompetent Chief Executives. However, the proposals go well beyond those stated objectives, removing any protection from arbitrary dismissal from all three statutory officers and not being limited to dismissal on the grounds of incompetence. Further, there is no evidence that the changes will significantly reduce severance pay-offs.

Background

Section 151 of the Local Government Act 1972 requires every principal authority to appoint a Chief Finance Officer, to be responsible for the proper management of the authority’s financial affairs. Sections 4 and 5 of the Local Government and Housing Act 1989 require every principal authority to designate officers as Head of Paid Service and Monitoring Officer.

The Head of Paid Service has a personal duty to report to Council (or, following the introduction of executive governance in the Local Government Act 2000, to Cabinet with a copy to all members in the case of an executive functions) where he considers it to be appropriate in respect of the co-ordination of the discharge of the various functions of the authority, or the adequacy or pay of staff, or their organisation or management. The Monitoring Officer is under a similar duty to report where he is of the opinion that the authority has or proposes to act unlawfully and has particular responsibility for maintaining the register of members’ interests. The Chief Finance Officer is under a similar duty to report where there is unlawful or improper expenditure.

The proper discharge of these personal responsibilities can bring the statutory officer into conflict with members of their authority, as their report may conflict with the political objectives of the authority, or indicate misconduct by a particular member. Accordingly, the Standing Orders Regulations provided some protection to statutory officers against arbitrary disciplinary action or dismissal.

The Standing Orders Regulations carried forward a previous requirement that the final decision to appoint or to dismiss the Head of Paid Service must be taken by full Council. They also provided that as soon as an authority identified that there was a matter in respect of any of the three statutory officers which required formal disciplinary investigation, it must appoint a DIP (to be a person agreed between the officer and the Council or in default appointed by the Secretary of State), that the statutory officer could only be suspended for a maximum of two months to enable the investigation to take place, unless the DIP agreed to extend that period, and that Council (or a Committee or the Head of Paid Service acting under delegated powers) could only take disciplinary action in accordance with the DIP’s report and recommendation.

The requirement that every authority adopt these provisions as part of its Standing Orders gave a degree of protection to the statutory officers against arbitrary or politically-motivated dismissal, though it is to be noted that they only applied to disciplinary proceedings and not to dismissal by reason of redundancy or medical incapacity.

The DIP procedure was then incorporated into the model disciplinary procedure contained in the NJC model terms and Conditions for Chief Executives, which have been incorporated into the vast majority of statutory officers’ contracts of employment. The NJC procedure goes further than the Regulations in prescribing a very protracted process in which the Chief Executive and his representative are entitled to be heard on at least five separate occasions before any final decision to take disciplinary action. In contrast to the Standing Orders Regulations, it merely requires the authority to “have regard to” the recommendation of the DIP.

Response to the proposals

Our principal concerns regarding the proposals are:

1. There is no empirical evidence that the cost of dismissing statutory officers under the DIP procedure is any higher than the cost of dismissing non-statutory officers

Every authority is under a fiduciary duty and is required to disclose severance payments, so an authority will not make a high severance payment unless it has to. Where the authority has a strong disciplinary case, the DIP requirements need not protract the disciplinary process unduly (see below), so an authority which has a strong disciplinary case and is prepared to manage the disciplinary process positively should not be dissuaded for fear of time which that disciplinary process will take.

High severance payments occur where the authority seeks to dismiss an officer without having a disciplinary case which will stand up in an Employment Tribunal, and so agrees a high severance payment to avoid having its disciplinary case tested properly. The requirement for the approval of a DIP means that an authority is less likely to take arbitrary disciplinary action against a statutory officer. So the DIP process actually reduces the probability of a high severance payment.

2. No requirement for a DIP Investigation

Despite the assumption in the consultation, there is currently no requirement for the DIP to undertake the disciplinary investigation. Unlike the Standing Orders (Wales) Regulations, the English Regulations make no such requirement and there are sound reasons why the investigation should be undertaken by someone other than the DIP: 

  • if the DIP conducts the investigation and then presents his report and recommendation, he does so before the evidence on which he has based his report and recommendation has been tested at a hearing. If the hearing process undermines that evidence or brings out new evidence, the authority remains bound not to take any disciplinary action except in accordance with that, now out of date, report and recommendation, and there is not facility for the DIP to review or update his report and recommendation; 
  • if the DIP conducts the disciplinary hearing on behalf of the authority, he is then conducting a hearing into his own findings, which would be a breach of natural justice.

Accordingly, our strong recommendation to local authorities is to arrange for a separate investigating officer, who can be an officer of the authority, to investigate and report to the disciplinary hearing, and arrange for the DIP to sit alongside or as a co-opted non-voting member of the disciplinary panel, with a right to ask questions of witnesses, then retiring with the Panel and able to make a report and recommendation on the basis of the tested evidence which (hopefully) accords with the wishes of the Panel.

3. The requirement for the DIP’s approval to extension of suspension currently speeds the disciplinary process

The consultation paper makes no reference to the limitation on the authority’s ability to suspend the Head of Paid Service for a period of two months, which can only be extended with the consent of the DIP. This restriction currently encourages the authority to conduct the investigation expeditiously, and so limits the cost of paying salary during suspension.

4. The direct cost of the DIP is relatively modest

If the authority uses a DIP sensibly, limiting his involvement to the Disciplinary Panel hearing and extension of suspension, the DIP’s fees are going to be of the order of £1,000 a day, possibly for a day’s preparation and a day’s hearing.

The real bureaucracy and delay in disciplining Heads of Paid Service particularly arises from the tortuous process set out in the model disciplinary process contained in NJC terms and conditions of employment. This provides some five occasions on which the Head of Paid Service and his legal representative have to be afforded the opportunity to attend and make representations or give evidence.

To reduce the procedural cost and delay in dismissing a Head of Paid Service, persuade the local authority employers to renegotiate these terms and to limit the involvement of the DIP to the Disciplinary Panel hearing.

5. The draft Amendment Regulations go far beyond the Secretary of State’s justification for them

The Secretary of State’s public statements have sought to justify the changes in order to facilitate local authorities in dismissing incompetent Chief Executives, and reducing the scale of severance payments for senior local government officers.

The Amendment Regulations as drafted would remove the additional protection from competent and incompetent Heads of Paid Service alike, as they are not limited to dismissals on ground of competence but extend to any disciplinary action. Further, they remove the same protection from Monitoring Officers and Chief Finance Officers, again irrespective of the basis of the disciplinary action.

As set out above, the high severance settlements arise not when the authority seeks to dismiss the officer concerned for good cause, but when it seeks to do so without a case which would stand up to scrutiny in an Employment Tribunal. If the authority has a strong disciplinary case, then it should have no fear in pursuing disciplinary action and paying just the statutory entitlement of the officer concerned, which may amount to no more than pay in lieu of notice (if the conduct were not gross misconduct) and, in a redundancy, statutory and contractual redundancy payments.

The other significant elements which appear regularly in severance settlements are the discretionary payment of up to two years’ pay and compensation payment to the LGPS Superannuation fund for discretionarily allowing immediate payment of pension without actuarial reduction. Under the authority’s fiduciary duty, these payments should only be made where they are provided for in the authority’s severance policy and where there is a commensurate benefit to the authority, which is normally that the authority is spared having to fight a losing case in an Employment Tribunal.

6. Statutory officers exercise an important regulatory function which may bring them into conflict with their authority, and which merits real protection from arbitrary dismissal

All three statutory officers are under a personal duty to report to Council or Cabinet where they consider it appropriate to do so in certain circumstances. This is an important regulatory function to protect the authority’s ability to discharge its functions effectively and lawfully, to prevent the politicisation of the authority’s employees and to safeguard against the inappropriate or illegal use of public resources. The exercise of this function may bring the statutory officer into conflict with the leadership of the authority.

If a statutory officer is to be subject to arbitrary dismissal as a consequence of discharging these personal statutory duties quite properly, then officers will understandably shrink from the proper and necessary discharge of these functions, and local government will be the loser.

The proposed alternative, requiring a resolution of full Council to dismiss a statutory officer, has been proven to be ineffective in an authority where the leadership command a majority in Council. But that is precisely the circumstance in which that leadership is more likely to act in an overbearing manner and seek to dismiss officers who, for good reason, exercise those statutory functions in a manner which is inconvenient for the leadership.

7. The proposed alternative safeguard encourages deadlock where the elected Mayor is at odds with the majority in Council

We have already seen the difficulties which attend a directly elected Mayor who is not supported by a majority in Council.

Where a statutory officer is incompetent, it is likely to be the Mayor, responsible for the discharge of 90% of the authority’s functions, who will lose patience with the officer and seek his dismissal. Where the Mayor is at odds with the majority in Council, Council can simply block any such dismissal. So the proposed alternative safeguard promises deadlock in the increasing number of mayoral authorities where the Mayor is not supported by a majority in Council.

8. Why not build on the role of the Independent Person?

The Localism Act 2011 created the role of Independent Person. If the Secretary of State wished to avoid the bureaucratic process which the NJC model disciplinary process requires with the DIP, it would be relatively easy for the Amendment Regulations to provide an effective safeguard by requiring that the Independent Person must attend any meeting of Council (or of any committee or sub-committee) which is discharging the function of dismissing a statutory officer, and that the meeting must have regard to the recommendation of the Independent Person. This would be limited to the actual disciplinary hearing and appeal, rather than the earlier processes, and would ensure that an independent voice were heard, which the unfairly dismissed statutory officer could pray in aid at any subsequent Employment Tribunal.

9. The Amendment Regulations fail to address the position of the Deputy Monitoring Officer and the Deputy Chief Finance Officer

The Deputy Monitoring Officer is required to discharge the Monitoring Officer’s functions where the Monitoring Officer is unable to discharge the function due to absence or illness, but he enjoys no protection from arbitrary dismissal. Similarly the Chief Finance Officer can delegate the discharge of his functions to another officer, who enjoys no similar protection.

Such protection need only be extended to the officer where he is subject to disciplinary action in respect of any action or omission in the role of Deputy Monitoring Officer or Deputy CFO.

Further, it would be useful to extend the duties of the Deputy to cover the case where the Monitoring Officer is not absent, but is otherwise unable to act in that capacity, for example as a result of a conflict of interest.

10. The implementation of this change may take a generation of officers before it has effect

Once the Amendment Regulations are in place, every local authority’s Standing Orders will still contain the previously mandatory provisions. So it will then be necessary for every authority to secure a resolution of Council to amend its Standing Orders to remove these provisions.

Even then, 95% of the DIP process will still be enshrined in the contracts of statutory officers (NJC Model Disciplinary Process merely requires that the authority “have regard” to the DIP’s report and recommendations, but otherwise it is fully compliant with the current Standing Orders Regulations). Those contracts can only be amended by agreement with each statutory officer, which agreement is unlikely to be forthcoming voluntarily.

So the probability is that most authorities will leave current contracts in place and adopt new terms and conditions as and when the present generation of statutory officers leave and they come to appoint replacements.


This consultation has not been widely publicised and the response time is rapidly approaching. Authorities should submit their views on the proposals to Paul Rowsell, DCLG Deputy Director – Democracy (email paul.rowsell@communities.gsi.gov.uk) by 14 March 2013.

If you would like to discuss any of the issues raised in this Alert, please contact a member of our Local Government team.

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