Forum on formula for ex-gratia payment

Theresa Fox

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The University Council at its meeting on 26 November 2001 approved the policies and procedures to be adopted for releasing staff on the grounds of redundancy (see Linkage No. 207). However, the Council also agreed to re-consider the formula for ex-gratia payment and authorized the Staffing and Conditions of Service Committee (SCOS) to review alternatives for Council's consideration in June 2002.

CityU’s Human Resources Office (HRO) organized a staff consultation forum on 19 April to present some alternatives for ex-gratia payment and to seek the views of staff.

“We would like to reiterate that the priority and preference of the University is to retain and upgrade the skills of our staff so that we can all continue to contribute to its vision and functions,” said Dr Ellen Ko, Acting Director of HRO. However, as a principle of good management, the University must be prepared for possible situations where there is no longer the requirement for certain skills.

Dr Ko said that there is no concrete plan for downsizing across the University. “Our redundancy policy aims at dealing with isolated cases, if there is any such case at all. The current policy is not in preparation for the de-linking suggested by the higher education review issued recently. And it is not motivated by the development of the College,” she emphasized.

In fact, Dr Ko pointed out, the University does not need a redundancy policy, as all staff in any organization are covered by the provisions of the Employment Ordinance, in which the only major condition to be satisfied is the payment of severance pay. However, as a commitment towards staff members, the University's redundancy policy not only provides for ex-gratia payment, but also provides an elaborate procedural and appeal process designed to safeguard the interests of staff.

“We want to strike a balance between protecting the interests of the University as well as being helpful to the colleagues concerned. So, we have devised an elaborate process aimed at ensuring the redundancy proposal coming for the head of department and supported by a line manager will be properly and seriously scrutinized by the mechanism,” Dr Ko said.

In the event that a staff member is made redundant, the University originally proposed an ex-gratia payment of three month’s salary plus one month's salary for every three years of service [E = (3 + Y/3)M]. After reviewing the proposal, the SCOS came up with two proposals: Proposal One, the most common formula among public and private organizations, is two-thirds of the monthly salary times the number of years of service, subject to a cap of 15 months [E = (Y x 2/3)M], where Y stands for years of service and M for monthly salary. Proposal Two is calculated on the basis of the number of years of continuous service (V) plus one month's salary for every two years of service, again capped at a maximum of 15 months [E = (V + Y/2)M].

“Although both proposals are based on the number of years of service, the effect is enhanced under the second proposal. The means that staff members with longer service would get a better redundancy package because they have contributed their skills and experience to the University for a longer time and it may be difficult for them to find employment,” Dr Ko explained.

The Executive Committee of Council and both Staff Consultative Committees have discussed the proposals and are in favour of Proposal Two. The Executive Committee expressed some concern about the financial implications of the proposal and requested that the formula be reviewed after two years. The Management Board and the SCOS support Proposal Two in principle, Dr Ko said, and subject to staff consultation between now and then, it will be presented to Council for approval in June.

In the Q&A session that followed Dr Ko’s presentation, some of the concerns raised by staff included whether the redundancy calculation would be based on the highest salary point during service, or the leaving salary; whether the University would set up a “post-redundancy service—whether long-serving staff members made redundant would continue to be eligible for medical benefits; and whether transfer to a lower grade job would be an option.” Dr Ko said HRO would reflect the views expressed to Council and the SCOS.


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