What should you do when an employee joins your organisation from a Scottish Arms Length External Organisation (ALEO) or other Scottish public body which is not listed on the RMO (but probably should be)?
The Redundancy Payments (Continuity of Employment in Local Government etc)(Modification) Order - thankfully shortened to RMO - originated in 1983. Effectively it means that where an employee who is employed by an organisation covered by the RMO is made redundant, and they have previous service with one of the organisations listed in Schedule 2 to the RMO, then that service will count for the purposes of calculating their redundancy payment entitlement.
It cropped up in the House of Commons last summer when Martyn Day, MP for Linlithgow and East Falkirk, raised concerns over the lack of progress made on updating the order. Effectively, this means that a number of organisations across Scotland have yet to be included in the order, despite applying for inclusion - in some cases - several years ago. With an estimated 130 ALEOS operating in Scotland, only a fraction of these are listed in the RMO.
Likewise, some significant new and newish public bodies are omitted. For example, the Scottish Police Authority, created in 2013, employs all the so called 'civilian' members of police staff (that is, staff who are not police officers) previously employed by predecessor regional authorities. Significantly it is not expressly included in the RMO schedules, giving rise to a potential difference between the treatment of police staff north and south of the Border.
Review by Government
The answer given by the Government in the Commons was that the RMO is under review:
"Since , a number of separate orders have added new bodies to the list of associated bodies. It is fair to say that over that time the order has become a rather untidy piece of legislation. It is unwieldy, and it is often …. to navigate or administer.
…. Any review must ensure that the [RMO] is not over-burdensome in processes or future costs."
So it appears possible that the review might extend as far as restricting the RMO 'family' in an effort to keep redundancy costs across the sector in check. This could be controversial as sectoral consistency will be important.
What should employers be doing in practice?
In the meantime, what should RMO employers do when an employee joins them from a body that is not listed but which has applied for inclusion? It is not clear whether the reviewed legislation, once available, will 'retrospectively' add these bodies. However, it is quite possible that where the redundancy situation is triggered after the RMO has been reviewed, previous service with public employers which are added to the RMO as part of the review, will count (even where that previous service pre-dates the review).
Separately, employers welcoming new employees who have previous service with a public employer which seems to be anomalously excluded might already have a practice of agreeing contractually to recognise that past service. That might seem like a pragmatic approach, particularly given the possibility that the RMO's effect, once reviewed, may be retrospective. However, RMO employers will have to equally be mindful of budgets and governance justifications for exceeding their strict legal obligations.
We suggest that the first port of call should be to analyse carefully the current RMO schedules themselves. As the Government acknowledged, it can be difficult to navigate and some employers which are not included expressly by name may be caught by generic descriptions contained in the legislation or, in some cases, might potentially be capable of being construed as included by applying a purposive interpretation of the existing RMO provisions.
Get in touch
If you require assistance in relation to considering your policy / practice when it comes to recognising continuity, get in touch.