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What happens when someone is dismissed on grounds of efficiency?

6.2.18 For pension purposes, employees who are dismissed are usually treated as if they had resigned. You can, if you wish, also pay them a lump sum compensation payment as long as they have at least one year’s service. You will meet the cost of the compensation payment.

6.2.19 The Scheme Administrator, on your request, will calculate the maximum compensation payable on dismissal on the grounds of efficiency. You then need to decide how much of this compensation calculation, if any, you want to pay by following the guidance attached to EPN 471.

Please note: Compensation is not payable to employees dismissed on the grounds of efficiency if they are over their scheme pension age. The scheme pension age for classic, classic plus and premium members is age 60. For nuvos members the scheme pension age is currently age 65. In alpha, a member’s Normal Pension Age (NPA) is the later of their State Pension Age (SPA) or age 65.

6.2.20 Decisions about compensation should be based on the employee’s health condition(s) and circumstances. Both long term and intermittent health conditions can be considered; if the condition is not grounds for medical retirement, but affects attendance and/or performance. It is important to note that unsatisfactory attendance or poor performance dismissal criteria should not be applied in such cases.

6.2.21 If you are dismissing a member on efficiency grounds caused by medical reasons, you must first consider them for Ill Health Retirement (see ‘Ill Health Retirement (IHR)’ (section 6.3.7) for details).

6.2.22 Once a decision has been made to dismiss an employee for efficiency reasons, and compensation is due, the Scheme Administrator will calculate the level of compensation payable to the member based on your instruction.

6.2.23 All compensation payments must then be paid through your payroll, as announced in EPN556. The Scheme Administrator will calculate the member’s preserved benefits and inform the member as described in 6.2.15 (‘Scheme Administrator action’).

6.2.24 The Scheme Administrator will give classic members the option of receiving their pension benefits immediately and without reduction by giving up their compensation lump sum if they:

  • are age 55 or over on the last day of service;
  • eligible for a preserved award; and
  • have been awarded 100% compensation.

6.2.25 If a member chooses to receive their pension benefits immediately, the Scheme Administrator will process the payments and bill you separately for the cost.



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