Severance Payments to Special Temporary Employees

The Auditor-General, Mr Peter Achterstraat, today released his report ‘Severance payments to Special Temporary Employees’. STEs comprise the vast bulk of the ‘personal’ staff of the Premier, Ministers and Leader of the Opposition.

Two recent severance payments involved special deals that were outside the guidelines and cost the taxpayer nearly $180,000 extra.

“The rules are clear on severance pay. The Department of Premier and Cabinet needs to follow them,” said Mr Achterstraat. “There should be no special deals,” he added.

One hundred and forty seven STEs received severance pay totalling $5.9 million over the three and a half year period we examined. They are entitled to a severance payment when their employment is terminated for any reason other than misconduct or poor performance. Over half of the STEs that left got severance pay, with the rest resigning.

The Department treated all STE terminations as redundancies, which attract a lower taxation rate. Redundancies imply that the position is abolished. However, the usual practice was for a new person to be employed after the staff member was terminated.

“The Department should obtain taxation advice on whether its practice of applying concessional tax treatment to all STE severance payments is correct,” said Mr Achterstraat. “Further, the reasons for a severance payment should be clearly documented and support the case for a lower tax rate. In many cases the reason for the termination was not clear,” he added.

The Department had not determined or published salary bands for the top two grades of STEs.

“STEs are paid from the public purse. There is no good reason to keep their salary bands a secret. The Department should determine and publish senior STE salary bands, as it does with the Senior Executive Service,” Mr Achterstraat said.

The Auditor-General also found that the number of weeks of salary paid on termination is generally higher than in other jurisdictions. “The Department should also have a close look at adopting a two-tiered system, with lower severance payments to staff whose services are dispensed with. If it is good enough for the Commonwealth, it should be good enough for us,” Mr Achterstraat said.

In summing up the audit, Mr Achterstraat commented: “STEs do not face normal public service merit selection processes. It is therefore critical that their entitlements are fair, transparent, and stringently administered. My report’s recommendations will help the Department achieve this.”

Further information

Barry Underwood, Executive Officer, on 9275 7220/0403 073 664 or email