Federal workers' buyouts could reach $2B

The Harper government's plan to slash an estimated 30,000 public service jobs over three years includes hefty golden handshakes that could leave some federal workers laughing all the way to the bank, CBC News has learned.

Workers eligible for up to 82 weeks severance, plus retraining and pension breaks

The Harper government's plan to slash an estimated 30,000 public service jobs over the next three years includes hefty golden handshakes that could leave some federal workers laughing all the way to the bank.

For instance, CBC News has learned that a public servant laid off after only one year in the government will be entitled to a severance package of almost six months' pay, plus up to $11,000 to go back to school for a couple of years.

The Canadian Taxpayers' Federation isn’t impressed.


Are public service workers’ planned buyouts too generous? Have your say. 

"Public service severance packages are far out of line with anything in the private sector," the federation's Derek Fildebrandt said. "It's far out of line with Canadians' reasonable expectations."

Private-sector employers commonly offer laid-off workers a couple weeks of severance for every year they have been with the company, Fildebrandt said. But federal public servants whose jobs are declared no longer needed will be offered special buy-out packages of up to 82 weeks of pay, depending on length of service, plus an array of other benefits.

For instance:

  • Workers with 15 years of service and an annual salary of $70,000 will be entitled to a severance cheque equal to 66 weeks of pay, or almost $90,000.
  • Workers with 29 years of service will be entitled to the maximum severance of 82 weeks.
  • Workers over age 55 will be able to take early retirement without the usual pension penalties, a break that could be worth hundreds of thousands of dollars to some retirees.
  • Government retirees will also receive full severance cheques.

The entire program of buy-outs is expected to cost Canadian taxpayers more than $2 billion.

Members of the Public Service Alliance of Canada demonstrate against planned public service cuts in Ottawa March 1. CBC News has learned federal employees affected by layoffs will receive hefty severance packages and benefits. (Sean Kilpatrick/Canadian Press)

Public servants who are declared surplus but who decide not to take the money and run will have a year to look for another position in government. Those accepting lower-paying jobs will continue to be paid their original higher salary.

The special federal severance package does not apply to layoffs at federal Crown corporations such as the CBC

Finance Minister Jim Flaherty is expected to reveal the overall size of the public service job cuts when he unveils the next federal budget March 29.

"What I am hearing from people is that government needs to be part of the solution," Flaherty said recently. "Lots of people in the private sector have been through difficult times. People have lost their jobs and had to retrain."

The government hopes the relatively rich severance packages will entice federal workers to leave voluntarily, avoiding the need for layoffs.

Rocky Dwyer, a senior public servant involved in managing the downsizing, defends the government's generous package of buy-outs and early retirement.

"You need to refresh the public service, and you need to enable people to retire," he said. "If the government creates a package which enables them to do that, then I think that's a good strategy."

But the Harper government's plan to pave the nation's path to austerity in golden handshakes makes the Taxpayers' Federation see red.

Will big payouts negate savings?

Fildebrandt applauded the government's plan to cut the size of the bureaucracy and give public servants a "reasonable transition program so they don’t land too hard."

"But we need to make sure that these severance packages aren't so big that they are going to completely negate the savings that we have from salaries," he added.

The severance packages are part of the so-called workforce adjustment program directive, an agreement with public service unions representing about 280,000 federal employees.

Tony Clement is the minister responsible for that agreement and all aspects of the pending job cuts and buy-outs. Five days after CBC News asked for information on the severance packages being offered, Clement's department was still not able to provide even basic details.

The last time the federal government tried to reduce the size of the public service with big buy-outs was in 1995 under Jean Chrétien and the Liberals.

In that case, the government put 44,000 federal jobs on the chopping block and gave public servants even bigger golden handshakes than what the Conservatives are offering this time.

But the auditor general subsequently reported that thousands of those employees had simply walked out of their departments, cashed their severance cheques and marched right back into government as consultants.

The Taxpayers' Federation fears more of the same this time around under the Harper government. "It's labour peace at any price … People will be pretty quiet if you hand them a nice cheque, and they can come back as consultants," Fildebrandt said.