NICS redundancy and the Civil Service Compensation Scheme

Northern Ireland Civil Service (NICS) staff who leave on voluntary redundancy below normal pension age get one month’s pay for each year of service, up to 21 months. Compulsory redundancy pays the same rate with a cap of 12 months. Both come from the Civil Service Compensation Scheme (Northern Ireland), CSCS(NI), which sets the most that departments can pay. It is separate from the statutory minimum in statutory redundancy pay in Northern Ireland.

The tariffs

The Department of Finance sets them out like this:

Type of exit	Below normal pension age	Above normal pension age
Voluntary redundancy	one month’s pay per year, up to 21 months	one month’s pay per year, up to 6 months
Compulsory redundancy	one month’s pay per year, up to 12 months	the page gives no separate figure

Staff who might face compulsory redundancy must first have had the chance to leave on voluntary terms. Voluntary redundancy carries three months’ notice.

The scheme can pay less than the maximum. Employers decide whether to run a voluntary exit scheme, who to offer it to and what tariff applies, and they tell staff the selection criteria. If you are offered a place, you do not have to accept.

What counts as pay and service

Pay is your full basic pay on your last day plus any permanent pensionable allowances. Two limits apply to the figure used. Anyone earning less than the top of the EOII scale (on a full-time basis) is treated as earning that amount. At the other end, pay is capped at the maximum of point 2 on the NI Senior Civil Service scale, which the December 2024 staff guidance gives as £103,379. NICS grades explained describes the grades those scales refer to.

Service counts from your current employment, including earlier Civil Service employment if there was no break. Added years or added pension you are buying, benefits transferred in from a former job and earlier periods of pensionable service in the NICS pension schemes before your current employment are left out. Decimal years are used, so 11 years and 200 days is 11.5479 years.

Part-time staff have service based on actual hours worked and full-time equivalent pay. If you worked part time in the last three years, the maximum number of months can be restricted in proportion, and tapering applies in the same way. Fixed-term staff normally get the same as a permanent colleague with the same pay and service, though your contract can change that.

Pension choices

The pension side often matters as much as the cash. With at least two years’ qualifying service and over your minimum scheme pension age, you can take your pension straight away. Taken before scheme pension age it is reduced, because it will be paid for longer. You can use your compensation to buy out that reduction. If it falls short, you pay the difference by cheque to the Department of Finance, and the pension is not paid until the cheque clears. If the compensation is more than the cost, you get the rest as a lump sum.

You can instead take a reduced pension and the compensation as cash, provided the pension is above the Guaranteed Minimum Pension. You cannot use your pension lump sum to buy out the reduction. If you have not qualified for a pension, you get a refund of your contributions, less tax and the cost of buying you into the State Second Pension, or you can transfer the notional value to another scheme. The NICS pension (alpha) guide explains how the scheme itself works.

Over scheme pension age, you get your compensation and your pension is paid immediately.

Notice, tax and returning

You are entitled to three months’ notice, which starts when you sign the agreement to leave. If your employer wants you gone sooner, it pays compensation in lieu of notice for the balance. That payment is taxed through payroll and National Insurance applies.

The guidance says the first £30,000 of a compensation payment is tax-free under current tax law, and ordinary tax rules apply to the rest.

If you return to an organisation covered by the NICS pension and compensation schemes within 28 days, the compensation is cancelled, your service is treated as continuous and you repay the full amount. Return after 28 days but within the shorter of six months and the period the payment covered, and you repay a proportion, which can be reduced if the new salary is lower. A pension already in payment can also be affected.

What to check

• Which tariff and selection criteria your employer has announced for the scheme.
• The quotation, including any amount kept back to buy out an early pension or add pension.
• The tax position on the payment, with HMRC.
• Any plan to take another public sector job soon after leaving.

The Department of Finance says the voluntary and compulsory redundancy booklets were under review when its page was read, and the guidance warns that the CSCS(NI) rules, not the booklet, are the legal basis if the two differ. Civil Service Pensions NI can be reached on 0300 077 0329 or at [email protected].