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Scottish Public Finance Manual

The Scottish Public Finance Manual (SPFM) is issued by the Scottish Ministers to provide guidance on the proper handling and reporting of public funds.


FGN2014/06 SPFM amendments: June 2014

The purpose of this note is to announce recent substantive amendments to the Scottish Public Finance Manual (SPFM). The amendment is as follows:

Settlement agreements, severance, early retirement and redundancy terms

The section on Settlement Agreements, Severance, Early Retirement and Redundancy Terms has been updated to clarify Scottish Government (SG) clearance arrangements for proposals to offer a financial consideration to an employee out with any existing (and approved) scheme, taking account of a strengthened process for the reporting of Settlement Agreements which took effect from 1 April 2014.

Settlement Agreements are generally pursued in two different circumstances. The first is where an end to the employment relationship is being considered or has actually occurred in circumstances that are the subject of an employment dispute. The second is in situations where the employment relationship is continuing but the employee has indicated that they have an employment dispute that remains unresolved.

The new measures place the emphasis on SG sponsor teams or Policy leads as the first point of contact for a public body who wishes to submit a Business Case for a Settlement Agreement to the Scottish Government. SG HR is available to provide support and advice to the SG sponsor teams or policy leads in the preparation of the Business Case. SG HR will be responsible for collating information on the use of Settlement Agreements across the public sector and reporting annually to the Public Audit Committee.

These new measures will provide consistency of approach, and increased transparency around the use of public money.

An overview of the process and supporting guidance is provided at Annex 1 of the revised section.

Scottish Government Finance Directorate

June 2014

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