Implications of the latest FEMPI legislation

Health managers would be prudent to examine their own contracts to ensure that their earnings are not hit by the latest FEMPI legislation, writes Alan Wallace.

The recent Financial Emergency Measures in the Public Interest Bill, 2015 (“FEMPI”) is the sixth proposed statutory instrument introduced by the Government since 2009 to facilitate the reduction of remuneration of public servants and pensions payable to former public servants. The FEMPI Bill published on October 9  last, has provided at Section 12 for amending the Ministers and Secretaries (Amendment) Act 2011 to give the Minister permanent powers to preclude public servants from benefiting from the payment of unsanctioned remuneration.

Interestingly, Section 12 proposes to deal with future employment of public servants, which includes health managers, as any person employed whether by a government agency or voluntary healthcare provider who will receive a public pension is by law considered a public servant.

The logic underpinning this principle appears to be that the entitlement to a public service pension precludes public servants from serving another master or receiving a top up of their remuneration.

Section 12 of the FEMPI Bill has its genesis in an agreed action plan for the implementation of recommendations arising from an internal HSE Audit Report regarding Section 38 Agencies Remuneration in June, 2012 culminating in a Department of Health Circular 11/2013 issued on the 27th September, 2013.

There are implications for current health managers, their contracts of employment and any ongoing negotiations surrounding “red circling” of posts. Irish employment law basically recognises two types of contracts, either a contract of definite or indefinite duration.   A contract of indefinite duration relates to permanent employees.   A contract of definite duration refers to a fixed term or a specific purpose contract and is often used to retain managers in the hospital sector on a rolling basis.

The Protection of Employees (Fixed-Term Work) Act, 2003 (Section 9) confirms that once employed on two or more continuous fixed term contracts the total duration may not exceed four years.  Accordingly, after four years a contract of indefinite duration should apply unless there are objective grounds justifying the renewal of a contract for a fixed term only.   Any employee is entitled to a written statement from their employer outlining what will trigger the end to a fixed term or specific purpose contract and if an employer intends to renew same, then a written statement should be supplied not later than the date of renewal setting out the objective grounds justifying the renewal and, if applicable, the failure to offer a contract of indefinite duration.

The underlying principle surrounding government policy in this area is “one person one salary” which affirms that serving public servants require the consent of the Minister in order to undertake other forms of paid remuneration in any part of the public service.   Where this leaves former public servants providing services on a consultancy basis, current health managers who attend conferences to speak (receiving remuneration) or current public servants with an income from say a farm, is somewhat unclear.  The logic underpinning this principle appears to be that the entitlement to a public service pension precludes public servants from serving another master or receiving a top up of their remuneration.

In light of the above, any health manager on a rolling contract would be well advised to review their contract now, focusing on any clarification required as to permanent status, related roles and sources of remuneration prior to the FEMPI Bill being enacted.

Alan Wallace is a notary public & partner with Mangan O’Beirne Solicitors, 31, Morehampton Road, Donnybrook, Dublin 4. Alan is a former Board member of the Corporate Governance Association of Ireland and his practice focuses on advising hospitals, their Boards of Directors and hospital suppliers in the healthcare sector.  Alan can be contacted at alanwallace@manganobeirne.ie  or at 01 6684333.