Central Bank says €541,000 severance payout was ‘cost-efficient’

Six payments made between 2011 and 2013 to avoid ‘more costly’ outcomes, PAC is told

Six employee severance payments that cost the Central Bank €541,000 between 2011 and 2013 were entered into to avoid "more costly" outcomes, the regulator has told the Public Accounts Committee.

"In the view of the bank, the agreed outcomes represented the most cost-efficient solution in the particular circumstances of each case," Gerry Quinn, the Central Bank's chief operations officer, told the PAC at a hearing on Wednesday to consider a report by the Comptroller and Auditor General on severance payments by certain public sector bodies.

The C&AG found that the Central Bank did not adopt a standard approach for assessing and determining the payments, which amounted to €384,000 plus related legal costs of nearly €157,000.

Four of the cases, with a total cost of about €342,000, involved an individual that had not yet commenced employment with the bank, two employees each of whom had less than two years’ service, and a long-term contractor who had never been on staff with the bank.


Mr Quinn said the bank introduced “clear guidelines and robust risk management procedures” in July 2015 for individual discretionary severance payments.

“This policy includes procedures to ensure adequate control and oversight over, firstly, the decision to enter into negotiations; secondly, the severance amount to apply in particular circumstances; and finally, the written terms of the severance agreement,” he said.

“Furthermore, a cost-benefit analysis is always required and this must be supported by detailed written legal and/or employee relations advice.”

Mr Quinn said the cases occurred in a period of “unprecedented growth” for the bank. By 2013, it had more than 1,400 employees compared to about 1,000 in 2009.

He said two of the cases related to settlements arising from pending court proceedings. The first involved a contractor who claimed to have been an employee. This was agreed following the consideration of legal advice and the likely cost of the High Court proceedings.

In the second case, a candidate was awarded a role and resigned an existing position. The individual then alleged that the bank’s pre-employment processes did not make sufficiently clear the conditions of employment prior to the resignation and was unwilling to take up the role. A settlement of €32,000 plus legal costs of €25,000 was agreed following legal advice.

In two other separate cases of fixed-term employment, the employment relationship broke down.

Ciarán Hancock

Ciarán Hancock

Ciarán Hancock is Business Editor of The Irish Times