Analysis: Health executives to retain unapproved salaries

Two years after the controversy began over millions of euro in top-up payments being made to health service executives, the Department of Health and the HSE will this week try to end it with an arrangement that will result in many being permitted to keep the additional money.

When the controversy erupted, then minister for health James Reilly insisted top-up payments had to stop.

Taoiseach Enda Kenny said at the time: “Top-up payments that were not authorised, that were unapproved and that came from nonexchequer funding sources, that breached the public service pay agreement, have to be dealt with.”

However, ending top-ups proved not to be straightforward.

In recent weeks Minister for Public Expenditure and Reform Brendan Howlin has agreed, with some conditions, to proposals by the Department of Health to deal with the controversy.

The HSE had earlier forwarded 85 business cases to the Department of Health that had been submitted by voluntary hospitals and agencies seeking to have additional salaries and allowances paid to their staff approved on a “red-circled” or personal-to-holder basis.

The hospitals and agencies (technically known as Section 38 organisations), as well as the HSE said the individuals concerned had legal contractual rights to the payments.

Controversy

A HSE internal audit report – which generated the controversy when its findings were published in The Irish Times in 2013 – identified 274 unauthorised salary payments, allowances and perks being paid to 222 employees of voluntary hospitals and agencies.

It found that senior personnel in voluntary hospitals and agencies were together getting €3.2 million in allowances and benefits above their official salaries.

These included private health insurance cover, motor allowances and extra duty allowances. About half of these have been discontinued.

However, the 85 business cases submitted to the Department of Health sought to retain 136 unapproved salary levels, perks or allowances for 91 individuals in 26 voluntary hospitals or agencies.

It is now expected that 64 individuals will be allowed to retain unapproved salary levels – that is unapproved by Government – on a ring- fenced and pensionable basis.

In a submission to Howlin’s officials, the Department of Health said: “A number of these salaries fall below the top tier of management in Section 38 agencies – 37 of the 64 are between €50,000-€80,000.

“Of the remaining 27 salaries, 23 are between €80,000-€110,000 and four are in excess of €110,000. The majority of the salaries in excess of €80,000 relate to the intellectual disability sector for which there was no approved rate for the post.”

Of the 64 individuals who were seeking to retain topped-up salary levels, 35 were also in receipt of an unauthorised allowance and 11 of these 35 also were receiving a second unapproved allowance.

The Department of Health said 61 individuals in Section 38 organisations were in receipt of unapproved allowances. It proposed approving 32 allowances on a ring-fenced, nonpensionable basis, with 29 being rejected.

It said of the 11 individuals receiving a second allowance, it proposed to approve four. “We are proposing that all unapproved allowances awarded prior to 1 January 2010 be red-circled on a personal-to-holder, non-pensionable basis.

“It is not proposed to approve any allowances awarded after January 1st, 2010, when [the second piece of financial emergency legislation] Fempi (No 2) came into force, to either existing staff or new hires.

AG advice

“Legal advice has been received from the Office of the Attorney General which supports this approach,” the Department of Health told the Department of Public Expenditure.

The Department of Health said out of 72 allowances – worth €693,000 per year – that were currently paid, it was proposed to approve 36 on a nonpensionable basis with a value of €323,000.

In August Mr Howlin approved Department of Health proposals for dealing with the top-up controversy in accordance with legal advice from the AG. The full details have only now emerged.

The Department of Public Expenditure and Reform said this would involve authorising the ongoing payment of salaries currently at unapproved rates on a ring-fenced personal-to-holder basis.

Individuals appointed in future will be paid on the basis of official pay rates.

The Department of Health said the HSE had been asked to confirm which business cases met the criteria for approval and those that would be rejected under the formula.

These details are expected to be finalised later this week.