State public servants will swap permanency for a capped 12 month forced redundancy process under a landmark deal to be recommended by the Public Service Association (PSA).

The deal, negotiated by Minister for the Public Sector Susan Close, signals the end to “departure lounges” for long-term excess employees.

It was outlined to PSA worksite representatives in special meetings yesterday.

It includes a 7.5 per cent wage rise over three years.

“It’s a significant change and one that while we didn’t support it in principle, we could see it was inevitable,” the PSA’s chief industrial officer Peter Christopher told InDaily today.

“During the last election both major parties had a policy of using forced redundancies to meet public sector cuts; our role has been to make sure the process is transparent and fair.

“Job security will be removed, but we are determined to see that proper practices are in place to give people who are declared excess an opportunity to be placed elsewhere within 12 months.”

The deal is outlined in a letter from the Chief Executive of the Department of Premier and Cabinet to the PSA.

Similar letters have been sent to the Ambulance Employees Association, the Australian Education Union, CEPU SA, Health Services Union and Psychologists Association.

The PSA letter formalises the State Government’s offer of a pay rise of 2.5 per cent in October 2014, 2015 and 2016 and the “introduction of a new redeployment, retraining and reduncancy policy”.

The redundancy policy, detailed in a separate attachment, signals the end of the concept of permanency in the public service which led to excess employees spending years sitting at a desk in the so-called “departure lounge” with nothing to do while on full pay.

The proposed new deal caps the period a public servant can be excess at 12 months, after which they will be forced to take redundancy.

“Where an employee declared excess has been unsuccessful in obtaining an alternative ongoing position after 12 months, they may be separated with a suitable payment,” clause 9 of the proposed policy says.

It also contains an incentive clause to encourage excess employeees to take a package within three months of being placed on the list.

If they fail to take an offered redundancy package within that period, any subsequent offer will be reduced by 50 per cent (in the first six months) and by 75 per cent after that.

The number of public servants in “departure lounges” has varied over the years – peaking at well above 400 in the early 2000s to an estimated 160 at the current time.

“It’s better managed these days,” Christopher said.

“Most excess employees are being placed in work areas doing temporary work.”

The most recent “State of the Public Sector Report” shows that during 2012-13 the number of excess employees was reduced from 312 at 30 June 2012 to 177 at 30 June 2013.

In that year the number of employees being formally declared excess across the sector fell from an average of 26 per month in 2011-12, to an average of 13 per month in 2012-13.

Some public servants, however, have been on the excess list for more than five years.

During the period 1 July 2012 to 30 June 2013, 161 excess employees were added to the excess list and 296 were placed or separated.

The negotiated pay rise represents a major win for Treasurer Tom Koutsantonis who was under pressure to deliver on savings measures in his June 2014 State Budget.

In a letter to the union, Koutsantonis made an “either or” offer.

“The Treasurer’s offer made it clear that if we wanted a pay rise higher than the 2.5 per cent offered then that would have to be funded by corresponding cuts in each department and that would mean job losses,” Christopher said.

“We outlined the detail of those negotaitioons in the meetings with work site reps yesterday; there was overwhelming support for a containable pay rise that would prevent further job losses.”

The State Government offer will be formalised into a Draft Enterprise Bargaining Agreement over the next three or four weeks and then be voted on by public service union members a couple of weeks after that.

“There’s about 30,000 eligible PSA members and it requires a majority of those who vote for it to be accepted,” Christopher said.

Once ratified by Fair Work Australia, the long standing public service concept of permanency will have come to an end.

Peter Christopher sees the move as an evolution of public service management.

“Over the years we have had this strange mix of permanent public servants being declared excess while their departments were out there employing temporary or casual staff.

“What this deal aims to achieve is to accept the reality that there are excess employees, but that once declared as such, they should have full and priority access to positions being filled by those temporary staff.

“It should make for a more diverse public service and more efficient public service while also protecting current employees jobs.”

It’s been a long process for the State Government which signalled an end to permanency as far back as the 2010 State Budget delivered by then-Treasurer Kevin Foley, pitching him into fierce battle with the public sector unions.

The State Liberals backed the “no more than 12 months” policy in 2011.

In June 2011 the Public Service Association warned that any political party that supported an end to permanency “did so at their own risk”.

The battle now appears to be all but finished, although the State Government is keeping its cards close to its chest.

In an emailed response to InDaily, Public Sector Minister Susan Close said she welcomed the PSA’s  endorsement of the Government’s offer as a suitable basis for negotiating a new enterprise agreement.

“While negotiations are yet to be concluded, we do appreciate the PSA’s response to our offer,” Dr Close said.