Review finds Nottingham City Council underpaid 40 staff members by £70,000

As part of its internal auditing process, which all local councils must do, the the Labour-run authority has been looking at key financial systems including human resources (HR) and payroll.

Back in September last year the internal review of the council’s HR and payroll processes found there was ‘no assurance’ these areas were meeting financial standards.

It highlighted a ‘poor system of internal control and consistent non-compliance with key controls’, which resulted in a financial impact to the council.

During an audit committee meeting on February 23, council officers said despite a lot of work being done on the initial review’s findings, they still determined there was ‘no assurance’.

Coun Andrew Rule (Ind) said: “Do we have any idea how much exactly has been paid to employees and the number of employees affected?”

The updated work picked up around 40 individuals impacted by an issue whereby their line manager had failed to progress their pay within the system.

At the end of their probation period their pay needed to be confirmed, however this was not moved forward on an IT system.

This means the individuals lost out on around £70,000 between them.

Coun Rule questioned whether Nottingham could be facing a similar equal pay claim issue as Birmingham City Council did in 2012 when more than 100 employees sued the council under the Equality Act 2010.

A Supreme Court ruling later led to that council having to pay out approximately £1.1bn in equal pay claim compensation, with a further £760m due to be paid out, adding to pressures which led to the authority issuing a Section 114 ‘bankruptcy’ notice.

Coun Rule added: “Do you think we’ve mitigated against any risk of being challenged about equal pay, because I’m conscious equal pay is something that adversely impacted Birmingham and I am keen to ensure it is not replicated here.”

Councillors were informed the 40 staff members have now been paid and officers said they are mindful of the issue and progress is being made.

The internal audit also concluded there was still ‘no assurance’ with appointeeships.

When a person on benefits needs residential care but is unable to manage their own finances, councils can be authorised to become an ‘appointee’ for that person.

Benefits can then build up if they aren’t spent, and once savings hit certain thresholds, benefits can be affected.

Appointees will attempt to find relatives or executors of the person’s estate if they die.

While these attempts are made, their money is held in a ring-fenced account with any interest accrued added to the balance.

If all attempts fail and no person or executor can be found, any remaining balance can be passed to the Crown Estate.

The appointeeship process was managed on the council’s behalf by Nottingham Revenues & Benefits, a stand-alone company which has since been brought back in-house.

The internal audit found the council was holding in excess of £1m in the account and an external finders agency was commissioned to try and track relatives down.

The internal audit made recommendations that money should be placed in separate ring-fenced accounts for each person and officers said that work should be completed within three months.