Government’s pay cap does not apply to persons appointed on consultancy contracts

People appointed on consultancy contracts to carry out work for public bodies are not covered by the Government's official pay ceiling, the Department of Public Expenditure and Reform has said.

The Irish Times reported last month that one Health Service Executive hospital group had paid a senior manager, employed under a contract arrangement, €258,000 over a 13-month period since last year.

The individual was employed through a company as a contractor in the University of Limerick Hospitals Group and had responsibilities in relation to six hospitals in the region.

The amounts paid out were far in excess of the official public service pay cap, set at about €185,000 – the salary of the Taoiseach.

Last Thursday, chairman of the Dáil Public Accounts Committee John McGuinness raised concerns that a company known as Starline Management Consulting Ltd was paid €258,000 to fill the position of chief operations officer/deputy chief executive officer at the hospital group.

He sought a report on the background to the appointment from HSE director general Tony O'Brien.

Mr O’Brien said the position in the hospital group had been publicly advertised on two occasions but could not be filled.

The HSE told this newspaper last month the contractor was being paid €700 a day for services to the group. It said that at the start of this year, he took on additional duties when another senior manager left, without any additional remuneration.

Employee vs contractor

Asked whether the payments made in respect of the position were in breach of the Government’s pay cap, the Department of Public Expenditure and Reform said: “As an external consultant is not an employee or public servant, the public service pay cap is not relevant The contracting of outside contractors under contracts for service is a matter for the relevant accounting officer and subject to public service procurement requirements.”

The trade union Impact, which first raised the issue in the Mid West Hospital Group with the Dáil Public Accounts Committee, said it was holding an industrial action ballot across five hospitals in the region to sanction a refusal to report to the manager. The ballot result is due on June 20th.

Impact official Andy Pike said the union was seeking clarification over when the management consultancy contract would be terminated, and said staff objected to the level of pay.

“The HSE director general has said the Mid-West Hospital Group needs additional administration staff to provide vital services to patients. The money spent employing just one management consultant would cover the costs of at least five clerical staff to help the hospitals cope with increasing demands,” he said.

In 2011, the HSE and the Department of Health drew up confidential plans to pay up to €1.5 million a year to hire an outside company to manage its hospitals in Limerick and Galway. The plan was dropped. However, official files maintained the department acknowledged there was "a risk that this initiative could attract adverse media comment and be perceived by some as a way around the cap on public service salaries".