Ottawa must pay out as much as $6 billion in voluntary severance payments to hundreds of thousands of federal public servants who are not even losing their jobs, a spokesperson for Treasury Board President Tony Clement said Friday.

Even though the Conservative government has ended the generous program, which pays out thousands of dollars to federal employees when they retire or decide to quit, it is still required to honour existing contracts.

“It’s a benefit that has been there since the Trudeau (years) circa 1968-69, so the liability was always there. It has been quietly handed out when people retire or decide to quit … it’s on the book anyway,” Andrea Mandel-Campbell told the Star.

The voluntary severance is not to be confused with an additional $900 million in severance for 19,000 federal workers losing their jobs as result of Conservative government-wide cost-cutting exercise.

Mandel-Campbell said there is an impression that the Conservative government is “giving away the $6 billion” when in fact it has no other choice but to live up to its employment obligations. But she says when everyone is paid off, the program will come to an end.

“This doesn’t exist in the private sector, just like the banking of sick days doesn’t exist in the private sector … it egregious and very costly and we can’t afford,” she said. “This liability was only going to continue to grow so that’s why we needed to cut it off now … it’s unsustainable.”

The average payout to date has been roughly $20,000, but the highest-paid government executives and senior military personnel could be getting cheques of up to $150,000. It is based on one week for every year of service and the payout is based on their last year, which is usually their highest.

To date, the program has cost about $500 million a year.

Mandel-Campbell explained that as the many different collective agreements expire “we are then going on and negotiating for the removal of this benefit.” So far the program has been stripped from contracts representing some 230,000 of the 400,000 federal public servants.

Robyn Benson, national president of the Public Service Alliance of Canada, said in lieu of the voluntary severance, the union negotiated “stronger provisions for severance upon layoff so the thousands of federal workers this government is recklessly cutting have a better chance of continuing to pay their mortgages and contributing to the economy.”

What is different at the moment is that public servants are being offered the chance to cash in now rather than waiting until they retire or quit because the government wants it off the books.

“They have the option of cashing out now or cashing out when you retire or leave. So far, about 75 per cent of members are cashing out now rather than waiting,” Mandel-Campbell said.

This year, Ottawa expects pay out about $2 billion.

Dan Kelly, president and CEO of the Canadian Federation of Independent Business, said he understands that the government has a commitment to pay out the money “but it’s a giant bitter pill to have to crunch on that we are paying out billions to people who are not losing their jobs.”

“The government has gotten rid of it, that’s the main thing,” he said.

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Kelly said the voluntary severance is “just one of many, many hidden perks that civil servants have that the average Canadian haven’t a sweet clue about,” adding that the government also tops up Canada Pension Plan for public servants who retire early unlike the rest of Canadians who are penalized.

Mandel-Campbell also noted a public servant losing his or her job who has already cashed in on the voluntary severance “will (have their severance) reduced by the number of weeks of severance that the employee has cashed out as a result of the negotiated end of the accumulation of severance benefits for voluntary departure.”

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