TNAG-2099-FCO40-2988-HM-Overseas-Civil-Service-(HMOCS)-policy-matters-1990 — Page 56

CODE 18-77

Pa

SECRET

Reference..

Mr Stone

HMOCS de

Hong Kong Department

414

thiB 4316

DATE:

RECEIVED IN REGISTRY

- 9 APR 1990

DESK OFFIC

S FISH (GTN 7 7243 3444)

10 March 1990

C

cc Mr J V Kerby, ODA

Mr A Paul, HK Dept

HONG KONG COMPENSATION/INCENTIVE SCHEME FOR HMOCS STAFF

we

Further to our meeting on 22 March 1990 I promised to let you have my comments

how Mr Fifoot's minute of 15 March 1990, and my thoughts on

should present the agreed scheme to Mr Maude.

on

2.

of

we The first point I would make is that should not make too much precedents, however much OSPA and others would like us to. Cmnd 1193 makes it of the clear that compensation arrangements must reflect the circumstances territory concerned. There is no need for a traditional scheme because Hong Kong is different, indeed unique; staff have a written guarantee about future employment (and pensions) and, as long as HMG regards these guarantees as genuine, it would be absurd to try to obtain actuarial advice about loss of career. Our scheme has been prepared on the basis that there is no loss of career; only the loss of the Secretary of State's protection and it would not be possible to put an actuarial value on this.

3. I do not think that we can use the Fiji case as a justification for departing from precedent. We are not sure that Fiji is in any case a genuine exception, but even if it was it would be so insignificant as not to dent the precedent argument. The precedent argument falls in the face of the special circumstances of Hong Kong.

4.

It

As I said on 22 March, I accept that there was no immediately discernible logic to our choice of 10% of a traditional lump sum payment to compensate for the loss of Secretary of State's protection; other than that, at the outset, we were thinking of a scheme of payments spread over 10 years

with total expenditure broadly in line with what would have been paid in compensation under a traditional scheme. And I further accept that the use of such a figure implies a scientific (or actuarial) process which did not exist. was simply our assessment of the sum of money which, when taken with the first of the annual additions to salary, might induce officers to stay up to 1997 and beyond. On reflection, I feel that it would be best to drop our reference to a payment to 10% of the traditional compensation payment. Instead we could simply pay

further a

25% of salary in 1997,

the initial thus making compensation/incentive payment 50% of salary. This would be little expensive in cost terms and would remove from the package all reference to traditional compensation arrangements.

more

5. Mr Fifoot says that there should be an objective basis for determining the payments we make. Given the volatility of the situation, I do not think this is practical. The scheme we have devised, in conjunction with the Governor, is one which we think will meet our objective of encouraging HMOCS staff to stay on. We shall not know whether we have got it right until the scheme has been announced and individual officers have made their decisions. Even then it will be open to doubt as to whether financial considerations have been the determinant of personal decisions. Judging by the recent letters from Hong Kong, personal feelings about the transfer of power and the worthiness of the Basic Law are just as likely to drive the decision making

1. SECRET