CONFIDENTIAL
Paragraph 13: It is, I believe, misleading to refer to a traditional form of general compensation scheme. A general compensation scheme could either take the form of a lump sum provision or it could be an instalment scheme. Under the instalment scheme, compensation was assessed on the basis of age and service factors and the first and subsequent instalments until the last would be paid on that basis. The instalments could be paid at yearly intervals. When the last instalment came to be paid it would be reassessed again on length of service factors (and I think age too) and if it were greater than the original figure the difference would be added to the final instalment. This was the inducement element to persuade people to stay on. If the reassessment was less than a figure which any intervening reassessment would have produced the highest assessment would have been taken as the final figure. A lump sum payment would only be made under such a scheme if the officer was compulsorily retired on localisation grounds or as a "constitutional casualty".
A traditional instalment scheme therefore did have an incentive provision built in, but it differed from what is called in these papers the modified scheme in that all officers were entitled to all instalments, not only the first instalment, whether they continued to serve or not. The incentive to serve was the possibility of increasing the amount of compensation.
Paragraph 14: Can one really say that the modified scheme is "arguably consistent" if the only element which is truly compensation is one-tenth which is so disproportionate to the inducement element which is nine-tenths?
Paragraph 15, 4th sentence: I just find this unbelievable.
Paragraph 19: The last sentence ignores the possibility of a genuine compensation scheme which is paid in instalments. Have we also thought of the possibility that the Chinese might prefer a lump sum payment, so long as it is paid by the UK, to a continual subsidy by the UK for persons in the employment of one of its subordinate governments?
Paragraph 22: I am doubtful about the possibility of judicial review as regards the decision of how to implement a policy with regard to payment to persons other than those in our employ, but as I wrote in an earlier minute, it cannot be entirely excluded.
Paragraph 24: The third sentence is not true in all cases. In some dependent territories expatriate civil servants were encouraged to stay on and stayed on, certainly initially, on pensionable terms.
3 PFAAL
CONFIDENTIAL
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