The Western Australian Government has moved to reduce large compensation payouts for senior bureaucrats when a contract is brought to an early end.

The Public Sector Commissioner has decided to apply a new approach when determining compensation payments.

Currently, senior members of the public service may seek a compensation payment of up to 12 months’ remuneration, which includes salary, motor vehicle allowances and superannuation.

Under the new policy, in operation from 1 September 2017, compensation payments will be applied on the basis of four months’ remuneration for each full year of the contract remaining, up to a maximum of 12 months.

Further legislative changes will also limit the maximum compensation payment when officers’ contracts are brought to an early end, to 12 months’ salary rather than remuneration.

If this approach had been applied to Senior Executive Service officers since March 2017, the total compensation costs would have been reduced by about 41 per cent.

As part of the government’s workforce reform, legislation will be introduced to also remove the existing ‘right of return’ provision available to Senior Executive Service officers appointed under the Public Sector Management Act 1994 and health executives appointed under the Health Services Act 2016.

Following the enactment of the legislation, a six-month transition period will be in place, enabling officers to exercise their right to return to a permanent tenure if they wish to do so.

WA Premier Mark McGowan said: “A number of people leave the public service for various reasons. While there is an initial cost that the state government is trying to reduce, there is also long-term savings.”