Page:Report of The Inter-Governmental Committee, Malaysia.pdf/34

32 21. In accordance with undertakings given by the British Govemment to Her Majesty's Oveseas Civil Service, a compensation scheme on the lines of the attached draft will be brought into force on Malaysia Day for entitled officers serving in the Borneo States.

22. The compensation scheme should be brought into effect by an Order in Council, which will preserve the continuing rights under the scheme of an officer who is seconded to Federal Service within the Borneo States. To all officers, other than those who may be required to retire under procedures laid down in the scheme, compensation is to be paid by instalments over a period of five years. These capital payments are exempt from income tax in the United Kingdom. The Order in Council should provide for a similar exemption from tax in the Borneo States, and insofar as this may be necessary the Federal Government will secure that these payments (but not any interest payable on them) are exempt from tax under Federal law.

23. Certain features of the compensation scheme have special implications for the Federation:—

(a) the scheme contains special inducements to officers to continue to serve until their posts can be filled by local officers. In particular, to reassure officers who continue to serve that their compensation and pension cannot be lost by a possibly arbitrary decision of Government, the scheme provides for the establishment of an Appeals Board with neutral membership to hear and decide any appeal by an entitled officer against a disciplinary decision insofar as that decision involves the loss of compensation or pension. There should be provision for this Board in the appropriate Constitutions;

(b) the scheme lays down a special procedure for the localisation of posts held by entitled officers and provision for this procedure should be made in the State and also the Federal Constitutions; and

(c) the scheme contains special provisions for the commutation of pensions. Federal pensions legislation should be amended as necessary to provide for this commutation.

24. Public Officers Agreements on the lines of the attached draft should be concluded with the Federal and State Governments to safeguard the conditions of service of overseas officers, and in particular their pensions. These Agreements should come into effect on Malaysia Day.

25. Over 100 contract officers from overseas are serving in Departments due to be Federalised. The great majority of these are serving on contracts for a single tour. The Federal Government and the Borneo Governments wish to reassure these officers that the terms of their existing contracts will be observed and that they can expect to complete the full term of their contracts on secondment to the Federal Service but without liability to serve outside Borneo.

26. The terms of service of the small number of officers serving on long-term contract will also, of course, be observed. It appears likely that these officers too will complete the full term of their contracts and the Governments of North Borneo and Sarawak are confident that this will prove to be the case. It is however, desirable both as a protection for officers and a proper provision for Government that a regular procedure should be laid down for localising the posts of these officers if and when this becomes possible, similar to the procedure for localising the posts of pensionable overseas officers. This would involve a special payment to the officer to compensate for any premature termination of contract.

27. Some officers serving in the Borneo States, although not eligible for designation under the Overseas Service Aid Scheme and not in receipt of overseas inducement pay, have within certain limits been recognised as overseas officers, primarily by according them overseas passage terms. These officers will be treated in all respects as local officers, so that no question of the Borneanisation of their posts will arise and they will throughout their careers be equally eligible for promotion with local officers. Since the establishment of Malaysia is not to disturb existing conditions of service, they will continue while serving in the Borneo States to enjoy their existing overseas passage terms on a personal basis unless they opt to surrender them at some future date as part of a generally favourable change to new conditions of service.

28. There are a small number of officers not eligible for designation under the O.S.A.S who are in receipt of overseas inducement pay from the Sarawak Government. The Sarawak Government will consider whether some alternative offer of premature retirement terms should be made to them.