(1) Notwithstanding the Public Bodies Contracts Act 1959 and the fact that a local authority to be formed is not yet a legal entity, where any draft scheme or final reorganisation scheme provides for the constitution of a new local authority, the transitional committee may enter into contracts appointing persons to senior executive positions with the local authority to be formed, and fixing the conditions of employment of those persons.
(2) The transitional committee shall not enter into a contract under subsection (1) of this section appointing a person to the position of principal administrative officer of the local authority to be formed unless the Remuneration Authority has first agreed in writing to the conditions of that contract which fix the remuneration of that person. In this subsection remuneration has the meaning given to that term by section 2 of the Remuneration Authority Act 1977.
(3) If the local authority is not formed on terms substantially the same as those set out in the draft scheme, the local authorities that appointed the members of a transitional committee and any other local authorities that were entitled to appoint a member of that committee shall be liable in proportions specified by the transitional committee for the obligations expressed in any such contract to be those of the local authority to be formed.
(4) Where a contract is entered into under this section and the local authority to be formed is formed on terms substantially the same as those set out in the draft scheme, the local authority so formed shall decide, before the 30th day of June 1990, whether or not to ratify the contract.
(5) Where a local authority, being a local authority formed on terms substantially the same as those set out in a draft scheme, decides, before the 30th day of June 1990, not to ratify a contract entered into under this section,—
(6) Every contract entered into under this section shall contain a condition that, if the local authority is not formed on terms substantially the same as those set out in the draft scheme, the contract shall be capable of being cancelled—
and, if the contract is so cancelled, the compensation payable to the person appointed as a senior executive of the local authority shall be an amount equal to 12 months' salary of that person or such lesser amount as may be specified in the contract.
(7) Subject to subsection (2) of this section, nothing in the Local Authorities (Employment Protection) Act 1963 or the Remuneration Authority Act 1977 shall apply in respect of any person employed under any contract entered into under this section.
(8) Nothing in this section limits the right of any transitional committee or local authority to dismiss for good cause or in accordance with any contract any person appointed under this section.
Section 25 was amended, as from 1 April 2003, by section 4(1) Remuneration Authority (Members of Parliament) Amendment Act 2002 (2002 No 54) by substituting the words
“Remuneration Authority” for the words
“Higher Salaries Commission” in every place where they appear.