Update On The Public Sector Exit Payment Cap

By way of an update on our previous article on the issue of the Public Sector Exit Payment Cap of £95,000.00, the Government recently confirmed that there will be further consultation on the issue. Accordingly, it is anticipated by the Government that the new regulations will finally be implemented in early 2017.

With respect to the Repayment of Public Sector Exit Payments Regulations 2015, which provide for the repayment of exit payments by those earning £80,000.00 or more should they be re-employed into the public sector within a year of leaving, the implementation of those regulations is also imminent.

The Government also recently announced in its September 2016 response to the consultation on reforms to public-sector exit payments, that it is proposing to introduce further measures in this area. These include the following:-

  • When calculating an exit payment, a maximum tariff of 3 weeks pay for each years service would be applied
  • Redundancy pay – a maximum of 15 months pay
  • Exit payments to be calculated on the basis of a maximum salary figure of £80,000.00 (in line with the existing NHS scheme salary limit)
  • As employees reach normal pension retirement age, a taper on the level of lump sum compensation would be applied
  • Measures to limit or end exit packages that include a term that the employee would receive employer funded early access to their pension.

In relation to the additional proposals, the Chief secretary to the Treasury, David Gauke, stated: “These reforms ensure public-sector exit payments are consistent and fair, and that they are also fair to taxpayers too. By applying these reforms across the public-sector workforces for the first time, appropriate standards will be in place for workers and public services will remain protected.”

Nevertheless, Garry Graham, the deputy general secretary of Prospect, stated: “The Government looks set to ignore the vast majority of those who responded to the consultation and peddle tired old myths about fat cats and rewards for failure. In reality, the Treasury proposals will hit some of the lowest-paid and longest-serving public servants hardest.”

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Posted in General Employment Law, Public Sector Exit Payment Cap and tagged , .