Capping the size of public sector exit payments
Capping the size of public sector exit payments

The following Employment guidance note provides comprehensive and up to date legal information covering:

  • Capping the size of public sector exit payments
  • History and status of the legislation to cap exit payments
  • To whom the capping regulations will apply
  • To what types of payment the capping regulations will apply
  • When and how the cap must be applied
  • Reporting duties of the recipient of an exit payment
  • Concerns expressed about the cap mechanism
  • Problems in valuing non-cash exit payments
  • Exception where right to exit payment derives from TUPE transfer
  • Exception to ensure exit payment is no less than statutory redundancy entitlement
  • more

UPDATE: On 10 April 2019 a new consultation was launched on implementation of the proposals to cap the size of public sector exit payments, which included new draft legislation entitled The Restriction of Public Sector Exit Payment Regulations 2019. For more information, see: LNB News 10/04/2019 90 and Capping exit payments in the public sector—a review of the draft regulations for consultation (15/4/19).

NB: This Practice Note discusses draft regulations that are not yet in force. Implementation of these draft regulations has been substantially delayed, and there is no current indication from government as to when they will be implemented.

The current government and the coalition government that came before it have both expressed a desire to place controls on termination payments in the public sector.

There have been two separate but related legislative developments arising out of this.

The first of these was announced in the Queen's Speech in 2014, comprising a set of measures aimed at the situation where a high-earning public sector post holder left his or her post, receiving a sizeable termination payment, but then took a further public sector post, either immediately or within a short period of receiving the termination payment. These measures will allow for claw-back of part or all of the termination payment in those circumstances.