Q&As

Do the special severance payments rules that apply to public sector bodies, such as the NHS, apply to settling claims in the employment tribunal, ie is a payment made in settlement of an existing employment tribunal claim a true severance payment for these purposes?

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Published on LexisPSL on 23/08/2021

The following Employment Q&A provides comprehensive and up to date legal information covering:

  • Do the special severance payments rules that apply to public sector bodies, such as the NHS, apply to settling claims in the employment tribunal, ie is a payment made in settlement of an existing employment tribunal claim a true severance payment for these purposes?

Do the special severance payments rules that apply to public sector bodies, such as the NHS, apply to settling claims in the employment tribunal, ie is a payment made in settlement of an existing employment tribunal claim a true severance payment for these purposes?

Special severance payments are one of the types of special payments by public sector organisations on which the HM Treasury may need to be consulted.

Guidance on special severance payments can be found in:

  1. Annex 4.13 of the HM Treasury guidance: Managing public money (see, in particular, paragraphs A14.13.9–A14.13.15)

  2. the HM Treasury’s Special severance payments guidance dated May 2021, which supplements the special severance guidance outlined in Annex 4.13 of Managing public money

For information on special severance payments generally, see Practice Note: Settlement agreements in employment—practical and tax issues, in particular section: Public sector employers.

Special severance payments are described as payments paid to employees, contractors and others outside of normal statutory or contractual requirements when leaving employment in public service whether they resign, are dismissed or reach an agreed termination of contract (see paragraph A4.13.15 and box A4.13A of Managing public money).

According to paragraph 2.2 of the Special severance guidance, special severance payments are ‘any payments on termination of employment which do not correspond to an established contractual, statutory or other right’.

However, the Special severance guidance also states that:

  1. any

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