Government proposals to reform public sector exit payments
Government proposals to reform public sector exit payments

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

  • Government proposals to reform public sector exit payments
  • Capping the size of public sector exit payments
  • Legislative background
  • Revocation of the 2020 Regulations
  • Public sector pay cap—the future
  • Settlement agreements
  • Proposals for a new ‘framework’
  • Consultation outcome
  • Framework of caps and limits
  • Method of implementation
  • More...

This Practice Note considers legislation which has been revoked and proposals not yet in force. It outlines the history of the cap on public sector exit payments, including the Restriction of Public Sector Exit Payments Regulations 2020, SI 2020/1122 in force between 4 November 2020 and 19 March 2021. It also considers the government’s proposals for a ‘framework’ to reform the calculation methods for public sector exit payments generally, and the separate proposals to reform exit payment terms for local government workers and specifically those eligible to be members of the local government pension scheme (LGPS).

The history of the proposals and now revoked legislation capping public sector exit payments is discussed immediately below—see Capping the size of public sector exit payments. For details of the Restriction of Public Sector Exit Payments Regulations 2020, see Practice Notes: Capping the size of public sector exit payments—the revoked 2020 regulations and Capping public sector exit payments—pensions implications.

The proposed legislative measures announced in the Queen’s Speech of 2014, concerning claw-back of public sector exit payments, comprising a set of measures aimed at the situation where a high-earning public sector post holder left their 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, are discussed in Practice Note: Claw-back of public sector

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