The government has resurrected the plans for a cap on public sector exit payments and has published two documents for consultation. The consultation closes on 3 July 2019.
The following categories of public sector employer are within scope of these regulations where they fall within the responsibility of the UK government, regarding their employment:
· the UK Civil Service, its executive agencies, non-ministerial departments and non-departmental public bodies (including Crown non-departmental public bodies and Her Majesty’s Prison and Probation Service)
· the NHS in England and Wales
· academy schools
· local government including fire authorities’ employees and maintained schools
· police forces, including civilian and uniformed officers
All public sector employers should make value for money decisions on exit payments and spend public money responsibly.
The cap remains at £95,000 and the proposed exit payments that will be subject to the cap are:
· any payment on account of dismissal by reason of redundancy;
· any payment made to reduce or eliminate an actuarial reduction to a pension on early retirement or in respect to the cost of a pension scheme of such a reduction not being made;
· any payment made pursuant to an award of compensation under the ACAS arbitration scheme or a settlement or conciliation agreement;
· any severance payment or ex gratia payment;
· any payment in the form of shares or share options;
· any payment on voluntary exit;
· any payment in lieu of notice due under a contract of employment;
· any payment made to extinguish any liability to pay money under a fixed term contract; (i) any other payment made, whether under a contract of employment or otherwise, in consequence of termination of employment or loss of office.
Payments exempt from the restriction:
· any payment made in respect of death in service;
· any payment made in respect of incapacity as a result of accident, injury or illness (not including injury to feelings);
· a service payment made in respect of annual leave due under a contract of employment but not taken;
· any payment made in compliance with an order of any court or tribunal;
· a payment in lieu of notice due under a contract of employment that does not exceed one quarter of the relevant person’s salary.