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Capping public sector exit payments: response to consultation

Further details have been announced on the government’s much-delayed plans to cap exit payments in the public sector.

The plan to restrict exit payments in the public sector first saw the light of day in 2015. In 2019 a consultation which included draft legislation was published. The government has now responded to this consultation with some more refinement of its plans which include the following:

  • The cap is to remain at £95,000 but the level will be kept under review.
  • The cap will not be implemented in two stages as planned previously but will apply to the whole of the public sector as soon as it is implemented.
  • The government expects that pension schemes, employment contracts, and compensation schemes will be amended to reflect the introduction of the cap.
  • Exempt payments will be extended to include payments made in respect of injury to feelings.
  • The cap can be relaxed in exceptional circumstances on a discretionary basis.
  • There is to be a mandatory waiver for health and safety detriment and unfair dismissal cases (in addition to discrimination and whistleblowing cases).

Revised draft regulations and guidance will be published at ‘a later date’.