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Government reforms (1): Cap on exit payments

compensatory award - scales balancing person and moneyWhat do we already know?

We updated you in our September 2015 Newsletter Government reforms (2): Enterprise Bill that the Government proposes to cap exit payments made to public sector workers to £95,000 in reforms which are most likely to take effect in October 2016 or later.

What’s new?

The Government has published its response to the consultation on the exit payment cap (available here). The consultation ran from 31 July to 27 August 2015.

The Government confirms that it intends to proceed with the cap. The consultation response identifies groups of employees who will be excluded from the cap and circumstances in which the cap will not be applied. It also sets out those payments that will be taken into account in cases where the cap is applied:

When used, the cap will apply before tax and cover the total aggregate value of the following payments:

Any waiver of the cap would require consent from the relevant Minister, or from the full council in the case of local government exit payments. Relevant bodies will be required to annually publish details of all exit payments made.

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