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Government Reforms (1): Public Sector Exit Payments – CAPS LOCK ON…

What do we already know?

We updated you in our October 2015 Newsletter Government reforms (1): Cap on exit payments that the Government proposed that exit payments to public sector workers should be capped at £95,000 (which include pay in lieu or notice, redundancy and ex gratia payments).

There was also a consultation at this time and the Government confirmed in its Response that it intended to proceed with the cap.  The expectation was that the cap would likely become law in early 2017.  However, the law never materialised and it appeared plans may have been shelved.

What’s new?

The Government has resurrected its plans and begun a further consultation (available here) on capping public sector exit payments.  The consultation will be open until 3 July 2019 and invites comments on the draft regulations which set out the proposed cap and on the accompanying guidance to implement its plan.

The draft regulations propose that the following payments will be subject to the cap:

The Treasury has suggested the first round of implementation will cover most public sector employers, including the civil service, local authorities, and schools. It could later be extended to cover organisations such as the BBC, the Financial Conduct Authority and the Bank of England.


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