Government U-turn over cap to public sector exit payments

In a dramatic U-turn, in February 2021, the government revoked its Restriction of Public Sector Exit Payments Regulations 2020, in force since November 2020. The short-lived regulations had imposed an absolute cap of £95,000 on all public sector exit payments (not just redundancy payments). The £95,000 figure was not indexed, or subject to any kind of formal review mechanism.

The regulations were condemned by a chorus of unions as an unwelcome distraction in the middle of a pandemic and a personal catastrophe for low paid employees who stood to lose the pension they were entitled to as a consequence of being made redundant. The government had been threatening these regulations since 2015, ignoring campaigners who warned repeatedly of the impact of the cap on lower paid workers.

Judicial review challenges to the cap were launched by four unions — UNISON, Unite, GMB and the British Medical Association, as well as a separate judicial review challenge by the Association of Local Authority Chief Executives and Lawyers in Local Government.

The cap was in place between 4 November 2020 and 12 February 2021 and the government has rightly conceded that anyone the cap was applied to over this period must be compensated. Public service unions are likely to play a key role in ensuring any affected members know their rights to reimbursement and are quickly repaid the outstanding sums.