Cap on public sector exit payments





As Law at Work goes to press, the government is consulting on draft regulations to impose an absolute cap of £95,000 on all public sector termination payments (not just redundancy payments), including in the civil service.
The cap, if implemented, will override complex negotiated agreements reached between employers and public sector unions.




Originally planned for October 2016, the proposal was put on hold after the unexpected outcome of the May 2017 general election, followed by a successful judicial review challenge by the Public and Commercial Services Union (PCS v Minister for the Cabinet Office [2017] EWHC 1787). 


The cap, if introduced, will mostly affect high earners but public services union UNISON has warned that despite government promises, it will also impact on moderate earners with long service, such as nurses, social workers, paramedics and librarians, especially if they were previously entitled to take early retirement as an alternative to being made redundant.



Public sector pay is a devolved matter for the governments of Wales and Scotland, so none of the UK government’s proposals on public sector redundancy pay will apply in these countries.