New £95,000 cap on public sector exit payments


The new cap applies to the following exit payments:


  • Any payment on account of dismissal by reason of redundancy (although there are exceptions in respect of statutory redundancy entitlements).

  • Any payment to reduce or eliminate an actuarial reduction to a pension on early retirement or in respect of the cost to a pension scheme of such a reduction not being made.

  • Any payment pursuant to an award of compensation under the Acas arbitration scheme or a settlement or conciliation agreement (although compensation in some circumstances may be exempt).

  • Any severance payment or ex gratia payment.

  • Any payment in the form of shares or share options.

  • Any payment on voluntary exit.

  • Any payment in lieu of notice due under a contract of employment (although a payment that does not exceed one-quarter of the relevant person's salary is exempt.

  • Any payment to extinguish any liability to pay money under a fixed term contract.

  • Any other payment, whether under a contract of employment or otherwise, in consequence of termination of employment or loss of office.


The following are not exit payments:

  • Any payment in respect of death in service.

  • Any payment in respect of incapacity as a result of accident, injury or illness (including injury to feelings payments).

  • Payment under certain firefighters' pension scheme rules and regulations.

  • Certain service awards to members of the judiciary.

  • Any payment in respect of annual leave due under a contract of employment but not taken.

  • Any payment in compliance with an order of a court or tribunal.

  • Any payment in lieu of notice due under a contract of employment that does not exceed one-quarter of the relevant person's salary.


https://www.gov.uk/government/publications/restriction-of-public-sector-exit-payments#:~:text=Exit%20payments%20are%20important%20for,and%20react%20to%20new%20circumstances.&text=The%20Restriction%20of%20Public%20Sector,the%20taxpayers%20who%20fund%20them.




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