Public sector exit pay cap revoked


After an extensive review of the application of the cap on public sector exit payments, the Government has revoked the £95,000 cap on exit payments for public sector authorities and offices, which came into force on the 4 November 2020.


The Government concluded that the cap may have had unintended consequences and has decided that the Restriction of Public Sector Exit Payments Regulations 2020 should be revoked.


An HM Treasury Direction has been published that will disapply the cap until the Regulations have been revoked. The Government has also published guidance stating that any employee who was affected by the cap while it was in force should request the amount he or she would have received had the cap not been in place by contacting his or her former employer directly. Employers are encouraged to pay to any former employees to whom the cap was applied the additional sums that would have been paid but for the cap.


Link to guidance and Treasury Direction: https://www.gov.uk/government/publications/guidance-on-public-sector-exit-payments


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