Public sector exit pay cap – date in force confirmed

The Restriction of Public Sector Exit Payments Regulations 2020 were ‘made’ (signed by a Minister) on 14 October 2020, meaning that they will come into force 21 days later on 4 November 2020.

The Regulations impose a cap of £95,000 on exit payments made to departing public sector employees and office holders. This will apply to the majority of public sector employers, including the civil service, local government, all academies and maintained schools, the NHS and the police. The full list of employers within scope is set out in the schedule to the Regulations.

The cap will apply in respect of most payments made to an individual on the termination of their employment, including statutory and contractual redundancy payments. Certain exclusions apply and there will be both mandatory and discretionary waivers in respect of certain payments and in certain ‘exceptional circumstances’.

See our previous article for more details on the new Regulations.

Detailed guidance on the new Regulations and a Treasury Direction setting out the applicable rules for the waiver of the cap have not yet been published, but are expected before the Regulations take effect on 4 November.