On 31 July 2015, HM Treasury launched a consultation on a proposal to introduce a cap on the maximum settlement payment that can be made to a public sector employee upon termination of their employment. The current proposal is to introduce a cap of £95,000 on the total value of exit payments made to public sector employees, which includes the monetary value of any additional leave or other benefits granted as part of any package, and would apply to both voluntary and compulsory exits.
The proposal would cover all current and future employees of public sector bodies that are the responsibility of the UK Government, as well as Ministers and Special Advisers. It wouldn’t therefore affect employees of devolved public sector bodies that are the responsibility of the Scottish Government, and it will be for the Scottish Government to decide if it will make similar arrangements for Scottish public sector staff. It will be interesting to see what steps, if any, it takes in this regard.
The consultation is open until 27 August 2015, and can be found at:https://www.gov.uk/government/consultations/consultation-on-a-public-sector-exit-payment-cap/consultation-on-a-public-sector-exit-payment-cap
Earlier this year the Cabinet Office issued guidance on the use of Settlement Agreements, special severance payments, confidentiality clauses and a new “prior approval process” for all civil service organisations and their arms-length bodies. To find out more, please click here.