Last reviewed 7 October 2020

As part of a wider programme of cross-public sector action on exit payment terms, the Ministry of Housing, Communities and Local Government (MHCLG) has issued a consultation paper with proposals for reforming local government exit payment.

This can be found at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/915149/Reforming_local_government_exit_pay_consultation.pdf and is open for comments until 9 November 2020.

The MHCLG is particularly interested in the effects that the proposals for reform will have on the regulations which currently govern exit payments (including both redundancy compensation pay and early access to pensions) in local government.

It would also welcome comments on the likely impact that the proposals for reform will have on the local government workforce.

“Consultation responses will inform a full impact assessment, including equalities considerations which will be issued alongside the regulations when these are laid before Parliament,” a Ministry spokesperson said.

The reforms would apply to those areas which are the responsibility of the UK Government.

It would be for the Scottish government, Welsh government and Northern Ireland Executive to determine if and how they wanted to take forward similar arrangements in relation to devolved bodies and workforces.

The current system

Local government lump-sum redundancy arrangements vary considerably between employers.

However, they must operate within a framework set by regulations and specifically the Local Government (Early Termination of Employment) (Discretionary Compensation) (England and Wales) Regulations 2006.

These regulations provide that the total maximum lump-sum pay-out is 104 weeks’ (24 months’) pay, although most local authorities currently provide for less than this.

Under Regulation 30(7) of the Local Government Pension Scheme Regulations 2013, employees aged 55 or more who are members of the Local Government Pension Scheme (LGPS) are currently entitled to immediate access to unreduced pension where:

  • the member is dismissed from an employment on redundancy or business efficiency grounds, or

  • the employment is terminated by mutual consent on business efficiency grounds.