Last reviewed 15 February 2021
In October 2020 we reported on the publication of the Restriction of Public Sector Exit Payments Regulations 2020 which set a limit of £95,000 on the total pre-tax aggregate value of exit payments made to most types of public sector employees (see Cap on public sector exit payments coming into forcepo-document-id_71178).
The move met strong resistance from trade unions with Unite arguing that it would adversely affect long-serving public servants earning relatively low salaries of £25,000-a-year. The regulations were also criticised by a number of employment law experts and, with unions seeking a judicial review, the Treasury has announced that they will be revoked as the cap may have had “unintended consequences”.
In guidance on the restriction of public sector exit payments, which can be found here, the Treasury includes advice for individuals who have had their exit payments capped as a result of the application of the regulations.
“If you have been directly affected by the cap whilst it was in force,” it suggests, “you should request from your former employer the amount you would have received had the cap not been in place by contacting your employer directly.”
In light of the withdrawal of the regulations, employers are encouraged to pay to any former employees who had an exit date between 4 November 2020 and 12 February 2021 and to whom the cap was applied, the additional sums that would have paid but for the cap.
Available at https://www.gov.uk/government/publications/guidance-on-public-sector-exit-payments/mandatory-hm-treasury-directions, mandatory Treasury Directions have been published that disapply the cap until the regulations have been legally revoked.