Many years ago, we were told the Government wanted to end six figure payments to public sector workers when they left their employment. This planned reform to cap public sector exit payments wouldn’t come into force before 1 October 2016.
After a very slow start, the expected reforms were quickly consulted on and a cap on public sector exit payments came into force 4 November 2020. But by 25 February 2021, legislation had been made and laid before parliament to revoke the cap with the revocation coming into force on 19 March 2021. The revocation of the cap reportedly was due to unintended consequences arising from the reforms made.
However, the Government still plans to reform public sector exit payments, and has consulted on the statutory guidance that is planned to regulate special severance payments. Most public sector workers enjoy statutory and contractual redundancy terms that are significantly higher than redundancy payments made in the private sector.
The Government is, therefore, of the view that paying additional, discretionary sums on top of these entitlements (‘special severance payments’) won’t usually provide good value for money or offer fairness to the taxpayers who fund them and so, should only be considered in exceptional cases.
Further reforms are expected to be announced/consulted on towards the end of this year and we’ll do our best to keep you up to date with the changes as they occur.