Cap on Public Sector Exit Payments

The Enterprise Bill will place a limit on public sector redundancy packages at £95,000.

Research showed that, in 2013/2014, almost 2000 redundancy payments to public sector employees were in excess of £100,000. The total spent on redundancy packages by public sector employers in the same time period was almost £2 billion.

The cap of £95,000 will apply to all types of payments made in relation to leaving employment, including voluntary and compulsory redundancy situations, and other ex-gratia termination payments. Importantly, it will also cover payments made in lieu of notice, in order to prevent employers being able to circumvent the new cap by including very long notice periods in employment contracts being added to the redundancy payment to inflate it.

This measure is being put into place alongside the requirement for public sector workers to pay back redundancy payments from public sector employees who return to the same part of the organisation within 12 months of receiving the payment.

There is currently no implementation date attached to these measures.

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