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Cap on Public Sector Exit Payments Disapplied

Cap on Public Sector Exit Payments Disapplied
Richard Hiron Feb 12,2021
blog post

Back in October 2020, we reported on the cap on public sector exit payments.

However, after conducting a review into the application of the 95,000 cap on remuneration that departing public sector employees may receive, the government has determined that the cap could have "unintended consequences" and, therefore, the Restriction of Public Sector Exit Payments Regulations 2020 should be revoked.

Meanwhile, HM Treasury has issued a direction confirming that those public sector employees who have been affected by the cap between 4th November 2020 and 12th February 2021 should contact their former employers and request the sum that they feel they would have been paid had the 95,000 cap not applied.

Likewise, public sector employers who applied the cap are being encouraged by HM Treasury to pay the sums that they would have made to those employees who left them during that time period had the cap not applied.

However, HM Treasury has emphasised that it remains committed to redressing unjustified public sector exit payments, ensuring value for the taxpayer whilst urging public sector employers to make exit payments that are fair and proportionate. The Treasury's proposals in this regard will follow in due course.