£95,000 cap on public sector redundancy payments revoked

15 February 2021

HM Treasury has published updated guidance for both employers and employees who have been affected by the £95,000 cap that was applied to public sector exit payments. This cap has now been revoked, following an extensive review into the effects of the cap, which revealed that it may have had some unintended consequences, and so should not be in place.

This means for those employees who had an exit date between 4 November 2020 and 12 February 2021, they should check with their former employers to establish if the amount that they would have received if the cap wasn’t in place would have been higher. If this is the case, then the employer should ensure that any payment owing to the employee is made out to them.

The guidance for employers is that, now that the cap has been disapplied, it is open to employers to pay any former employees with an exit date between 4 November 2020 and 12 February 2021, to whom the cap was applied, the additional sums that would have been paid had the cap not been implemented.

 


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