Reforms to public sector exit payments: Government Response to consultation

27 September 2016

The stated aim of these reforms is to make public sector exit terms fairer, more modern and more consistent.

Approximately 350 responses were received to the consultation and included responses from unions; public sector employers and employer organisations as well as public sector workers and others responding in an individual capacity.

The majority of responses expressed opposition to the government’s proposals. A small number of responses supported the principles of the government’s proposed reforms and some or all of the specific proposals.

The government had previously committed to introducing two other measures on public sector compensation:

  • a cap on all public sector exit payments at £95,000; and
  • a ‘clawback’ of redundancy compensation when a highly-paid individual returns to the public sector shortly after receiving an exit payment.

The exit payment framework further includes:

  • a maximum tariff for calculating exit payments of three weeks’ pay per year of service
  • a ceiling of 15 months on the maximum number of months’ salary that can be paid as a redundancy payment
  • a maximum salary of £80,000 on which an exit payment can be based
  • a taper on the amount of lump sum compensation an individual is entitled to receive as they get closer to their normal pension retirement age
  • action to limit or end employer-funded early access to pension as an exit term

Full details on the policy and the government’s process for reform are in the response to the consultation.