Martin Ford 12 February 2021

Treasury scraps cap on public sector exit payments

Treasury scraps cap on public sector exit payments image

The Government has dropped its controversial cap on public sector exit payments after admitting it had ‘unintended consequences’.

A limit of £95,000 on payments to council staff leaving their jobs came into force in November in the face of fierce opposition from unions.

The High Court was due to hear a joint legal challenge by Lawyers in Local Government (LLG) and the Association of Local Authority Chief Executives (ALACE) and a second case brought by Unison next month.

But today the Treasury issued new guidance revoking the pay cap following an ‘extensive review’ that ‘concluded that the cap may have had unintended consequences’.

Partner at Greenburgh and Company, Mark Greenburgh, who was due to represent ALACE and LLG, said: ‘We are pleased that the Government has seen sense.’

While he said it was, as yet, unclear what this would mean for the litigation, Mr Greenburgh added: ‘We await the proposals to include costs for our clients.’

LLG and ALACE had argued the cap clashed with local government pension scheme (LGPS) regulations and changed the terms of employment of existing council workers.

Today’s guidance said former employees affected by the cap between November 4 and February 12 should ‘request from your former employer the amount you would have received had the cap not been in place’ and ‘the Treasury’s expectation is that they will do so’.

The Treasury said it would still ‘bring forward proposals at pace’ to tackle ‘unjustified’ exit payments, adding: ‘Employers should always consider whether exit payments are fair and proportionate.'

 

SIGN UP
For your free daily news bulletin
Highways jobs

Social Worker

Durham County Council
£35,412 - £39,152 / £40,777- £45,091 p.a. i.e. pre-progression Grade 9/ post -progression Grade 11
We are seeking a dedicated and enthusiastic social worker to play a key role within the Social Care Direct team, which serves as the vital ‘front of h Durham
Recuriter: Durham County Council

Deputy Manager, Children’s Homes Service

Durham County Council
Grade 11 £40,777 - £45,091
Deputy Manager – Pioneering New Project Supporting Young People’s Transition to Independence   Salary
Recuriter: Durham County Council

Year 5/6 Teacher plus TLR2 for Quality of Education

Durham County Council
M3 to UPS3 £35,674 to £51,048
Year 5/6 Teacher  M3 to UPS3 £35,674 to £51,048 + TLR2 (£3,527) for Quality of Education Full Time, Whole Time Permanent Required from 1 January 2026 Ferryhill
Recuriter: Durham County Council

Business Administration Apprentice

Durham County Council
£7.55 per hour
Business Administration Apprentice National Apprentice Training Wage £7.55 per hour Temporary – required from 6 January 2026 until 31 August 2027 37 h Cassop
Recuriter: Durham County Council

Administrative Assistant

Durham County Council
£25,185 - £25,989 pro-rata
Admin Assistant Grade 3 £25,185 - £25,989 pro-rata Part Time - 18.75 hours per week / Term time only  Temporary – required from 6 January 2026 until 3 Cassop
Recuriter: Durham County Council
Linkedin Banner