The government has confirmed long-held plans to introduce a £95,000 cap on payments for public sector workers when they leave their employment.
Although the cap was put into legislation as part of the Small Business Enterprise and Employment Act 2015 (which then became the Enterprise Act 2016), it has never been enacted. There was a consultation at the time, but no indication since on how it would be implemented. There will now be another consultation, led by the Treasury.
The cap would cover redundancy lump sums and pension top-up payments, although the government has confirmed that exit payments will continue to be available “so public sector employees can support their families, find new employment or have a bridge until retirement age”.
The Treasury has suggested the first round of implementation will cover most public sector employers, including the civil service, local authorities, and schools. It could later be extended to cover organisations such as the BBC, the Financial Conduct Authority and the Bank of England.
The most recent figures, for 2016/17 suggest that around 1,600 people received payments above £100,000, costing £198m, of which £98m was in local government in England.
