19th February 2021

Government U- turn on public sector exit payment cap

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Only three months after it was introduced, the government has announced that it is revoking the Public Sector Exit Payments Regulations 2020, which place a £95,000 cap on public sector exit payments.

The exit payment cap met with a lot of criticism when it was introduced and, following a review into the effects of the cap, the government has recognised that it may have had some unintended consequences, and is being withdrawn as a result.

A Treasury Direction has been issued to suspend the Regulations until they can be formally revoked.  

HM Treasury has published updated guidance for both employers and employees affected by the £95,000 cap.  If you have applied the cap for any employees leaving between 4 November 2020 and 12 February 2021, you can now pay them the additional sums you would have paid had the cap not been implemented.

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