Government confirms plan to cap exit payments


18 / 9 / 2015 5pm

The government has confirmed it plans to introduce a public sector exit payment cap of £95,000 for public sector workers, which includes the NHS.  The Enterprise Bill 2015 contains a provision to cap exit costs for employees working for public sector organisations.

The government has published its response to the consultation document, which asked for views on the details of the policy.  While some technical details will not be known before regulations are made, the cap will cover payments made in relation to leaving employment. These are likely to include:

  • contractual redundancy payments (eg Section 16 of the NHS terms and conditions of service handbook) either voluntary and compulsory 
  • other voluntary exits with compensation packages 
  • ex gratia payments and special severance payments
  • payments or compensation in lieu of notice added to a severance payment 
  • payments to eliminate an actuarial reduction to pensions on early retirement.

The government’s response to the consultation is now available.

We will keep employers informed of developments and the impact for the NHS when further information is available.

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