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The government legislated for a cap of £95,000 on exit payments in the public sector in the Small Business Enterprise and Employment Act 2015 as amended by the Enterprise Act 2016.
The further consultation documents, including a draft statutory instrument and mandatory directions were issued on 10 April 2019 and the government is inviting comments by 3 July 2019. The consultation can be found on the following link.
Many Employer Link subscribers as deliverers of public services are explicitly in scope of this Act (including academies, multi-academy trusts and housing associations). Other subscribers advise organisations that are within scope. For ease, the Executive Summary is extracted below:
“Exit payments to employees leaving the public sector workforce in 2016-2017 cost the taxpayer £1.2 billion1, with payments at and above £100,000 amounting to £0.2 billion. Exit payments can be important to employers’ ability to reform and react to new circumstances, whilst providing support for employees as they find new employment or as a bridge until retirement age. However, public sector employers have a responsibility to demonstrate that they are using public money efficiently and responsibly, and to ensure that pay and terms are always proportionate, justifiable and fair to the taxpayers who fund them.
The government does not believe that the majority of six figure exit payments, which are far in excess of those available to most workers in the public sector or wider economy, are proportionate or provide value for money for taxpayers.
The government therefore introduced powers to cap exit payments in the public sector at £95,000 in the Small Business, Enterprise and Employment Act 2015. This consultation sets out the proposed method of implementing that cap, including which bodies should be in scope.
These regulations will help public sector employers to ensure exit payments represent value for money to the taxpayer who funds them.”
The questions in the consultation are predominantly asking about
- Whether the right organisations are covered
- Exemptions are appropriate
- Whether the guidance supports employers in implementing the legislation
- Whether there are impacts that have not been considered in drawing up the legislation
If you are intending to reply please let us know, and if you are happy to share your response we would welcome sight of it so that we can see if there are common themes that are worth drawing out and sharing back to you or highlighting to Government. Please send your responses to info@employerlink.co.uk
The LGA will be publishing more information on the consultation next week.
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