Unions set for Cabinet Office talks on looming £95k cap on exit payments

Ministers told secondary legislation must not be implemented before “proper consultation”

By Jim Dunton

29 Oct 2020

Civil service unions have secured last-ditch talks with the Cabinet Office over the implementation of the £95,000 cap on redundancy payments for public-sector workers that becomes law from next week.

The cap, which applies to civil servants, staff at arm’s length bodies, local authorities and a range of other organisations, was provided for in the Small Business, Enterprise and Employment Act 2015. But secondary legislation underpinning its terms was only signed off this month and is due to come into effect on 4 November.

Unions representing departmental and agency staff said they had secured an agreement from the Cabinet Office that the cap would not be implemented before they had been formally consulted on the provisions of the statutory instrument that underpins the cap.

PCS, the civil service’s biggest union, said it was pressing the Cabinet Office for an assurance that staff currently faced with redundancy would not be subjected to the cap and would instead receive terms in line with the 2010 Civil Service Compensation scheme.

It said that HM Revenue and Customs staff currently at risk of redundancy could lose out if their exit payments were subjected to the new cap and that the matter required "urgent clarification".

The union said it expected to receive a written update on the implementation of the cap in the coming days with a formal consultation to follow. 

“Cabinet Office has accepted that there must be consultation with unions in the civil service prior to implementation,” it said.

Dave Penman, general secretary of the FDA union – which represents public-sector leaders – said the cap was “arbitrary” and a further example of the government’s “pernicious” targeting of public-sector workers.

“Ministers stand on their doorstep applauding public servants’ response to the Covid pandemic one day, then push through cuts in redundancy terms to the very same workers the next,” he said.

“This £95k cap will potentially affect hundreds of thousands of public servants, many of whom are on or just above average salary levels, who have built up pension provision through a lifetime of public service.

“These provisions are being rushed through before full consultation can take place and we urge the government, even at this late stage, to step back to reconsider their approach and allow for meaningful dialogue to take place about these complex proposals.”

Garry Graham, deputy general secretary at the trade union Prospect, said the Cabinet Office was well aware of its concerns about the implementation of the pay cap.

“Prospect has been very clear that any changes to the CSCS can only happen lawfully where ‘consultation with a view to reaching agreement’ has taken place,” he said.

“We immediately wrote to the Cabinet Office on this point and continue to press them legally.”

The terms of the Restriction of Public Sector Exit Payments Regulations 2020 provide an extensive list of public-sector bodies to which they apply and present exit-payment recipients with a list of disclosure obligations to future employers.

However they also set out some exemptions from the £95,000 cap, including: payments as a result of death in service; payments ordered by a court or tribunal; payments resulting from accident, injury or illness; payments in relation to annual leave not taken; and payment in lieu of notice – provided it represents no more than a quarter of one year’s salary.

The regulations also allow the cap to be waived with the written consent of HM Treasury.

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