Public sector workers who have received exit payments for leaving their post, may be due for a cash windfall after the Government agreed to revoke a cap on the figure they could receive.

The Restriction of Public Sector Exit Payments Regulations 2020 only came into force last November, and set a cap of £95,000 on exit payments for public sector authorities. However, an extensive review has concluded that the regulations may have had “unintended consequences” and that they should be revoked. Following the review, an HM Treasury Directive has been published which will immediately remove the cap, until the time that the regulations can be officially revoked.

Employment law specialists will be alerted by these latest developments, as the restrictions on exit payments included redundancy packages, severance packages and other payments made as a result of terminating a contract of employment. Employees now face the prospect of recouping monies owed to them and which they had previously been denied by the cap. Meanwhile, employers are bracing themselves for receiving such claims from ex-employees.

Controversial regulations

Several unions raised concerns over the regulations when they came into force amid considerable criticism in November 2020, and there were applications for judicial review almost immediately. This revocation has been accompanied by HM Treasury guidance for any individuals and public sector authorities who have been impacted by the cap, whilst it was in place.

To assist employees, section 2.1 of the guidance states: “If you have been directly affected by the cap whilst it was in force, you should request from your former employer the amount you would have received had the cap not been in place by contacting your employer directly. Employers are encouraged to pay to any former employees to whom the cap was applied the additional sums that would have been paid but for the cap.’

In order to assist employers, section 3.2 of the guidance states: “In light of the withdrawal of the Regulations, employers are encouraged to pay to any former employees who had an exit date between 4th November 2020 and 12th February 2021 and to whom the cap was applied, the additional sums that would have been paid but for the cap. Given that the cap has now been dis-applied, it is open to employers to do so and HM Treasury’s expectation is that they will do so.”

Help from employment law experts

Therefore, any individual who is an ex-employee of a public sector organisation and to whom this cap applies, can seek to claim the amount he/she would have received had the cap not been in place. Whilst they should contact their ex-employer directly to initiate this claim, Ison Harrison also have employment law specialists who can provide advice and help to negotiate on behalf of affected employees.

Contact Ison Harrison’s employment solicitors today to ensure the impact of this revocation of the Restriction of Public Sector Exit Payments Regulations 2020 is dealt with fairly and reasonably.