Update on the exit payment cap

Publication date: 07/06/2019 11:07:04

In May 2015 the government announced that they planned to cap exit payments for public sector workers. They proposed a cap of £95,000 which would apply to all types of payments relating to individuals leaving their job.  

Although the original consultation began almost four years ago, HM Treasury haven't confirmed how the cap will work in practice, and when it’ll be applied. However, recently a further consultation was issued which closes on 3 July. The full consultation document can be found under Related Links. 

While there's a lot to digest, we’ve picked out some key points from the consultation:

  • The maximum exit payment remains at £95,000 and includes redundancy payments (including statutory redundancy payments), severance payments, pension strain costs, and other payments made because of leaving an employment.
  • The exit cap will affect a wide range of public sector employers, including fire authorities.
  • The cap may be waived in some situations. Every waiver will need to be justified and requires consent from a relevant body.
  • The consultation mentions that exits with a leave date before the cap is effective, which have been agreed but are delayed, could still be paid under the old rules.  
  • In regards to the firefighter pension scheme, there are two types of employer payments which could be exempt from the cap. We'll provide more details once further information is released. 

The Fire Scheme Advisory Board (SAB) will be responding to the consultation.

We'll keep you posted on any further information we receive. Updates will also be provided on the firefighter area of our website.