A £95k cap on public sector exit payments will be introduced as part of the Enterprise Bill. This is planned for Parliamentary approval in summer / autumn 2016 and for there to be no transitional period. For local government, particularly in London, this has the potential to devastate management teams with a loss of skills, knowledge & experience at a time when these are needed to deal with significant change. Which senior manager “of an age” wouldn’t push to leave before the cap applies?
The Government says that it wants to re-position the public sector as a modern place to work, including ending taxpayer-funded, six-figure payoffs. But the £95k cap includes pension costs that the person does not receive; albeit benefits from. If someone 55 or over is made redundant under the Local Government Pension Scheme the employer meets the cost of the person having an unreduced pension. The Bill currently includes these pension “strain” costs within the £95k and as such it has the potential to impact senior and middle managers too.
Will the Bill change? Probably not. The House of Lords’ final amendments were made to the Bill during its third reading on 15 December and it will be back with the Commons in the New Year. It’s currently unclear how the cap will sit alongside individual employee contractual entitlements that may exceed the maximum. Or how far local Councillors will be given powers to allow exceptions to the cap – currently the Bill allows a Minister of the Crown to relax the cap at least in part for specific cases. Interesting times ahead.
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