The Government has "reluctantly" announced that it will legislate as soon as possible to cap redundancy pay for civil servants, bringing packages into line with best practice in the private sector. Compulsory redundancy payments will be capped at 12 months' pay and voluntary redundancy payments will be capped at 15 months' pay. There will be an additional cap on the amount any individual can receive. Accrued pension rights will be be unaffected.
The plans will save hundreds of millions of pounds as redundancies hit the public sector. However, it will severely affect long-serving employees, some of whom would currently be entitled to a severence package of over six years' pay. Although the plans to cap compulsory redundancy payments are not negotiable, the Government is seeking to agree arrangements for voluntary redundancies and protection for lower paid staff with its union partners. Unsurprisingly, the unions are resistant to the proposals and PCS has already warned of possible industrial action.