The Government has today pushed forward its plan to clamp down on large exit payments in the public sector, with the publication of the Enterprise Bill. The Bill includes various Government proposals, for example setting up a Small Business Commissioner and tightening up the terminology surrounding apprenticeships, but most significantly, if passed, the Bill will give ministers powers to impose legal limits on the ability of public sector organisations to make exit payments in excess of £95,000.
Fulll details of exactly what sort of payments will be covered by the new regime will be set out in separate regulations, which will only be made after the Bill has been approved by both Houses of Parliament. A whole host of payments could, potentially, be in scope, including redundancy payments, pay in lieu of notice, sums paid to settle potential tribunal claims and payments involved in providing unreduced benefits under pension schemes. Regulations will also specify which public sector bodies are covered by the rules and make changes to statutory pension and severance schemes.
Details of how this new provision will operate in practice will now be keenly awaited. Few underestimate the legal and technical difficulties of introducing a cap against a backdrop of what are already complex pay and pension regulations across the public sector. For many, a cap is also seen as something of a blunt instrument to address a concern over a small minority of public sector employees.
The new rules are unlikely to take effect before October 2016 at the soonest.
Within the next few weeks we are also expecting the Government to publish regulations aimed at recovering exit payments from individuals earning over £100,000 who leave the public sector and then return to work for in the same sub-sector within 12 months. Those regulations are expected to take effect by April 2016 at the latest.