Treasury to cap public sector redundancy payments at below £100k

26 May 15

Further steps to limit the redundancy payments made to senior public sector staff have been announced by the Treasury, with legislation now set to outlaw six-figure payouts.

Chancellor George Osborne and Chief Secretary to the Treasury Greg Hands said that the government’s forthcoming Enterprise Bill, announced in the Queen’s Speech, would cap any redundancy deals for public sector staff to under £100,000.

The ministers said this would ensure fairness and value for money for the taxpayer, and could save millions of pounds. According to the latest Treasury figures, 1,838 public sector employees received payouts over £100,000 in 2013.

Osborne said the government was minded to set the cap at £95,000, but would consult on details as part of the legislative process.

The proposed reform comes after the coalition government introduced rules to allow for any exit payments made to public sector workers to be reclaimed if they return to work in the same area within 12 months.

However, the chancellor stated there was a need to go further, as it was not right that working people had to ‘fork out for golden parachutes worth hundreds of thousands of pounds when public sector workers were made redundant’.

He added: ‘That’s why we are delivering on our pledge to end six figure pay offs for the best paid public sector workers, ensuring fairness and value for money for the taxpayer.’

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