The Government has launched a consultation exercise seeking views on its proposals to:
- introduce a new administrative controls process for public sector exit payments which exceed £95,000; and
- amend the existing procedure that applies to “special” severance payments, namely those which exceed an employee’s standard statutory or contractual entitlements.
It is expected that with clearer guidance for public sector employers and the introduction of an expanded approvals process involving the Secretaries of State and, in some cases, also HM Treasury, there will be greater scrutiny of high value exits and occasionally viable alternatives to staff exits identified, potentially generating savings to the taxpayer.
Guidance issued by the Government sets out
- the criteria to be considered before deciding an exit is necessary and
- lists the category of payments which should be included when calculating the total exit payment to be made to an employee.
The concept of requiring consideration to be given to the recovery of special severance payments “across central government”, where an individual receives such a payment and is re-employed in the public sector, is also covered. Additional reporting requirements to HM Treasury are also envisaged, aimed at improving the consistency and accountability of decisions to exit employees at a cost to the taxpayer.
It is worth noting that the new regime will not apply to bodies under the devolved administrations. However, where central government bodies working on reserved functions, which are normally subject to other kinds of administrative control from HM Treasury such as the controls on senior pay, have roles located within Wales, these roles will be in scope of the new process.
The consultation exercise will run until 17th October 2022.