The response this week to the public sector exit payments consultation indicates that powers to introduce the cap will be included in the Enterprise Bill, with the details to be dealt with in subsequent regulations.
The cap will initially be set at £95,000 and will apply to the vast majority of exit payments, including payments for voluntary or compulsory redundancy, payments in lieu of notice, early unreduced access to pensions and ‘special severance’ payments such as those agreed in settlement of threatened litigation.
A waiver system will be established to allow higher payments in exceptional circumstances. The cap will not apply to payments made in respect of an employee’s death, serious injury attributable to employment, or ill-health retirement, nor to payments made following litigation for breach of contract or unfair dismissal.