The Restriction of Public Sector Exit Payments Regulations 2020
2020 No. 1122
Employment
The Restriction of Public Sector Exit Payments Regulations 2020
Made 14th October 2020
Coming into force in accordance with regulation 1(2)
The Treasury make the following Regulations in exercise of the powers conferred by sections 153A(1), (2), (4) and (8)(a), 153B(1)(c), 153C(5) and (8)(a) and 161(2) of the Small Business, Enterprise and Employment Act 20151.
A draft of these Regulations has been laid before Parliament and has been approved by a resolution of each House of Parliament in accordance with section 161(4) of that Act.
Citation and commencement
1.—(1) These Regulations may be cited as the Restriction of Public Sector Exit Payments Regulations 2020.
(2) These Regulations come into force on the twenty first day after the day on which they are made.
Interpretation
2. In these Regulations–
“the Act” means the Small Business, Enterprise and Employment Act 2015;
“ACAS” means the Advisory, Conciliation and Arbitration Service;
“ACAS Arbitration Scheme” means the arbitration scheme set out in the Schedule to the ACAS Arbitration (Great Britain) Order 20042;
“conciliation agreement” means any agreement to refrain from instituting or continuing legal proceedings where an ACAS conciliation officer has taken any action under any of sections 18A to 18C of the Employment Tribunals Act 19963;
“exit payment” means a payment of a description prescribed in regulation 5(2);
“exit payment cap” means the amount for the time being specified in section 153A(1) of the Act;
“financial year” means each period of 12 months ending on 31 March;
“fire and rescue authority” means the authority determined under section 1 or established under sections 2 or 4 of the Fire and Rescue Services Act 20044;
“hours worked” by a person means the normal working hours in a period of a month the person is required to work under a contract of employment in respect of an employee or under the terms of appointment to an office in respect of an office-holder;
“local authority” means–
(a) a county council;
(b) in relation to Wales only, a county borough council;
(c) a district council;
(d) a London borough council;
(e) the Common Council of the City of London in its capacity as a local authority; or
(f) the Council of the Isles of Scilly;
“redundancy” has the meaning in section 139 of the Employment Rights Act 19965;
“relevant authority” means–
(a) a body listed in the Schedule; or
(b) a body responsible for determining the level of remuneration payable to the holder of a public office listed in Part 2 of the Schedule;
“relevant Minister” means either–
(a) a Minister of the Crown; or
(b) in relation to a relevant Welsh exit payment, the Welsh Ministers;
“relevant public sector exit” means a situation where–
(a) an employee leaves the employment of a relevant authority listed in Part 1 of the Schedule; or
(b) an office-holder leaves an office listed in Part 2 of the Schedule;
“relevant redundancy payment” means–
(a) a payment to a person of statutory redundancy pay to which the person is entitled under section 135 of the Employment Rights Act 19966; or
(b) in a case where a person is not, solely as a result of section 159 of that Act, entitled to statutory redundancy pay, a payment to the person of an amount equivalent to the statutory redundancy pay to which the person would have been entitled but for section 159 of that Act;
“salary” in respect of any employment or service in an office means the annual value of remuneration, including any benefit in kind, a person was entitled to receive under a contract of employment in respect of the employment or office or under the terms of appointment to an office in respect of the office, on the date that the person left the employment or ceased to hold the office;
“settlement agreement” means any agreement to refrain from instituting or continuing legal proceedings which satisfies the conditions in section 203(3) of the Employment Rights Act 19967;
“statutory redundancy pay” means an amount calculated in accordance with section 162 of the Employment Rights Act 19968;
Restrictions on exit payments
3. Subject to regulations 5, 6 and 7–
(a) a relevant authority must not make an exit payment to a person which exceeds the exit payment cap in respect of a relevant public sector exit;
(b) where two or more relevant public sector exits occur in respect of the same person within any period of 28 consecutive days, the total amount of the exit payments made to that person in respect of those exits must not exceed the exit payment cap.
4. For the purposes of regulation 3(b), the exit payments are to be treated as having been paid in the following sequence–
(a) where the relevant public exits do not occur on the same day, in chronological order;
(b) in any other case, in the following order–
(i) in descending order of salary;
(ii) where the salaries are equal, in the descending order of hours worked;
(iii) where the salaries and hours worked are equal, in descending order of the person’s length of the service in the employment or as holder of the office; or
(iv) where the salaries, hours worked and length of service in the employment or as holder of the office are equal, in the order determined by the relevant Minister.
Exit payments
5.—(1) In this regulation a reference to an exit payment made to a person includes a reference to an exit payment made in respect of that person to another person.
(2) The following descriptions of payment are exit payments, unless the payment falls within regulation 6–
(a)
(a) subject to regulation 7, any payment on account of dismissal by reason of redundancy;
(b)
(b) any payment to reduce or eliminate an actuarial reduction to a pension on early retirement or in respect to the cost to a pension scheme of such a reduction not being made;
(c)
(c) any payment pursuant to an award of compensation under the ACAS arbitration scheme or a settlement or conciliation agreement;
(d)
(d) any severance payment or ex gratia payment;
(e)
(e) any payment in the form of shares or share options;
(f)
(f) any payment on voluntary exit;
(g)
(g) any payment in lieu of notice due under a contract of employment;
(h)
(h) any payment to extinguish any liability to pay money under a fixed term contract;
(i)
(i) any other payment, whether under a contract of employment or otherwise, in consequence of termination of employment or loss of office.
Payments exempt from restriction
6. The following descriptions of payment are not exit payments—
(a) any payment in respect of death in service;
(b) any payment in respect of incapacity as a result of accident, injury or illness;
(c) any payment under–
(i) rule B7(5A), Schedule 2 to the Firemen’s Pension Scheme Order 19929where the relevant fire and rescue authority has determined that an individual be paid a lump sum;
(ii) rule 6, Part 3, Schedule 1 to the Firefighters’ Pension Scheme (England) Order 200610where the relevant fire and rescue authority has determined that an individual should be retired with an early retirement pension initiated by that authority in accordance with the Addendum to the Fire and Rescue National Framework for England on firefighters’ fitness prepared in accordance with section 21 of the Fire and Rescue Services Act 200411;
(iii) rule 6, Part 3, Schedule 1 to the Firefighters’ Pension Scheme (Wales) Order 200712where the relevant fire and rescue authority has determined that an individual should be retired with an early retirement pension;
(iv) regulation 62 of the Firefighters’ Pension Scheme (England) Regulations 201413where the relevant fire and rescue authority has determined that an individual should be retired with an early retirement pension initiated by that authority in accordance with the Addendum to the Fire and Rescue National Framework for England on firefighters’ fitness prepared in accordance with section 21 of the Fire and Rescue Services Act 200414;
(v) regulation 71 of the Firefighters’ Pension Scheme (Wales) Regulations 2015 (employer initiated retirement)15where the relevant fire and rescue authority has determined that an individual should be retired with an early retirement pension initiated by the authority;
(d) any service award to a member of the judiciary in accordance with the determination of the Lord Chancellor dated 31 March 200616;
(e) any payment in respect of annual leave due under a contract of employment but not taken;
(f) any payment in compliance with an order of a court or tribunal;
(g) any payment in lieu of notice due under a contract of employment that does not exceed one quarter of the relevant person’s salary.
Prohibition on reduction of statutory redundancy pay or equivalent
7.—(1) A relevant authority must not reduce the amount of a relevant redundancy payment in respect of a relevant public sector exit.
(2) Accordingly, if–
(a)
(a) a person is entitled to a relevant redundancy payment and one or more other exit payments in respect of a relevant public sector exit; and
(b)
(b) the total amount of the exit payments in respect of the exit would exceed the exit payment cap,
the relevant authority must reduce the amount of one or more of the other exit payments.
(3) Where this regulation applies, a payment of a relevant redundancy payment by a relevant authority may cause the total amount of exit payments payable to the person to exceed the exit payment cap, but only if all other exit payments by the relevant authority to which the person would, but for these...
To continue reading
Request your trial