Less than 3 months later, the government have revoked the provisions.
The aim of the Regulations was to prevent excessive payments being paid to departing employees in the public sector. After a review of the cap was undertaken, the government have concluded that the imposition of the cap has resulted in unintended consequences. They effectively found that long serving, middle ranking individuals were adversely affected, not just high flying executives. This was because the amount of any redundancy payment along with any pension shortfall payment would quite often exceed this figure. It was unclear how the payment was to be divided in such circumstances and the risk of litigation was substantial. Therefore, the government have decided that the Regulations should be revoked.
An HM Treasury Direction has been introduced which will disapply the cap until the Regulations are formally revoked.
According to government guidance, employees affected by the cap should contact their former employers and directly request to be paid what they would have been paid had the cap not been in place.
According to government guidance, employers are now encouraged to pay additional sums to any former employee affected, if the employee:
If the above applies, the former employer should pay the former employee the additional sums that would have been paid to them had the cap not been applied in the first place. Employers should note that HM Treasury have an expectation that the former employers will do this.
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