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The Exit Cap regulations were formally revoked on 19 March 2021 following the approval of the Restriction of Public Sector Exit Payments (Revocation) Regulations 2021 (the Revocation Regulations) on 25 February 2021.
The Revocation Regulations contain a legal obligation for employers to make payments to employees who left during the period between the Exit Cap regulations coming into force on 04 November 2020 and the date of the Revocation Regulations coming into force.
Guidance issued at the same time as the treasury direction effectively means that any payments made between 04 November 2020 and 11 February 2021 must, therefore, be ‘topped up’ by the difference between what was paid and the exit payment that the employee would have been entitled to had the cap not been in force.
Guidance for the Local Government Pension Scheme (LGPS) for employers is available on the LGPS website, which also sets out some immediate action points for affected employers:
You should review other termination payments that were restricted due to the exit cap in line with your policy, for example, discretionary compensation pay. You may also be approached by employees seeking additional amounts where such termination payments were made. The LGA recommends that requests from employees are considered in line with the requirements of the Revocation Regulations, their published policies and their own legal advice. Other employers may wish to take the same approach.
As the cap no longer applies, if an LGPS member exits on or after 12 February 2021 due to redundancy or business efficiency at age 55 or over:
If you have any further questions regarding the Exit Cap Regulations, or any other employment law related matter, please contact a member of our Employment team on 01332 226 149 or complete the form below.
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