Exit pay cap ‘unlawful’

by Neil Hallows

Concerns have been raised in Parliament about Government plans to cap exit payments for public sector workers.

Location: UK
Published: Thursday 24 September 2020
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Regulations going through Parliament would impose a legal duty on public bodies – including NHS trusts – to limit payments to exiting employees to £95,000 even where doing so ignores existing contractual obligations, including agreed redundancy rights or where the employer otherwise accepts the worker is owed the sums as agreed compensation for the employer’s unlawful acts.  

The BMA has applied for a judicial review to challenge the cap.

Former BMA president and cross-bench peer Baroness Finlay (pictured above), in the Lords on 23 September, said: ‘How can the Government justify extending the scope of the definition of exit payments to include payments made to compensate an exiting employee for an infringement of their legal rights during their employment, before their exit? The BMA believes that doing so is unlawful.

‘What about a person with an equal pay claim that goes back years, who leaves before the back pay is settled? How can Government justify preventing public bodies paying money owed to an exiting employee – payments such as a contractual redundancy payment, to which the employee is entitled under existing lawful contracts of employment negotiated in the proper and recognised way? Again, the BMA believes this is unlawful.​’


Essential services

The Liberal Democrat peer, Baroness Bakewell of Hardington Mandeville, said she had received a BMA briefing on the issue, and added: ‘In addition to there being little communication between government departments, no equality impact assessment has been produced. Why not? Is the Government afraid that, if they produce one, it will be obvious that the bread-and-butter staff of public service are being caught in this trap?’

And the Labour peer, Lord Tunnicliffe, said: ‘My lords, public sector workers carry out vital work each and every day. Over the past six months, their importance has become ever more apparent as they have provided the essential services that have kept the country running. To introduce these measures at a time when we appear to be entering a second wave of COVID-19 is not only unnecessary but, frankly, extraordinary.’


Value for money

Responding for the Government, the Treasury minister Lord Agnew said: ‘I believe the Government is right to take this course. We are strongly of the view that these regulations will deliver value for money for taxpayers and put a stop to excessive pay outs, which we have unfortunately seen too often in recent times. After a long period of consultation, it is now right that this policy comes into force.’

The regulations have yet to be approved by Parliament.

In the BMA’s application for judicial review, it argues that the Government’s intention to seek to override potential payments owed to exiting employees is unlawful as the Government cannot interfere with and override rights agreed in workers’ employment contracts. Doctors’ contracts of employment are nationally negotiated by the BMA and NHS Employers and are the result of lengthy negotiations which take into account the needs of the NHS, NHS Employers and doctors.


Human rights breach

The BMA also argues the proposed regulations are contrary to human rights legislation as they put public sector employees at a significant disadvantage in seeking to enforce their rights to peaceful enjoyment of their property, as compared with private sector workers.

The proposed regulations also demand that all doctors, including doctors in training, calculate and notify their employer of all ‘exit payments’ to which they are entitled at the time of leaving employment. The BMA will argue that the legislation would effectively ask junior doctors to do the work of NHS trust HR staff – placing them under the obligation to perform complex calculations, likely to be beyond their competence, every time they rotate.