A recent study by the Taxpayers’ Alliance found that 2,545 council staff were paid over £100,000 in 2017/8. Of those, 608 earned over £150,000 – that’s more than the Prime Minister!
This means that, when senior managers are forced to leave their public sector or local government jobs, their ‘golden goodbye’ payout can also reach six figures.
To avoid ‘wasting’ public money like this, the Treasury has now announced plans to cap such payoffs at £95,000.
However, this isn’t the whole picture. The reality is that most public sector workers will get £10,000 or less as compensation for being made redundant.
What this means to you
Any settlement agreement (known as a compromise agreement in Northern Ireland) is based on your salary, age and length of service. It might also include any holiday pay that’s outstanding, and perhaps a payment to cover your contractual notice period if you don’t work it.
But you don’t have to accept the first amount your employer offers, as there may be some wiggle room.
The money you receive is in return for you agreeing not to pursue a claim against them.
But there are some other things you can offer which might be worth them paying you more. For example, you might agree not to take a job at a competitor for a period of time, or to keep the deal secret, or to stay on to hand over to your successor.
And there are some things you can request that won’t cost them any money, such as a good reference to help you get another job, and / or support to boost your interviewing skills.
As you may know, the first £30,000 of a redundancy payment is tax-free. So you also need to understand the tax implications, to ensure you get the most beneficial structure for your deal.
If you’re facing redundancy, you need the advice of a specialist employment lawyer – give us a call and we’ll advise how much you can expect, and help you negotiate a better deal if possible.
By the way, your employer will usually pay for our advice, so it may not cost you a penny!
For more information, you might like to read our article on Compromise agreements.
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