Public sector pay in the spotlight

Published on: 02/10/2015


There’s been a lot of discussion in the news this week about public sector pay, with a particular focus on the NHS.

While the government published its response on plans to introduce a £95,000 cap on public sector exit payments, Trade unions spoke out over a termination payment of around £410,000 to a senior NHS executive. This all comes at the same time as news that the British Medical Association will ballot its members on industrial action over proposed changes to junior doctors’ contracts.

Trade unions, including Unite and the GMB, were angered by the sum that was paid to David Flory when his role as chief executive of the NHS Trust Development Authority (TDA) came to an end earlier this year. The publication of the TDA’s annual report confirmed that Mr Flory had received a termination payment of “between £410,000 and £415,000” on top of his £235,000 salary. The Guardian quoted Barrie Brown, national officer for health at Unite the Union, referring to the payout as “a disgraceful reward for a mediocre performance”. Mr Brown also suggested that public sector bosses are leaving their positions now, before the introduction of the cap on exit payments.

The government intends introduce a £95,000 cap on the total value of all exit payments made to most public sector employees. No date has been set for the introduction of the cap – the proposals will come into force via the Enterprise Bill 2015-16, which had its first reading in the House of Lords on 16 September 2015, and detailed Regulations are expected by April 2016.

Although the cap is likely to affect high numbers of people working in the public sector, there a number of exclusions including:-

  • employees of the BBC, Channel 4, the Financial Conduct Authority, and the Bank of England;
  • members of the armed forces;
  • payments following breach of contract or unfair dismissal claims; and
  • payments following death or injury attributable to employment, ill-health retirement payments, or payments to employees with protected terms following a TUPE transfer.

The Government made a manifesto commitment to end large exit payments to public sector workers in the run up to this years’ general election and the move to introduce the cap is only part of a wider program of measures to limit payouts funded by the tax payer. Public-sector accounts published in March showed that £1.8 billion had been paid in public-sector exit payments in 2013/14, with 1,838 payments of more than £100,000 having been made.


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