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Redundancy in the Public Sector: How Does it Work?

Calendar November 27, 2020

Redundancy is a form of dismissal from your job, this happens when the employers need to reduce their workforce.

The public sector employs workers through the state, federal or local government. The most common civil service is healthcare, emergency services and armed forces. Jobs in the public sector are said to have more job security than the private sector.

Can I be made redundant in the public sector?

For the public sector, if workers are facing redundancies it would be on the basis that their job ceases to exist. This would mean that the employer is not able to bring someone else in to do the job cheaper, employees are protected under the Employment Act 1996.

The employers of the public sector should have all their regulations tights. Therefore, employees should be able to find out exactly what they are eligible for and what rights you are entitled under.

In most public sector redundancy cases there is a better chance to receive better terms if you are being made redundant. It is more than likely that you are able to get a high monetary value from the public sector than private.

Public Sector Redundancy Packages

There are new proposals for implementing the £95k cap on exit payments. This year it is said the Health and Social Care industry has said to have the highest amount of exit packages.

Like the private sector, the public sector would follow a similar redundancy procedure.


Using the NHS as an example the employee must have a minimum two years’ service with a break of no more than one statutory week, if not it will not be counted as two years of continuous service.

This in mind the NHS reckonable will be used and would determine the contractual redundancy the employee would receive.

  • When reckonable service is not counted:
    Service is counted previously in respect of a redundancy by an NHS employer
  • Any previous employment for which an employee has received NHS pension benefits
  • Loss of office payment
  • MARS severance payment (which is offset against any subsequent redundancy payment).

The NHS operates a contractual redundancy scheme collectively agreed with NHS trade unions and NHS staff council.
Thereafter the redundancy would be the same procedure and every workplace should have a redundancy policy which should be found in the company handbook. If there is no redundancy policy, they would need to follow a fair redundancy process.

Public Sector Exit payments

Legislation to Limit Payment


There are some limitations when it comes to exit payments. Under the Restriction of Public Sector Exit Payments Regulations 2020, a relevant authority must not make an exit payment to a person that would exceed the existing cap.

Furthermore, if there are two or more relevant public sector exits in the respect of the same person within a 28-day period, the exit package must not exceed the exit payment cap.

In the exit package that was made on behalf of any employee, a reference must be included.

The following descriptions below would constitute as an exit payment:
subject to regulation 7, any payment on account of dismissal by reason of redundancy;
any payment to reduce or eliminate an actuarial reduction to a pension on early retirement or in respect to the cost to a pension scheme of such a reduction not being made;
any payment pursuant to an award of compensation under the ACAS arbitration scheme or a settlement or conciliation agreement;
any severance payment or ex gratia payment;
any payment in the form of shares or share options;
any payment on voluntary exit;
any payment in lieu of notice due under a contract of employment;
any payment to extinguish any liability to pay money under a fixed term contract;
any other payment, whether under a contract of employment or otherwise, in consequence of termination of employment or loss of office.
There are also payments that are exempt from restriction, for example any payment in respect of death in service, any payment in respect of incapacity as a result of accident, injury or illness.


Looking to find out more about employment law services? Our solicitors specialising in employment law are on hand to help. We help you understand the redundancy process in the UK and provide legal advice. Please ring 0330 221 0684 orcontact our legal team online.


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