A new maximum severance payment for civil servants who are made redundant, or take voluntary redundancy, will come into effect in from 1 April 2010. There will also be an increased qualifying period for entitlement to the payouts. The new rules are:
- anyone made compulsorily redundant will receive cash compensation of up to two years' pay. For the lowest paid, cash payments will be capped at three years' pay or £50,000, whichever is lower
- civil servants who are made redundant will no longer be able to retire on a full pension from the age of 50 (the minimum pension age rises to 55 for all employees as from April 2010)
- the qualifying period for redundancy pay will increase from one to two years
- anyone who receives a severance payment and then returns to work for the Civil Service will have to pay back their cash settlement on a pro-rata basis. In the future, the government will explore the feasibility of extending this policy to include anyone to returns to work as a consultant to the Civil Service
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