Scottish Public Finance Manual

The Scottish Public Finance Manual (SPFM) is issued by the Scottish Ministers to provide guidance on the proper handling and reporting of public funds.

FGN2019/06 SPFM amendments: September 2019

FGN2019/06 SPFM amendments: September 2019

The purpose of this note is to announce recent amendments to the Scottish Public Finance Manual (SPFM), specifically the chapter on Settlement agreements, severance, early retirement and redundancy terms.

Settlement agreements, severance, early retirement and redundancy terms

The chapter for Settlement agreements, severance, early retirement and redundancy terms has been updated. The model framework document for executive NDPBs in the Accountability chapter of the SPFM has also been updated to reflect these changes.

These chapters have been updated to reflect changes to the severance policy which applies to all devolved public bodies to which the Scottish Public Finance Manual (SPFM) is directly applicable.  The chapter has been rearranged to present the information in a more user-friendly way. 

The policy measures will reduce the risk of excessive or inappropriate exit payments. The key policy features are to:

  • introduce a £95,000 administrative severance payment cap and recovery arrangements to voluntary early severance, voluntary early retirement, voluntary redundancy and settlement agreements
  • ensure that individual leaving on a voluntary resignation basis is precluded from returning to the same employer for a period of 12 months, including as a temporary agency worker or via a procurement route
  • set a consistent maximum pay-back period of two years to voluntary early severance and retirement schemes (however, where organisations’ own compensation schemes have a payback period of less than 24 months, the shorter period will apply)
  • set a maximum of six months’ Pay in Lieu of Notice (PILON) Period for all new contracts (although it is recommended that a robust business case is made for any notice periods beyond statutory notice periods)
  • reduce the use of discretionary payments
  • introduce measures to improve governance, accountability and transparency of severance payments

Those bodies in the Principal Civil Service Pension Scheme (PCSPS), whether civil service organisations or not, have different reporting procedures.

Business case templates

Templates have been amended to reflect the changes. 

Draft Confidentiality Clause

This chapter now includes an illustrative confidentiality clause. However, there remains a general presumption against the use of such clauses.

Elements Included / Excluded from the £95,000 Calculation

A table is included which sets out the various benefits or payments which are included, and excluded in the calculation of the £95,000.


A new section has been added setting out Scottish Ministers’ continued commitment to the policy of No Compulsory Redundancies and the context for public bodies’ negotiating extensions of this policy with trade unions in return for continuing or additional workforce flexibilities.


Scottish Government Finance Directorate

September 2019

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