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The Scottish Public Finance Manual (SPFM) is issued by the Scottish Ministers to provide guidance on the proper handling and reporting of public funds.
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
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.
Redundancy
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.
Update to footnote in the borrowing, lending, and investment section
Updates to wording of Annex 2 Internal control checklist for Certificates of Assurance.
New FGN note added - FGN 2025/03 financial memoranda that accompany Scottish Government bills.
Updates to the following sections following SPFM Strategic Review: Foreword, Accountability (and annexes), risk and subsidy Control. Also the addition of FGN 2025/02 explaining the updates
Link in point 23 of Settlement, Severance, Early Retirement, Redundancy section updated.
numbering in Annex 2 Internal control checklist for Certificates of Assurance updated due to a typo
Updated Annex 2 Internal control checklist for Certificates of Assurance, added FGN 2025/01 re CoA checklist and added in a word version of the checklist.
updated missing text in document SPFM - Non-Ministerial Offices model framework document July 2024.
Adding in FGN 2024/03 re the updated AO Spend Control Template and Guidance.
Updating the SRO Appointment letter in the documents section to include a point on construction projects in the Annex.
Executive agencies model framework document updated.
Non-Ministerial Offices model framework document updated.
Updating the SRO Appointment letter in the documents section to this years dates
Updated link to 'On Board: A Guide for Members of Statutory Boards' within Governance statements chapter.
Updates made to model framework document templates.
Updates made to text within Procurement chapter.
Replaced non-ministerial office model framework document and advisory non-departmental public bodies model framework with updated versions.
Document updated with an additional date - Settlement Agreement supporting documentation - final confirmation of terms
Replaced Non-Ministerial Offices model framework document
Updates to the Settlement, Severance, Early Retirement and Redundancy section. The main section and Annex's A, B C have all been updated along with updated documents and a Finance Guidance Note to explain the changes
Updated the Certificates of Assurance chapter, Annex 2 with the CoA checklist questions for 2023/24 and added a Finance Guidance note outling the changes.
Updates made to proportionate due diligence wording, Accountable Officer tests guidance, risk exposure guidance, public bodies duties, monitoring and management, exit arrangements.
Procurement chapter updated.
Updated 'Major investment projects' paragraph 12 and the SRO appointment letter.
