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.

FGN2021/03 SPFM amendments: June 2021

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 to clarify wording and introduce refreshed supporting templates for business cases.

Key changes include:

  • rewording “Voluntary Resignations secured by a financial consideration” as “Voluntary Severance”
  • making clear that the Severance Policy applies to all organisations covered by the SPFM except where it is inconsistent with any statutory requirements
  • clarification about maximum payback period of 24 months for Voluntary Severance
  • more detail about the purpose of the £95,000 cap in ensuring that that exit payments for the devolved public sector are fair and equitable while providing value for money for the people of Scotland
  • reinforcing the expectation that for Voluntary Severance, notice periods will be worked and outstanding leave will be taken prior to termination of employment
  • refreshed flowcharts for Settlement Agreement and Voluntary Severance
  • the draft confidentiality clause has been reworded
  • the email address for HR has been updated
  • the email address for the Severance Policy Team has been updated

Business case templates

Templates have been updated to follow a more consistent style and structure. Furthermore, the templates have been streamlined to apply to two broad organisation types: those whose employees are in civil service pension schemes, and those whose employees are not.

Flowcharts of the reporting process

The flow charts summarising the reporting process for Settlement Agreements (Annex A) and  Voluntary Severance (Annex B) have been updated to more clearly set out the governance around advice and decision steps, including when business cases are referred to senior management for review.


The Redundancy section has been updated to reflect the link to the public sector pay policy.

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