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Redundancy by sectorLocal Government redundancy: your rights, pay and settlement agreements
Council redundancy pay, LGPS early pension access and discretionary compensation policies explained, plus how local government settlement agreements work.
Council and local authority staff face redundancy when services are restructured, outsourced or reduced due to budget pressures, and terms can vary significantly between authorities because each council sets its own discretionary compensation policy on top of the statutory scheme. Many councils calculate statutory redundancy pay using an employee's actual weekly pay rather than applying the statutory weekly cap, which increases the payment for higher earners. Staff in the Local Government Pension Scheme aged 55 or over may also be entitled to early, unreduced access to their pension on redundancy. Settlement agreements are used across local government both for agreed exits during restructuring and to resolve individual employment disputes.
Redundancy pay in local government: Local Government (LGPS) redundancy and the discretionary compensation policy
Local authorities operate under their own discretionary compensation policy, made under local government regulations, setting out enhancements to statutory redundancy pay and other exit terms. A common feature is calculating a week's pay using actual salary rather than the statutory cap, so higher earners receive more than the standard formula suggests. Employees in the Local Government Pension Scheme aged 55 or over may also qualify for immediate, unreduced pension payment on redundancy, a benefit separate from the redundancy payment itself.
Key points
- Many councils calculate a week's pay for redundancy using actual salary, not the statutory weekly cap.
- LGPS members aged 55 or over may get early, unreduced pension access on redundancy.
- Each council sets its own discretionary compensation policy, so enhanced terms vary between authorities.
- Settlement agreements often bundle redundancy terms with pension confirmation and any related grievance.
Settlement agreements in local government
Settlement agreements are common in local government redundancy exercises, particularly where a council wants to agree enhanced terms, confirm pension implications, or resolve a related grievance alongside the redundancy. Because discretionary policies and pension strain costs vary by authority, the value of an offer can be hard to assess without specialist review. As with any settlement agreement, it is only binding once an employee has received independent legal advice, which the council will normally pay for.
Been offered a settlement agreement?
If your local government employer has offered you a settlement agreement as part of a redundancy, we will review it the same working day and tell you honestly whether the offer is fair. Free to you when your employer pays our fee, which is the case in nearly every UK settlement agreement.
Local Government redundancy: frequently asked questions
Why do council redundancy payments vary between authorities?
Each council adopts its own discretionary compensation policy under local government regulations, deciding how far to enhance statutory redundancy pay and whether to use actual salary rather than the statutory cap when calculating a week's pay. This means two employees with similar roles and service at different authorities can receive different redundancy terms.
What happens to my pension if I am made redundant from a council job?
If you are a member of the Local Government Pension Scheme and aged 55 or over, redundancy can trigger immediate payment of your pension without the reduction normally applied for taking it early. This is a valuable benefit alongside any redundancy payment, and the combined value should be checked carefully before you agree to leave.
Can I negotiate better redundancy terms from my council?
Some scope exists, particularly where a settlement agreement is being used to resolve a related dispute or where the discretionary policy allows for case-by-case decisions, but councils generally apply their published policy consistently. A solicitor reviewing your offer can advise whether the figures and pension rules have been correctly applied to your case.