The College Financial Handbook - severance payment clarity

The College Financial Handbook (CFH) currently states that a college must obtain DfE consent before making an offer to a member of staff when the proposed severance payment is equivalent to three months’ salary or more (gross, before income tax or other deductions). There is no equivalent provision within the Academy Trust Handbook. 

We are aware that there has been some confusion as to whether the three month rule as described above remains in place. The CFH – which colleges are obliged to comply with – has not yet been updated, but we understand that there is an intention to do so to reflect the adjustment to the previous policy on this issue, to be back dated to take effect from August 2025. This will bring the CFH in line with the approach taken in the Academy Trust Handbook. Until the CFH is amended, if there is any doubt whether a particular arrangement may sit in the gap between the current and new delegated authority limits, colleges can still approach the DfE in the usual way for consent, or share that they intend to proceed on the basis of the new policy on this issue, appreciating that the CFH is intended to be updated – in the knowledge that the relevant DfE teams are aware of the change in policy.

The CFH was, from the outset, intended to be an evolving document, as colleagues from across the sector and within Government continue to work to find the right balance for this part of the sector. It is welcome that this reflective and collaborative approach continues. There will likely be further changes before policy begins to settle, in what is still a relatively newly reclassified part of the public sector. We may well see less frequent updates in future years as policy has space to mature.