The new Handbook expands the provisions on severance payments and supplements the existing rules with new express record keeping obligations.
Previous versions of the Handbook gave academy trusts delegated authority to make severance payments but required prior approval to be obtained from the DfE if certain financial thresholds were met or if payments were novel, contentious or repercussive. The Handbook required trusts to follow the DfE's Guide to academy trust severance payments and the Treasury's Guidance on Public Sector Exit Payments. This has all been retained in the 2026 Handbook but has been supplemented with new express record keeping obligations.
Trusts must now record and retain evidence of the management and approval process, including legal advice on the likelihood of successfully defending any claim by the employee, the reasons for any severance decision, the supporting evidence and demonstrating how value for money was achieved. Where a legal assessment suggests the trust has at least 50% chance of being successful, a settlement should not be offered. We have updated our checklist for academies making payments under settlement agreements to assist trusts in complying with their record-keeping obligations.
The Handbook continues to say that Severance payments should not be made where they could be seen as a reward for failure, such as gross misconduct or poor performance. The exceptions are narrow: in a gross misconduct...
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