North Yorkshire chief constable admitted gross misconduct in helping a relative during a recruitment drive.
The police authority refused to renew his fixed term contract which expires in May 2012.
He will receive a payout of £200,000.
Home Office regulations require senior officers to be compensated if they are unable to complete 30 years' pensionable service.
Mr Maxwell would only complete that period if he stayed in the force until 2013.
Simple, demote him and give him a broom until his 30 years are up. And change the regulations.