Public sector pay policy 2020 to 2021: technical guide

2. Introduction

Who does the Pay Policy apply to?

2.1 The information in this Technical Guide is for employers in the relevant public bodies listed here, although their trade unions and employees may also find it of interest. The detail in sections 3 to 6 applies to the following public bodies:

• The Scottish Government and its Associated Departments
  • Staff Pay Remits / Chairs, Board Members and Public Appointments
• Agencies
  • Staff Pay Remits / Chairs, Board Members and Public Appointments
• Non-Departmental Public Bodies (NDPBs)
  • Staff Pay Remits / Chief Executives / Chairs, Board Members and Public Appointments
• Public Corporations
  • Staff Pay Remits / Chief Executives / Chairs, Board Members and Public Appointments
• NHS Scotland Executive and Senior Management posts
  • Chief Executives / Senior Executives / Chairs, Board Members and Public Appointments
• Ministerial Appointments not covered by any of the organisations above.

A full list of public bodies is available at: www.gov.scot/Topics/Government/public-sector-pay/staff-pay/public-bodies-covered

2.2 The policy also applies to all public appointments under the auspices of the Scottish Ministers. This includes, but is not limited to:

• all public appointments to Non-Departmental Public Bodies (NDPBs) and public corporations
• Non‑executive directors of the Scottish Government and its agencies and associated departments
• Chairs and board members of Public Bodies
• Chairs and board members of short life and ad hoc working groups etc.
• Appointments to tribunals, appeals boards, advisory committees and inquiries
• Appointments to lead Reviews, Inquiries etc.

2.3 In addition, the policy acts as a benchmark for all major public sector workforce groups across Scotland including NHS Scotland,^[2] fire-fighters, police officers, teachers and further education workers. For local government employees, pay and other employment matters are delegated to local authorities.

What about Senior Civil Servants?

2.4 The Pay Policy does not apply to the remuneration of Senior Civil Servants as this is a reserved matter and operates within the UK Cabinet Office pay and performance management framework.

What role and responsibilities does the public body have in the pay policy process?

2.5 The public body is responsible for determining the pay and conditions for its staff that are appropriate for its business needs and which take account of and comply with the Scottish Government's Public Sector Pay Policy and processes. Where applicable, the public body's Remuneration Committee must be aware of all pay proposals, staff, Chief Executive, Chairs and Board Members.

2.6 Each public body is expected to submit its staff pay proposals to the Scottish Government in sufficient time to ensure that they can implement their pay settlement on the date in which it is due (which for the majority of public bodies is 1 April).

2.7 To assist in meeting the above requirement the existing risk-based approach will continue to apply for staff pay remits. Each public body will be assigned a rating, based on some key indicators, which will determine the approvals process required (see paragraphs C.3.71 to C.3.73).

2.8 Public bodies are expected to engage in early scoping discussions with their staff and staff representatives in preparing their staff pay proposals where appropriate, as part of a collaborative and constructive approach to the pay process.

2.9 Public bodies are encouraged to attend a pay surgery with the Finance Pay Policy team before they formally submit their remit proposals. Where appropriate the relevant Sponsor team will be invited to attend. This will help reduce the time required for getting approval to the negotiating remit.

What role and responsibilities does the Chief Executive have in the pay policy process?

2.10 The Chief Executive, as Accountable Officer,^[3] has the responsibility to provide assurance that staff pay proposals are in line with pay policy, there are robust performance management systems in place to support any progression payments and any projections for paybill savings are realistic and will be delivered during the 12 months of the pay remit year.

2.11 The Chief Executive also has the responsibility to confirm that the outturn for the previous pay year is in line with the approved remit. If the outturn is submitted before the end of pay year the Chief Executive is required to confirm that it is projected to be within the approved remit and, in particular, that the assumptions made in respect of paybill savings to fund the pay award are still valid and achievable.

2.12 It is therefore assumed all completed proforma providing this confirmation are submitted either by or on behalf of the Chief Executive or Accountable Officer on this basis.

What role and responsibilities does the Chair / Board have in the pay policy process?

2.13 The Chair / Board has the responsibility to develop remuneration proposals for their Chief Executive on any new or reviewed remuneration package and ensuring Scottish Government approval is obtained, through the sponsor team, prior to advertising, agreeing or implementing such proposals.

What role and responsibilities do the Trade Unions have in the pay policy process?

2.14 It is expected that Trade unions and/or staff representatives will want to participate in early engagement with their public body as part of a collaborative and constructive pay dialogue. However, pay negotiations must not be concluded until the staff pay remit has been formally approved.

What role and responsibilities does the Finance Pay Policy team have in the pay policy process?

2.15 The role of the Finance Pay Policy team is to ensure all pay proposals are in line with the Scottish Government's policy on public sector pay. Before a public body formally submits its pay remit or makes an appointment, the team can provide advice. This may be on any issue that arises during the scoping discussions between public bodies and their staff representatives or in the development of remuneration proposals for Chief Executives or public appointments including Chairs and Board Members. The team will help in making sure the proforma and any business case required include all of the necessary information.

2.16 The Finance Pay Policy team provides the main interface between public bodies and Remuneration Group. It is their role to advise senior officials, Remuneration Group and Ministers on all pay and remuneration proposals.

What role and responsibilities does the Remuneration Group have in the pay policy process?

2.17 The Scottish Government's Remuneration Group is chaired by a Non-Executive Director of the Scottish Government. The Group meets regularly throughout the year and its remit includes making sure a consistent approach is taken to approval of pay remits for staff, and to remuneration of Chief Executives and public appointments.

2.18 When required, the Remuneration Group will consider pay or remuneration proposals and will decide whether or not proposals need to be referred to Ministers.

2.19 Details of current membership of the Remuneration Group, meeting dates and the deadlines for papers are set out on the Scottish Government's Public Sector Pay webpages, available at: www.scotland.gov.uk/Topics/Government/public-sector-pay/RemunerationGroup.

What role and responsibilities does the sponsor team have in the pay policy process?

2.20 The sponsor teams of NDPBs and Public Corporations are responsible for making sure their public bodies are aware of the Scottish Government's Public Sector Pay Policy and the processes. It is their role to advise the Finance Pay Policy team on affordability and of any issues that they need to be aware of that may impact on the rating of the pay proposals.

2.21 Sponsor teams are also responsible for considering, along with the Finance Pay Policy team, any remuneration proposals for Chief Executives, Chairs, Board Members and public appointments (whether or not the public appointment is linked to a public body). If a new Chair is appointed to a public body, it is the role of the sponsor team to inform them of the Public Sector Pay Policy and this Technical Guide. In conjunction with the relevant Finance Business Partner, sponsor teams are responsible for considering and confirming the affordability and sustainability of remuneration proposals and seeking formal approval for the proposals.

2.22 Further detail on the role and responsibilities of the sponsor team is set out in section 7 of this guide.

What role and responsibilities do senior Scottish Government officials have in the pay policy process?

2.23 Senior officials (Director / Director General / Permanent Secretary). For NDPBs and Public Corporations, the Director of the relevant sponsoring Directorate is responsible for ensuring good governance within public bodies in respect of the Public Sector Pay Policy and the processes and where appropriate approving proposals. The Director for Budget and Public Spending is responsible for approving for Finance Pay Policy interests. These senior officials will refer proposals to Remuneration Group when they are novel or fall outside of Public Sector Pay Policy.

2.24 The relevant Director General will take on this role in relation to Agencies and to public appointments not linked to a public body. The Permanent Secretary takes this role for Associated Departments, the Scottish Government's Main Bargaining Unit and the Scottish Government Marine (off‑shore) bargaining unit.

What is the role and responsibilities of the senior Scottish Government Finance Business Partner in the Pay Policy process?

2.25 The Finance Business Partner^[4] is responsible for providing comment on the affordability of the proposals within agreed budget allocations (taking into account delivery of efficiency savings) and on whether the proposals offer value for money.

What role and responsibilities do Scottish Ministers have in the pay policy process?

2.26 If Ministerial approval is required the proposals will need to be approved by the relevant Portfolio Cabinet Secretary or Minister and the Cabinet Secretary for Finance or Finance Minister. Referrals to Ministers must include Remuneration Group advice.

How should pay increases be applied to part-time employees?

2.27 The policy intention is for all increases to be based on an individual's full-time equivalent salary so that part-time employees will receive all increases on a pro-rata basis. The reason for this is that it is the most equitable approach and maintains the integrity of existing pay and grading structures. This approach provides all staff in the same grade and job weight the same proportionate increase ensuring equal pay for like work or work of equal value.

What is required to extend a No Compulsory Redundancy commitment?

2.28 The statutory definition of "redundancy" encompasses three types of situation: business closure, workplace closure, and reduction of workforce. The dismissal of an employee will be by reason of redundancy if it is "wholly or mainly attributable to" the employer:

• Ceasing or intending to cease to carry on the business for the purposes of which the employee was employed by it (business closure) (section 139(1)(a)(i), ERA 1996);
• Ceasing or intending to cease to carry on that business in the place where the employee was so employed (workplace closure) (section 139(1)(a)(ii), ERA 1996); or
• Having a reduced requirement for employees to carry out work of a particular kind or to do so at the place where the employee was employed to work (reduced requirement for employees) (section 139(1)(b), ERA 1996).

2.29 The intention behind Ministers' No Compulsory Redundancy commitment is to ensure that, in any of the above circumstances, the employer works closely with affected staff and their unions, to identify suitable alternative employment opportunities.

2.30 This pay policy continues to support the Scottish Government's position on No Compulsory Redundancy. The Government believes this commitment creates the right environment to provide staff with job security while enabling employers and their staff representatives to take a range of steps to manage their headcount and budgets to realise the necessary savings to deliver efficiencies.

2.31 Public bodies will be expected to negotiate extensions to their No Compulsory Redundancy agreements for the duration of their 2020-21 pay settlement as part of constructive and collaborative discussions between employers and their trade unions to make the most effective use of the funding available for the pay award, within the bounds of the pay policy.

2.32 The details will be for agreement between employers and their staff groups as part of collective bargaining negotiations for 2020-21. The key aim remains for public bodies to manage costs and protect staff numbers to deliver the quality of services within constrained budgets. The Scottish Government expects all public bodies to engage with this framework.

2.33 The No Compulsory Redundancy agreement extends to all directly employed staff and public bodies would be expected to look at all appropriate measures to avoid compulsory redundancy such as transfer to other areas of work both within the organisation or to another public body (if agreed arrangements are in place); reviews of working practices such as reducing overtime; restricting promotions/recruitments; or restricting the use of temporary workers or fixed-term appointments, etc. The No Compulsory Redundancy agreement does not apply to the termination of a temporary appointment or the end of a fixed term contract where staff are recruited for a limited period.

What is the policy position on Fair Pay and pay inequalities?

2.34 The Scottish Government recognises the importance of treating people fairly in the work place and encourages best practice among its public bodies as set out in the Fair Work Framework.^[5] This recognition is embedded in Scotland's Labour Market Strategy.^[6]

2.35 The Scottish Government's Fair Work First position will see investment in skills and training, no inappropriate zero hours contracts, genuine workforce engagement, including with trade unions, and payment of the real Living Wage extended to more contracts and government support grants. All employers are encouraged to follow the Scottish Government's lead and have a Fair Work Agreement with their respective Trade Unions and/or staff representatives.

2.36 It is important public bodies meet their public sector equality duty and review their pay systems on an annual basis, and ensure they carry out a full equality impact assessment of their reward policies and practices in line with the recommended time scales. Public bodies are encouraged to work jointly with their trade union(s) in undertaking their equal pay reviews. Further information on the Scottish Government's duties under the Equality Act 2010 is available at: Outline of Scottish Government's duties under the Equality Act 2010.

2.37 Each public body is required to make sure it has due regard to its obligations under the public sector equality duties when considering its pay systems. This must include the legal requirement on public bodies to assess the impact of their policies and practices on people from different ethnic groups, disabled people and gender. In terms of pay proposals, public bodies are expected to have carried out equal pay reviews and set out in their business case the results of such reviews and the steps they propose to take to address any inequalities they have identified.

2.38 Where a public body has identified a potential pay inequality they wish to address, they will need to provide evidence of the extent of this inequality. A full risk assessment, including the likelihood of claims and the extent of potential liability as well as the costs of dealing with the issue, should form part of the business case which supports all proposals to address inequalities. They will also need to propose ways of tackling this in a cost‑effective way, subject to affordability constraints and where appropriate the pay policy limits. If it is not possible to make the necessary changes within the pay policy limits, the Finance Pay Policy team will liaise with the relevant sponsor team and advise whether the proposals should be put to the Remuneration Group and potentially Ministers for their consideration.

2.39 All employers will be required to confirm that they have considered their obligations under equalities legislation in developing their pay proposals.

2.40 The Scottish Government is committed to ensuring pay systems in the public sector are fair and non‑discriminatory and has published an Equality Impact Assessment in relation to the 2020-21 Public Sector Pay Policy. Scottish Public Sector Pay Policy 2020-21 - Equality Impact Assessment

2.41 Public bodies are expected to carry out an Equality Impact Assessment of their pay proposals for different groups or roles including considering the impact of reward policies on equality groups. This should also consider the appropriate length and progression journey time for all jobs, in line with equalities legislation.

What is the pay policy position on wellbeing?

2.42 The Scottish Government is committed to promoting wellbeing of all people living in Scotland. Employers are required to actively look at how they can promote wellbeing in their workplace to support a positive and healthy work-life balance. Public bodies will be expected to outline their well-being strategy and identify any changes they propose to introduce during 2020-21.

What does the suspension of non-consolidated performance payments mean?

2.43 The policy position remains that all non-consolidated performance payments (bonuses) remain suspended. This approach allows public bodies to maximise the resources available to them to address fair pay issues and pay restoration. The suspension applies to all non-consolidated performance payments (normally based on performance in the preceding year).

Can a public body submit pay proposals that cover more than one year?

2.44 This is a matter for public bodies, subject to affordability. There is an expectation that public bodies will submit pay proposals which cover one year, given budget allocations are for a single year, although this is not a mandatory requirement of the Pay Policy. The pay policy for 2020-21 applies to public bodies with settlement dates for the year between 1 April 2020 and 31 March 2021 (inclusive). Where a public body wishes to submit pay proposals for more than one year they should contact the Finance Pay Policy team and their sponsor team (where applicable) at the earliest opportunity.

2.45 A settlement covering more than one year may provide certainty for employers and their staff; help to ensure annual pay awards are paid on time and reduce the administrative burden and costs associated with the pay process. It may also provide public bodies with the opportunity to take a phased approach to addressing evidenced workforce or structural pay issues ensuring affordability and sustainability. It may also help to provide for meaningful pay negotiations between employers and staff representatives.

2.46 While it is for the public body to decide how the award may be packaged, taking account of their specific circumstances, the total increase must not exceed the equivalent annual average of the parameters set in the 2020-21 pay policy and take in to account forecast budget allocations.

2.47 If a public body has approval for a multi-year pay settlement, once the award has been implemented then the pay settlement cannot be re-opened during the period of the award. This policy position applies regardless of the pay policy put in place during the years of the multi-year settlement.

What might happen if the Pay Policy is not followed?

2.48 If any pay awards are implemented or daily fees are introduced without approval, or increased beyond that for which approval had been obtained previously, the sponsor Director will be required to explain the matter to the Remuneration Group. This could result in punitive action being taken by the Scottish Government, such as the recovery of any overpayments, the capping of future increases or a governance review of the public body.

What information is needed?

2.49 Public bodies will be issued with the relevant proformas and guidance which set out the information they are required to provide to enable them to seek approval for their proposals.

2.50 Where remuneration proposals are being developed for new public bodies or for public appointments not linked to a public body, sponsor teams should contact Finance Pay Policy team for advice on what information is required.

When should a public body send in its remit proposals?

2.51 Scottish Ministers have highlighted the importance they place in individuals being paid on or close to their recognised settlement date. To help achieve this, all parties taking forward the pay process should endeavour to adhere to the agreed timescales. While paying employees on their recognised settlement date is important, we recognise there is due process to follow in delivering this which can cause unavoidable delay and would ask that public bodies keep the Finance Pay Policy team up-to-date on progress with pay negotiations.