Public sector pay policy 2021 to 2022: technical guide

1. What is new for 2021-22

What is new in this Technical Guide for 2021-22?

1.1 The following highlights what is new and where it can be found within this document:

Feature

Pay policy metrics for 2021-22:

Refer to paragraphs: 1.4 to 1.6

Extension of the flexibilities to include pay coherence:

Refer to paragraphs: 1.4 and 2.46

Inclusion of the carry forward of the flexibilities from 2020-21:

Refer to paragraphs: 1.4, 3.71 to 3.75

Inclusion of introduction of the discretion for employers to work towards a 35 hour working week:

Refer to paragraphs: 1.4 and 2.45

Application of the real Living Wage as an hourly rate:

Refer to paragraphs: 3.25 to 3.26

Update to the Fair Work section:

Refer to paragraphs: 2.35 to 2.42

Update to the wellbeing section:

Refer to paragraphs: 2.43 to 2.45

Inclusion of sections on data protection and data sharing:

Refer to paragraphs: 2.53 to 2.56

Application of the pay policy for employees just above the Lower pay threshold (£25,000):

Refer to paragraphs: 1.6, 3.35 to 3.41

Application of the pay policy for employees just above the Intermediate pay threshold (£40,000):

Refer to paragraphs: 1.6, 3.46 to 3.52

What are the key features of the Public Sector Pay Policy for 2021-22?

1.2 The Public Sector Pay Policy for 2021-22 was announced in the Budget statement on 28 January 2021 with a revision announced on 9 March 2021. It covers pay settlements in 2021-22. The policy sets the parameters for public sector pay increases for the period 2021-22 for both staff pay and senior appointments within a range of public bodies in Scotland and for public appointments not linked to a public body.

1.3 The policy is available on the Scottish Government website at: Scottish Public Sector Pay Policy 2021-22

1.4 The key new features of the pay policy in 2021-22 are:

• Delivering a progressive approach to pay increases by:
• continuing the requirement for employers to pay staff the real Living Wage, now set at £9.50 per hour;
• providing a guaranteed cash underpin of £800^[1] for those earning a full-time equivalent salary of £25,000 or less;
• providing a guaranteed basic pay increase of 2 per cent for those with a full-time equivalent salary of more than £25,000 and up to £40,000;
• providing a guaranteed basic pay increase of 1 per cent for those with a full-time equivalent salary of more than £40,000 and up to £80,000; and
• limiting the basic award increase for those earning a full-time equivalent salary of £80,000 or more to £800.
• Providing the flexibility for employers to use up to 0.5 per cent of 2021-22 baseline salaries to address inequalities. Employers can also carry forward any unused portion of their 0.5 per cent flexibilities from the 2020-21 pay round to provide a cumulative total of up to 1 per cent. Public bodies must demonstrate that all such proposals can be wholly funded by savings at the point of implementation and in future if the proposals result to changes to existing pay and grading structures. The inequalities can include:
• affordable and sustainable changes to existing pay and grading structures where there is clear evidence of equality or recruitment and retention issues; and
• the introduction of pay coherence as an evidenced inequality (see paragraph 2.46.)
• Introducing discretion for individual employers to consider working towards standardising to a 35 hour working week if and when it is practical to do so (see paragraph 2.45).

1.5 The 2021-22 pay policy also continues:

• Retaining discretion for individual employers to reach their own decisions about pay progression (limited to a maximum of 1.5 per cent for Chief Executives) outwith the pay metrics for basic award increases.
• To encourage the promotion of wellbeing in the workplace and a healthy work-life balance.
• Maintaining the suspension of non-consolidated performance related pay (bonuses).
• The expectation to deliver a 10 per cent reduction in the remuneration packages for all new Chief Executive appointments.
• The commitment to No Compulsory Redundancy.

What are the pay thresholds for 2021-22?

1.6 The policy continues to target lower earners while restraining increases for higher earners to address pay erosion for those facing the greatest detriment and to continue to help work towards reducing overall income inequality. The thresholds for 2021-22 are set out in the following table and apply to all employees, senior appointments and those who are paid a daily fee:

Threshold: Lower pay threshold (£25,000):

Coverage: Below the Lower pay threshold: All employees with a full-time equivalent salary of £25,000 or less prior to applying the 2021-22 pay award.

Threshold: Intermediate pay threshold (£40,000):

Coverage: Between the Lower and Intermediate pay thresholds: All employees with a full-time equivalent salary of more than £25,000 up to £40,000 prior to applying the 2021-22 pay award. For public and Ministerial appointments who are paid a daily fee this equates to a daily rate of £154 or less per day before any uplift. Between the Intermediate and Upper pay thresholds: All employees with a full-time equivalent salary of more than £40,000 up to £80,000 prior to applying the 2021-22 pay award. For public and Ministerial appointments who are paid a daily fee this equates to a daily rate of more than £154 or up to £307 per day before any uplift.

Threshold: Upper pay threshold (£80,000):

Coverage: Above the Upper pay threshold: All senior appointments and employees with a full-time equivalent salary of £80,000 or more prior to applying the 2021-22 pay award. For public and Ministerial appointments who are paid a daily fee this equates to a daily rate of £307 or more per day before any uplift.

Where will I find the key policy information in this Technical Guide?

1.7 The following sign-posts you to the relevant sections in this document on the application of the key features of the pay policy:

Feature	Staff	Chief Executives[2]	Chairs, Board Members and Public Appointments
Application of the real Living Wage	3.24 to 3.28	not applicable	not applicable
Application of the guaranteed cash underpin of £800	3.29 to 3.30	not applicable	not applicable
Application of the guaranteed basic pay increase of 2 per cent	3.31 to 3.41	not applicable	6.10
Application of the guaranteed basic pay increase of 1 per cent	3.42 to 3.52	4.3	6.10
Application of the limit on basic pay increases for high earners	3.53 to 3.56	4.4	6.10
Paying progression	3.61 to 3.67	4.5 to 4.6 5.3 to 5.4[2]	not applicable
The flexibility to use paybill savings to address pay inequalities	3.71 to 3.75	not applicable	not applicable
Standardising to a 35 hour working week	2.45	2.45	not applicable