Public sector pay policy 2021 to 2022: technical guide

8. Glossary of terms used in the Public Sector Pay Policy documents

Assimilation point - The position of a salary on a proposed/revised pay range which reflects the number of years' experience an individual has at the recognised weight for the post.

Baseline paybill - The cost of employing staff for the full 12 months of the pay remit year before implementing the pay award. It should include mandatory increases in employer's pension or National Insurance contributions (NIC) but exclude the costs of increases in pay and benefits for which approval is being sought. The baseline paybill may also include other paybill increases that are not directly a result of the proposed pay award such as the changes to paternity pay and leave entitlement (or holiday pay) etc.

Baseline salaries - These are the base salaries before implementing the pay award. As such they exclude allowances, overtime, employer's pension or National Insurance contributions (NIC).

Base pay or basic pay - This is an individual's net annual salary. It excludes on-costs (pension contributions and payroll tax), the monetary value of any non‑consolidated performance payment (bonus), and other non-salary rewards, etc.

Basic award - This is normally, the inflation or cost of living element of the pay award. It is one element of a standard remit. The basic award has different meanings in different pay systems. For public bodies with a step or spine based system it refers to the revalorisation of steps/spines. For those without step or spine based mechanisms for pay progression the basic award will normally be defined as the consolidated increase to the pay range minima, maxima, milestones and/or individual employee's base salaries within the pay range.

Bonus - See non‑consolidated performance payment.

Business case - A document which contains additional information and evidence to support the proposals that are being made.

Buying-out - The offering of a one‑off non-consolidated payment in return for agreeing to the removal of a particular pay or non-pay reward.

Ceiling - The absolute limit for salary / pay range maxima in the Scottish Chief Executive Pay Framework or for a daily fee in the Daily Fee Framework.

Consolidated pay - Pay which is taken into account for pension and tax purposes.

Consolidated performance payments - Payments that reward exceptional or outstanding performance and are consolidated into individual employees' basic pay.

Current salary - This is an individual's salary prior to any uplift including progression (where eligible).

Daily fee - The amount a Chair or Member is remunerated per day. This can be expressed as an annual sum, but changes to the number of days worked should not result in a change to the daily fee. The fee may be paid in a half‑day or hourly amounts.

Daily Fee Framework - The Framework within which the daily fee of a Chair or Member of a Scottish public body is expected to sit. It contains minima, maxima and ceilings for the four tiers of public bodies.

Financial proforma - Excel spreadsheets that set out: what was actually paid as a result of the last pay award; the costs of the increase in pay and benefits proposed and details of the pay and reward structure as well as details of current and projected staffing.

Gross daily fee - The daily fee for a Chair or Member inclusive of any pension contribution made by the public body.

Hourly rate - The hourly rate should be calculated on the same basis as the National Minimum Wage as defined by HM Revenue and Customs.

Host public body - This is the public body which another (usually smaller) public body aligns or analogues to for its annual pay award.

Increase for staff in post (ISP) - This is the cost of the proposed increase in pay and benefits to an average member of staff as a percentage of the baseline paybill.

Increase in paybill per head - The result of comparing the paybill per head for the current remit with the paybill per head for the last remit. It is expressed as a percentage of the paybill per head for the last remit.

Intermediate pay threshold - This is set at £40,000 for 2021-22.

Journey time - The time (in years) taken by an individual on a pay range to move (subject to satisfactory performance) from the minimum to the maximum of that pay range.

Lower pay threshold - This is set at £25,000 for 2021-22.

Lowest quartile - This is the value of the middle number between the smallest number and the median of the pay range ie the lowest quarter if the pay range and. It is also known as the 25th percentile.

Market median - The value of the midpoint of comparator salaries in the relevant market for similarly weighted posts.

Market rate - The market median in the relevant market for similarly weighted posts.

Maximum / maxima - The highest point on a pay range, sometimes known as the rate for the job this includes staff who are on spot rates of pay. Staff are not normally paid above the maximum of their pay range. Where a member of staff is paid above the maximum and eligible for a pay increase, the award should be non‑consolidated. There should also be arrangements to move such staff onto their pay range maximum within a defined time scale. Such staff are often referred to as "red-circled".

Median - The value of midpoint in a series.

Minimum / minima - The lowest point on a pay range. Staff are not normally paid below the minimum of their pay range. Where a member of staff is paid below their pay range minimum there should be arrangements to move them onto their pay range minimum within a defined time scale. Such staff are often referred to as "green‑circled".

Net Paybill Increase - This is the percentage increase to the baseline paybill as a result of the pay proposals. The New Money is the monetary value of the proposed increase in pay and benefits added to the existing paybill.

Non-consolidated performance payments - These are normally payments such as bonuses or performance payments which are awarded in addition to the annual pay award. They are awarded to staff, at an individual, team or organisational level, and would normally be based on performance in the preceding year. Such payments are re-earnable and as they are not consolidated into basic pay they do not have associated future costs. Non-consolidated payments would be taxable but not pensionable. The current pay policy position is that all non-consolidated performance payments are suspended.

Non-salary Rewards - Remuneration other than pay, pension or tax. It covers for example, car, health insurance, etc.

Notional cost - These are costs which have a benefit to the individual but with no actual cost to the employer. This could for example include changes to the working week, annual leave or public holiday entitlement.

Pay coherence - This is the move towards greater consistency in rates of pay for roles with the same job weighting as well as standardisation of terms and conditions in public bodies covered by the pay policy. The policy expectation is for the Scottish Government to be the main benchmark for salary levels and for terms and conditions.

Pay ranges - The pay scale for each grade or role within a public body, with a minimum and a maximum or target rate and through which staff progress as they develop in knowledge, skills, experience and performance. It is not normal for staff to be paid at a level either below the pay range minimum or above their relevant pay range maximum.

Pay remit - Pay proposals made by public bodies that seek approval for increases in pay and benefits for staff.

Paybill - The full annual cost of employing the staff subject to the pay remit, including employer's pension and National Insurance contributions (NIC).

Paybill per head (PPH) - This is calculated by dividing the total paybill by the number of staff (full time equivalent).

Paybill savings - Savings in the Paybill that can be used to part fund a pay award.

• Permanent savings such as savings resulting from the removal of outdated allowances; reductions in overtime costs and reductions in staffing. These will all have an impact on future baseline paybills.
• In-year non-recurring savings such as recyclable savings or deferring filling vacant posts which result in a saving only in the year in which they are implemented.

Progression - The movement an individual makes from the minimum of a pay scale to the maximum or target rate. For example if a pay range had 6 spine points an individual would expect to progress from minima to target rate in 5 years. The policy expects the movement to be dependent on performance or competency.

Progression journey times - The number of years it takes to move from the minimum of a pay range to the maximum or target rate.

Public sector labour market - The labour market data provided by the Finance Pay Policy team. This covers the public bodies in Scotland subject to Scottish Government policy on public sector pay.

Recyclable savings - Savings which are a consequence of a more highly paid member of staff being replaced by a lower paid individual (see Paybill Savings).

Relevant labour market - The Scottish public sector labour market or a more appropriate specific or specialist labour market for specific workforce groups, specialisms or locations.

Salary Sacrifice Scheme - HM Revenue and Customs define a salary sacrifice as "when an employee gives up the right to receive part of the cash pay due under his or her contract of employment. Usually the sacrifice is made in return for the employer's agreement to provide the employee with some form of non-cash benefit. The 'sacrifice' is achieved by varying the employee's terms and conditions of employment relating to pay".

Scottish Chief Executives Pay Band - The category (1, 1A, 2 or 3) within the Scottish Chief Executive Pay Framework to which a Chief Executives is allocated following a job evaluation exercise. It reflects equivalent Senior Civil Service bands. There is not necessarily any relationship between the pay band of a Chief Executive and the tier of the body to which they are appointed.

Scottish Chief Executive Pay Framework - The framework of minima, maxima and ceiling within which the pay of a Chief Executive of a Scottish public body sits.

Real Living Wage (rLW) - This is the minimum hourly rate an individual must earn, before tax, to afford a basic but acceptable standard of living. The rate is £9.50 per hour for 2021-22.

Settlement date - The date on which any annual pay award salary would normally be implemented

Spot rates - These are staff who are on a single pay point which is set at the rate for job. Staff who are on spot rates of pay should be treated in the same way as staff who are on their pay range maximum.

Submission - The paper to senior officials, the Remuneration Group or Ministers which seeks approval for the proposed increases in pay and benefits.

Target rate - The point in a pay system that reflects competence in a role and/or the market rate for the role, often the maxima of the pay range.

Tier - The category (1, 2, 3 or Tribunal band) within the Daily Fee Framework to which a public body is allocated for the purposes of assessing daily fees. There is not necessarily any relationship between the pay band of a Chief Executive and the tier of the body to which they are appointed.

Total increase for staff in post (TISP) - This is the full cost of the proposed increase in pay and benefits to an average member of staff, regardless of whether or not they add costs to the paybill, as a percentage of the Baseline Paybill.

Turnover - The movement of staff out of and in to the organisation in a year.

Upper pay threshold - This is set at £80,000 for 2021-22.