Public sector pay: Chief Executive framework review

Punitive Action

54. The Public Sector Pay Policy Technical Guide states that if any payments are made without approval, this could result in punitive action being taken, such as the recovery of any overpayments, the capping of future increases or a governance review of the public body. Retrospective recovery of salary overpayments would be difficult if there had been updates to employment contracts.

55. The UK guidance states that any breach of the control process may result in a deduction from the departmental budget or an increase in spending controls, with financial sanctions at the discretion of the Chief Secretary to the Treasury (CST). Sanctions are set at a maximum of five times the remuneration package of the individual(s) in question and that departments may have their annual reports and accounts qualified by the National Audit Office. The UK guidance is also explicit that ignorance of the rules will not constitute a mitigating factor in the event of a breach.

56. The application of financial sanctions would prove to be circular in Scotland. Removing money from public bodies, or portfolios, due to unapproved increases to a CE would ultimately affect staff and services, either through reduced budget to fund pay awards, or reduction in staff numbers due to reduction of budget.

57. The prospect of facing a governance review and the potential to be brought in front of the Remuneration Group or a parliamentary committee to explain unapproved pay decisions has been effective in encouraging public bodies to follow pay policy and approval routes.

Recommendation 7: Punitive Action: The technical guide section on punitive action should be updated to provide more detail and greater clarity on the measures that could be put in place following deviation from the policy.