Public sector pay policy 2022 to 2023: technical guide

2. Introduction

Who does the Public Sector 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:

Public body	Staff pay remits	Senior Staff Appointments	Chairs and Board Members and Public Appointments
The Scottish Government and its associated departments	section 3	not applicable	section 6
Agencies	section 3	not applicable	section 6
Non-Departmental Public Bodies (NDPBs)	section 3	section 4	section 6
Public Corporations	section 3	section 4	section 6
NHS Scotland Executive and Senior Management posts	not applicable	sections 4 and 5	section 6
Ministerial Appointments not covered by any of the organisations above.	not applicable	not applicable	section 6

A full list of public bodies is available at: National public bodies: directory - gov.scot (www.gov.scot)

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, Appeal Boards, Advisory Committees and Inquiries.
• Appointments to lead Reviews, Inquiries etc.

2.3 In addition, the policy acts as a reference point for all major public sector workforce groups across Scotland including NHS Scotland^[3], 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 and other senior staff?

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. The pay policy applies to all other senior staff below Chief Executive in the relevant public bodies.

Role and responsibilities of the public body

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 on which it is due (which for the majority of public bodies is 1 April). Any public body unable to do this should discuss with the Public Sector Pay Policy team at the earliest opportunity.

2.7 Public bodies are expected to engage in early scoping discussions with their staff and staff representatives in preparing their staff pay proposals (this includes paying progression and using the paybill flexibilities) where appropriate, as part of a collaborative and constructive approach to the pay process.

2.8 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 3.96 to 3.105).

2.9 Public bodies are encouraged to discuss their draft proposals with the Public Sector Pay Policy team before they formally submit their remit proposals. Where appropriate the relevant Sponsor team should be included. This will help reduce the time required for getting approval to the negotiating remit.

Role and responsibilities of the Chief Executive

2.10 The Chief Executive, as Accountable Officer^[4], 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.

Role and responsibilities of the Chair/Board

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.

Role and responsibilities of the trade unions

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.

Role and responsibilities of the Public Sector Pay Policy team

2.15 The role of the Public Sector 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 Public Sector 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.

Role and responsibilities of the Remuneration Group

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: Remuneration Group

Role and responsibilities of the Sponsor team

2.20 The Sponsor teams 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 Public Sector 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 Public Sector 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.

Role and responsibilities of Scottish Government Senior Officials

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 Public Sector 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.

Role and responsibilities of the Scottish Government Finance Business Partner

2.25 The Finance Business Partner^[5] 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.

Role and responsibilities of Scottish Ministers

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 fulltime 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 (see paragraphs 3.61 to 3.64 for more detail).

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. Where public bodies are seeking to re-structure, particularly as a result of the pandemic, full consideration must be given to redeployment and retraining.

2.31 The policy position remains that public bodies should work with their staff representatives to negotiate extensions to their No Compulsory Redundancy agreements where it is practical to do so.

2.32 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 comply with this commitment.

2.33 The No Compulsory Redundancy agreement extends to all directly employed staff. 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.

2.34 The No Compulsory Redundancy commitment may mean that employers seeking to restructure, in discussion with trade unions, may wish to consider voluntary exit schemes following consideration of re-deployment and re-training. Any public bodies seeking to do this must follow the relevant guidance in the Scottish Public Finance Manual. Further advice can be obtained by contacting severance-policy-for-scotland@gov.scot

What is the policy position on fair pay and pay inequalities?

2.35 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^[6]. This recognition is embedded in Scotland's Labour Market Strategy^[7].

2.36 The Scottish Government's Fair Work First position will see:

• appropriate channels for effective voice, such as trade union recognition;
• investment in workforce development;
• no use of zero hours contracts;
• action to tackle the gender pay gap and create a more diverse and inclusive workplace; and
• payment of the real Living Wage.

2.37 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. The agreement between Scottish Ministers and the recognised civil service unions is available at: Scottish Government Fair Work Agreement.

2.38 It is important public bodies meet the legal duty placed upon them in Equality Act 2010 and 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.

2.39 Each public body is required to make sure it has due regard to the legal requirements of the Equality Act 2010 (section 149) when considering its pay systems. To help public bodies better meet the requirements of the public sector equality duty the Scottish Government has introduced regulations in the Equality Act 2010 (Specific Duties) (Scotland) Regulations 2012 which places a number of requirements on public authorities: report on the work being done to mainstream equalities; set outcomes; publish and use employee information and to assess the impact of their policies and practices on people from with one or more of the protected characteristics listed in the Equality Act 2010. 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.

2.40 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 Public Sector 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.

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

2.42 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 2022-23 Public Sector Pay Policy, which is available at: Scottish Public Sector Pay Policy - Equality Impact Assessment.

2.43 Public bodies are expected to carry out their own Equality Impact Assessment of their pay proposals as they develop their own proposals to ensure that there are no unintended consequences of the proposed pay award. They should consider the impact on different groups of staff or roles including considering the impact of reward policies on those with a protected characteristic as well as the potential impact on lower paid employees and working families. 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?

2.44 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 wellbeing strategy and identify any changes they propose to introduce during 2022-23.

2.45 The Scottish Government has made it clear that, where it is practical to do so, homeworking will be an effective tool as part of our continued response to the health crisis. Many employers have introduced more flexible working practices as part of their response to supporting staff. Examples of such practices have included reviewing HR policies on caring responsibilities, home-schooling, special leave and sick leave; and extending core working hours, (where it is agreed between employee and employer) to enable staff to work at times that are more suited to their home environment or domestic situation; ensuring that employer obligations in relation to duty of care and health and safety are met; and some may have provided regular articles on looking after the mental, emotional and physical wellbeing of the individual.

2.46 The 2022-23 pay policy maintains the discretion for employers to work towards standardising to a 35 hour working week if and when it is practical to do so. This applies to all public bodies with an existing working week of more than 35 hours. Consideration of reduction in working hours should form part of normal pay negotiations as part of a progressive and agreed package of measures including terms and conditions that support new ways of working. Where an employer is looking to work towards a 35 hour working week they will be required to seek approval from Scottish Government. For further detail see paragraphs 3.82 to 3.87. The business case should include a cost/benefit analysis of any reduction in hours to demonstrate that it can be delivered within existing resources and there will be no detrimental impact on productivity maintaining service delivery.

2.47 The shift to a hybrid working model in many organisations in response to the pandemic has highlighted the potential for an 'always on' culture. Ministers have extended the wellbeing agenda to introduce the 'Right to Disconnect'. This aims to provide a balance between the opportunities and flexibility offered by technology and the need for staff to feel able to switch off from work. This pay policy introduces an expectation that employers will have meaningful discussions with their trade unions about a healthy work-life balance and the introduction of a Right to Disconnect. It is expected that employer and trade union discussions will include consideration of best practice around wellbeing, working hours and the use of technology.

What is meant by pay coherence?

2.48 In the context of the pay policy, pay coherence is defined as the move towards greater consistency in rates of pay for roles with the same job weighting in public bodies covered by the Public Sector Pay Policy. Pay coherence can also refer to greater standardisation of terms and conditions. The policy expectation for public bodies intending to address pay coherence issues is that Scottish Government will be the main benchmark both for salary levels and for terms and conditions.

What is meant by Right to Disconnect?

2.49 A Right to Disconnect policy gives employees the permission to disconnect from work outside of normal working hours and refrain from engaging in work-related electronic communications, such as emails or other messages, during non-work hours.

2.50 Right to Disconnect is fundamentally a matter for discussion between employers and their trade unions/staff representatives although the pay policy would advocate it as good practice for employers to develop their own policies on this. The approach may evolve during 2022-23.

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

2.51 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?

2.52 The 2022-23 pay policy introduces the option for employers, in discussion with their staff representatives, to either apply the single year 2022-23 pay policy or take a multi-year approach to pay enabling a more strategic approach to support achieving public service reform.

2.53 It is unlikely that pay proposals for more than one year that do not include an element of reform will be approved. Where a public body wishes to consider this, they should contact the Public Sector Pay Policy team and their Sponsor team (where applicable) at the earliest opportunity.

What might happen if the Public Sector Pay Policy is not followed?

2.54 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.

Data Protection

2.55 All personal data collected as part of the pay policy process is handled in accordance with the requirements of data protection legislation and in particular the principles of the General Data Protection Regulation (GDPR) and the Data Protection Act 2018 (DPA 2018). Any personal data collected as part of the staff pay remit process is solely for the purposes of evaluating the costs of the current pay policy, modelling the impact future pay policy and helping shape the Scottish Government's strategic views about the public sector workforce. Any information published by the Public Sector Pay Policy team will ensure individuals cannot be identified.

2.56 Individual public bodies are responsible for ensuring they have due regard to their obligations under General Data Protection Regulation (GDPR) when providing information to the Scottish Government as part of the pay policy process. Public bodies are not asked to provide names of individual staff members.

2.57 To mitigate the risk of any inadvertent data protection breaches, public bodies are requested to identify any information that carries a risk or potential risk of identifying an individual staff member.

Data Sharing Agreements - lawful basis for processing

2.58 In the context of lawful basis for processing in Data Sharing Agreements, the pay policy has a lawful basis. Most statutory bodies give control of pay to the Scottish Government either in their constitution or a memorandum of understanding. Generally a pay policy is necessary to run the Scottish Administration and legal cover for running that body is in section 65 of the Scotland Act which allows for the financing of the Scottish Administration provided there is budgetary cover in annual budget acts.

When should a public body send in its remit proposals?

2.59 Scottish Ministers have highlighted the importance they place on 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 Public Sector Pay Policy team up-to-date on progress with pay negotiations.

What information is needed?

2.60 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. Public bodies are required to provide information on the costs of applying their maximum negotiating remit, their pay and grading structure and staffing profiles as well as detail of their non-salary benefits.

2.61 Where remuneration proposals are being developed for new public bodies or for public appointments not linked to a public body, Sponsor teams should contact the Public Sector Pay Policy team for advice on what information is required.