Public sector pay policy for senior appointments 2019-2020: technical guide

5. Chairs and Members: Framework

Who is it for?

5.1 Sections 5 and 6 of this Technical Guide apply to all public appointments to NDPBs and Public Corporations; Non‑Executive Directors of the Scottish Government and its Agencies and Associated Departments; Chairs and Board Members of NHS Bodies; appointments to Tribunals, Appeals Boards, Advisory Committees and Inquiries, Reviews and short-life and ad hoc working groups, etc. under the auspices of the Scottish Ministers (in respect of any proposed changes to: daily fee rates, reviews and any pension arrangements, etc.). Terminology may vary: the Chair may be known as a Convener, President or such like; and Members may sometimes be named with reference to their qualifications (such as Legal or Medical Members, etc.).

5.2 This section applies equally to the introduction of remuneration for Chairs and Members of Scottish public bodies or where an annual uplift, review or change to that remuneration is proposed.

5.3 For background to the policy for Chairs and Members and information about how to determine daily fees, see Annex B

What is the Daily Fee Framework?

5.4 To ensure consistency and comparability across public bodies, a number of remuneration tiers (formerly known as bands) have been developed within the Daily Fee Framework. Appropriate rates of remuneration should be determined within this Framework. Each public body is allocated to one of the bands by reference to the significance of the body - based on its size (staff numbers) and the resources managed (budget / grant), as well as consideration of its likely public profile.

5.5 In general, Tier 1 bodies include a small number of the most significant Scottish NDPBs and Public Corporations; Tier 2 includes the majority of Executive NDPBs; Tier 3 includes the smaller NDPBs, advisory bodies and other short-life and ad hoc groups, etc.

5.6 The 'Tribunal' tier within the Chair and Members Daily Fee Framework covers the daily fees for Scottish Tribunal NDPBs and other tribunal‑type bodies (where approval of the Remuneration Group has been obtained to allocate to this tier). The expectation is that Tribunal members would be allocated in the following way:

• Chair of the public body – Tribunal Chair tier
• Specialist Members (for example: those required to have professional qualifications or specialist knowledge, such as Legal and Medical Members) – Tribunal Member tier
• Non-Executive Board Members of public body and Layperson Members – Tier 1 Member tier

5.7 A member of a Tribunal who acts as a convener of a tribunal hearing may receive a higher daily fee than other members so long as that daily fee remains within the appropriate Member band in the Daily Fee Framework.

5.8 Tribunal tiers in this section currently apply to the devolved tribunals. Those tribunals which are to be transferred in to the 'Scottish Tribunals' - as created by the Tribunals (Scotland) Act 2014 - will undergo an independent role evaluation. As such, the Pay Policy specifically for those tribunals may be subject to change.

5.9 The Chairs and Members Daily Fee Framework for 2019‑20 is as follows:

Chairs & Members Daily Fee Framework 2019-20 (gross daily fees)

Chairs
Tier	Daily Fee
	Minimum	Maximum	Ceiling
Tribunal	£329	£550	£700
Tier 1	£327	£487	£544
Tier 2	£211	£361	£430
Tier 3	£145	£227	£312

Members
Tier	Daily Fee
	Minimum	Maximum	Ceiling
Tribunal (specialist skills only)	£254	£379	£499
Tier 1	£233	£349	£442
Tier 2	£177	£261	£331
Tier 3	£95	£184	£264

5.10 Each tier consists of a minimum, maximum and a ceiling. There are different rates for Chairs and Members reflecting the different levels of responsibility. The pay policy expectation is that a daily fee should lie within the minimum and maximum of the relevant tier in the Daily Fee Framework. The daily fee should only exceed the maximum if it is demonstrated that this is required to recruit or retain Chairs and/or Members with the necessary skills, knowledge, experience or calibre for the role they are to undertake. Daily fees are limited to and must not exceed the ceiling of the relevant tier.

5.11 The daily fee rates in the Framework are considered gross daily fees in that they must include any contribution made by the public body towards any pension (if offered). A daily fee must not be increased to cover the Chair or Member's own contributions to any pension (see Annex B).

5.12 It is usual practice for the daily fee for a Chair to be set at a higher level than the daily fee for Members, in recognition of the additional responsibilities placed upon Chairs. There are no rules as to how high the level of differential between the Chair and Members' daily fees should be. Where there is a Deputy Chair, their daily fee would usually be somewhere between that for the Chair and Members. The main exception to this is where the Deputy Chair was required to have specialist skills, then they would fall within the relevant Members tier.

5.13 When a new public body is being established, the Sponsor Team must discuss with the Finance Pay Policy team which tier in the Daily Fee Framework might be appropriate for the body. The Finance Pay Policy team should also be consulted if a case is being made to move a public body to a different tier in the Daily Fee Framework.

5.14 Advice on the appropriate tier of a public body or which tier applies to the Chair, Deputy Chair or Members should be sought from the Finance Pay Policy team.

How are Chairs and Members to be paid?

5.15 Daily fee payments made to Chairs and Members must comply with the Tax Planning and Tax Avoidance section of the Scottish Public Finance Manual:
www.gov.scot/Topics/Government/Finance/spfm/taxavoidance

5.16 In line with the Scottish Public Finance Manual, all appointees must be paid through a payroll system with tax deducted at source. Where there is no payroll system in place, then the Scottish Government payroll system may be available for use. For further information, please email Scottish Government HR (Payroll): HR.Help@gov.scot. As daily fees are not usually pensionable, public bodies and Sponsor Teams are reminded the payroll system used should ensure no employer's pension contributions are made.

5.17 Where the Chair or Member is employed elsewhere and their main employer allows such duties within work time, then it may be appropriate to reimburse the employer for the time commitment, rather than the individual receiving a daily fee. In such circumstances the daily fee may be paid direct to the employer. When such an arrangement is being considered and the Chair or Member is a partner of, or shareholder in the 'employer' or is 'employed' through a private service company, then you must contact the Finance Pay Policy team for advice before any payment is made.

What about expenses?

5.18 Expenses may be paid to Chairs and Members. The basic principle is no Chair or Member should be out of pocket as a result of expenses arising from their appointment, provided such costs are considered reasonable.

5.19 Chairs and Members may be reimbursed for the reasonable costs of travel and, when appropriate, accommodation associated with their public duties. To ensure consistency across public bodies, Chairs' and Members' travel expenses should be paid at standard Scottish Government travel rates and have regard to the Scottish Government's Travel Management policy on air and rail travel.

What about other tax matters?

5.20 Responsibility for ensuring compliance with all relevant HM Revenue and Customs requirements concerning any payments made to Chairs and Members lies with the public body itself. Individual Chairs and Members must also satisfy themselves as to their own tax liabilities resulting from their appointment.

5.21 In certain circumstances, where an individual has been making sufficient National Insurance contributions to be considered to be an "employed earner" and meets other applicable qualifying criteria, they may be entitled to statutory family-related pay (for example, Statutory Maternity Pay).

What to do when making a public appointment where the individual is already a senior employee of another public body?

5.22 Issues to be considered by Sponsor Teams prior to the appointment of a Chair or Member where the individual is already a Chief Executive (or other senior employee) of another public body covered by the Scottish Government Public Sector Pay Policy includes conflict of interest; time commitment; and remuneration. Such matters, including (where relevant) the need to liaise with the Sponsor Team of the public body to which the individual might be appointed, are outlined in more detail in the Public Bodies Information Update 109 which is available as a downloadable document on the Scottish Government website at:
www.gov.scot/publications/public-bodies-information-update-109-public-sector-pay-policy/

Chairs And Members: Approval

What must you do to seek approval of proposals?

6.1 The relevant Scottish Government approval prior to implementing any proposals to:

• make any annual uplift
• change to the tier of a body
• introduce, review or change the remuneration package, for example:
  • the daily fee
  • other matters, such as pension arrangements

6.2 Where no change is proposed, confirmation of details of the current daily fees is all that is required to be submitted to the Finance Pay Policy team.

6.3 If proposals are simply the annual upliftin line with Pay Policy, then a Chairs and Members template should be either completed by the Sponsor Team and sent to the Finance Pay Policy team; or, completed by the public body and sent to the Finance Pay Policy team, copied to the Sponsor Team The approval approach being taken under the Pay Policy for Staff Pay Remits by the public body (fast-tracked, streamlined, full remit) bears no relation to how the daily fee proposals for the Chair and Members are approved and these should follow the steps outlined in this guide.

6.4 For proposals that go beyond that, further information will be required. For example, if proposals entail a change in remuneration or tier (for example, following a review) or the introduction of a benefit (for example: pension or car) then a supporting business case will need to be prepared. For appointments to a new body, details of the proposals and supporting business case would be prepared by the Sponsor Team.

Who is going to approve your remuneration proposals?

6.5 The Finance Pay Policy team will assess all daily fee proposals and confirm the relevant approval route. The approval route will depend on the circumstances of your proposals as set out below and in Table 2.

6.6 Where the proposed annual award is wholly in line with Pay Policy, provided affordability has been confirmed by the Sponsor Team, the proposals will be 'signed off' by the Finance Pay Policy team. The Sponsor Team will then notify the public body / the public appointee(s). Any increase should not be implemented until this notification has been received.

6.7 Proposals for the introduction of or changes to tiers and daily fees for existing or new bodies, where these are wholly in line with Pay Policy, may be approved by senior officials. For those which are to be considered for approval by senior officials, once the Sponsor Team has confirmed affordability, the Sponsor Team should send the template and short note to senior officials (the Sponsor Director or Deputy Director and Director of Budget and Sustainability). For their part in the approval, the Sponsor Director is required to confirm they are content with and support the proposals. The Director for Budget and Sustainability will then confirm formal approval. Either Director has the option of referring the proposals to the Remuneration Group. Once approved, the Sponsor Team will notify the public body / the public appointee(s). Any increases or changes should not be implemented until this notification has been received. The Finance Pay Policy team will also notify the Remuneration Group at the next meeting.

6.8 More significant changes, such as the introduction of a benefit (for example: pension or car) will require consideration by the Remuneration Group. The Sponsor Director is responsible for putting forward the submission for any proposals which are required to be considered by the Remuneration Group. This submission must include details of the proposals, supporting business case and a confirmation of affordability. The Finance Pay Policy team should also be asked to contribute advice to this submission. The Remuneration Group will either approve the proposals or they may refer the approval to Ministers where they consider there is likely to be significant Ministerial interest. Once approved, the Sponsor Team will notify the public body / the public appointee(s). Any increases or changes should not be implemented until this notification has been received.

If proposals are outwith the Pay Policy, they cannot be approved, even by the Remuneration Group. The public body (or sponsor team) must review any such proposals, following advice from the Finance Pay Policy team.

Table 2: Chair and Members – approval route

Current or new Chair or Member	Daily fee proposal	Approval (in all cases, affordability must be confirmed by the Sponsor Team)
Existing body	No Change / Annual increase (in line with Pay Policy)	Sponsor Team once the Finance Pay Policy team have 'signed-off' the proposals
	Current and previous annual increases (in line with Pay Policy)	Sponsor Team once the Finance Pay Policy team have 'signed-off' the proposals
	Change to any other aspect of current remuneration package (e.g. introduction of car, pension, etc.)	Remuneration Group
Existing body - review of Tier or daily fee rates	Setting Tier and daily fees – in line with Pay Policy expectations	Senior Officials (who may refer to the Remuneration Group) or Remuneration Group
	Setting Tier and daily fees – goes beyond Pay Policy expectations (i.e. above maximum in Framework / profile used to justify a higher tier)	Remuneration Group
New body	Setting Tier and daily fees – in line with Pay Policy expectations	Senior Officials (who may refer to the Remuneration Group)
	Setting Tier and daily fees – goes beyond Pay Policy expectations (i.e. above maximum in Framework / profile used to justify a higher tier)	Remuneration Group

How long should the process take?

6.9 Allow for up to five working days for consideration by the Finance Pay Policy team. If the issue is complex and is likely to take longer, then the Finance Pay Policy team will discuss this with the sponsor body and Sponsor Team. Allow for up to a week for proposals to be considered by relevant senior officials.

6.10 If the proposals are referred to the Remuneration Group, then these are normally considered at the next available Remuneration Group meeting - the dates of which are set out on the Scottish Government Public Sector Pay webpages:
www.gov.scot/Topics/Government/public-sector-pay/RemunerationGroup

6.11 Under exceptional circumstances, some items may be able to be taken in correspondence. Referral to Ministers will require further time.

What might happen if the Pay Policy is not followed?

6.12 Where daily fees have been 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. Such actions 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.