Public Sector Pay Policy for Staff Pay Remits 2009-10

ANNEX E

PUBLIC SECTOR PAY POLICY 2009-10: EXECUTIVE SUMMARY

1. The policy for 2009-10 applies to public bodies with settlement dates between May 2008 and April 2009 (inclusive).

Strategic Aims

2. Government policy on public sector pay has three strategic aims:

a) To make sure that public sector pay settlements are affordable and sustainable and, through the targeting of resources, that value for money is secured;

b) To provide flexibility within an overarching policy for public bodies to determine the pay and reward systems that are right for their business needs; and

c) To work towards making sure that pay is fair and non-discriminatory.

Key Pay Policy Priorities

3. The current tight financial settlement for Scotland means that public bodies must deliver affordable and sustainable pay settlements. Public Bodies should target resources at:

a) addressing inequalities within pay and reward systems and structures to work towards ensuring that they become and remain compliant with all equality requirements;

b) reducing the width of pay ranges, where possible, to work towards shorter progression journeys for staff and sustainable progression costs for public bodies;

c) addressing recruitment, retention or motivation issues that directly impact on a Public Body's ability to deliver outcomes; and

d) addressing low pay.

Pay Metrics

4. In 2009-10 the key metrics are:

The Basic Award percentage

5. An absolute Basic Award limit of 1.50% will apply for 2009-10. If you are planning a multi-year pay deal, the Basic Award must be no more than 1.50% in each year. The Basic Award must be delivered within the standard remit Increase for Staff in Post limit of 3.00% in any year.

The Increase for Staff in Post percentage

6. An average standard remit Increase for Staff in Post limit of 3.00% will apply to the Standard Remit Elements of all pay proposals:

a) The Basic Award;

b) progression or consolidated performance payments;

c) non-consolidated payments (over and above the non-consolidated pot that is included in the baseline paybill); and

d) increases in the costs of overtime, allowances, employers pension contributions and National Insurance that result from the increases in pay and benefits that you propose.

7. Public bodies will, however, continue to include the costs of all increases in pay and benefits that they propose to make in the pay remit proformas, along with the increases to allowances, overtime rates, employers pension contributions and National Insurance that result. This will be the Total Increase for Staff in Post.

8. The one-off costs of harmonising terms and conditions of employment of different groups of staff as a direct result of the simplification of the public sector in Scotland will be noted in the proforma but will not count against the policy limits. Proposals which increase the pay or non pay benefits for the existing staff group, with the exception of salary sacrifice schemes which are targeted at non-pay rewards such as childcare vouchers or assistance with green transport initiatives, will continue to count against the policy limits. You should contact the Finance Pay Policy team if you are unsure whether the costs should be included in the remit proforma costings.

The Net Paybill Increase (formerly Headline Cost)

9. An absolute Net Paybill Increase limit of 3.00% will apply to the total remit package (Standard Remit Elements plus measures targeted at addressing the Key Pay Policy Priorities).

10. This is the increase in paybill as a result of the total package of pay proposals for which approval is being sought. It can be less than the Increase for Staff in Post percentage where recyclable or other savings in the paybill can be delivered to reduce the cost of proposals to the organisation.

11. Increases targeted at the key priorities will fall into the following categories:

a) Increases with ongoing cost implications, for example:

• Addressing inequalities by reducing progression journey times;
• Addressing particular issues such as low pay and recruitment, retention and motivation of staff by adjusting pay range minima, maxima or target rates; or
• Restructuring of pay and reward systems. These costs relate to the assimilation of staff onto a new structure. As a result such proposals will be assessed against the Net Paybill Increase limit of 3.00% and the future projected costs for the Standard Remit Elements (see below). If proposals also include progression and/or a Basic Award then these will require to be costed under the Standard Remit Elements.

b) One-off increases, for example buying out terms and conditions of employment that are now outdated. These are actual costs to the paybill but are limited to a single year; and

c) Increases in benefits or non-pay rewards, for example reduction in working hours or additional leave. Such proposals have notional cost benefits for staff but do not add actual costs to the paybill.

12. Proposals which seek increases to pay range maxima above the Basic Award limit must not result in pay range maxima being more than 5% above the median of the maxima of the relevant labour market maximum. For most staff the relevant labour market is expected to be the public sector labour market in Scotland and the Finance Pay Policy team will provide all public bodies with the base data set.

13. In exceptional cases, where a more specific or specialist labour market is appropriate public bodies may provide additional market data. Such data should reflect who public bodies actively compete with for staff and should be accompanied by an explanation setting out why it is a more relevant labour market. There should also be a clear link, based on job weightings, between the posts being compared and comparisons should be made on a like for like basis. If you think that you have a specific or specialist labour market you should discuss the position with the Finance Pay Policy Team in advance of the collection of relevant data.

Multi-year remits

14. During 2009-10 public bodies may negotiate and put in place pay awards for one or two years. Knowing the level of pay increases for future years brings certainty for employers and staff, but the length of any pay deal is a matter for each public body and its recognised Trade Union(s). If you propose a pay award for more than one year you are expected to set out your plans and costs for each of the years in your remit proforma and your business case.

Can you analogue to another Public Body or submit joint pay proposals?

15. To reduce the administrative and financial burden of preparing a pay remit on small ⁷ public bodies, the 2009-10 policy encourages such bodies to make a business case to analogue in all respects to another appropriate existing pay system (such as the Scottish Government or another Agency/ NDPB). Where a case is approved, the public body would be expected to provide a simple return that confirmed that they were implementing the analogued settlement only and the costs of implementing that settlement.

16. Thereafter, a brief review of each analogue would be required every three years to ensure that it remains fit for purpose and continues to allow the body to recruit, retain and motivate its staff.

17. Whilst the analogue arrangements would only be available for the smaller public bodies, there would be no restriction on larger public bodies seeking to submit joint remit proposals where there are clear business benefits of doing so. Where two or more bodies propose to submit a joint pay remit they should seek early discussions with the Finance Pay Policy team.

What do public bodies need to do to obtain approval for a pay remit?

• Make sure that proposals are in line with the details of the policy set out in the published policy documents;
• Demonstrate that the level of Basic Award is no more than 1.50% in any one year;
• Demonstrate that the Standard Remit Elements do not lead to an average Increase for Staff in Post percentage greater than 3.00%;
• Demonstrate that proposals above an Increase for Staff in Post percentage of 3.00% are targeted at the Key Pay Policy Priorities and do not lead to a Net Paybill Increase for the pay remit of more than 3.00% in any one year;
• Support proposals with a business case that takes account of the requirements and expectations of the policy;
• Make sure that proposals are affordable within existing budgets and that the business case clearly sets out how the proposals will be funded;
• Demonstrate that proposals are sustainable by providing a 3 year projection that shows that after addressing any Key Pay Policy Priorities, the resulting standard remit will be deliverable within the current Increase for Staff in Post limit of 3.00% (based on a current Basic Award assumption of 1.50%).
• Start working on proposals early, attend the policy seminar and workshops and submit the remit on time; and
• Speak to the Finance Pay Policy Team if you need help, by telephoning 0131 244 7341 or by emailing financepaypolicy@scotland.gsi.gov.uk.

What do I need to know if I am not due to submit a pay remit during the 2009-10 pay round?

18. If you are not due to submit a pay remit during the 2009-10 pay round: you must complete an outturn proforma, for the pay year ending during 2009-10, within 2 months of the pay year end; and your Chief Executive (as Accountable Officer) must provide a brief statement of assurance that the outturn is within the approved remit and that any assumptions made in regard of savings to fund your pay award are still valid. If this is not the case you should provide an explanation and detail of any action being taken.

19. The Scottish Government encourages employers to offer staff childcare vouchers or assistance with green transport initiatives and the costs of such schemes will not count against the Public Sector Pay Policy limits in 2009-10. Whilst approved pay settlements must not be re-opened, if you propose to offer staff childcare vouchers or assistance with green transport initiatives during the period of a multi-year settlement, you do not need to seek approval for a revised remit but need only provide the Finance Pay Policy Team with details and administrative costs of setting up the proposed scheme.

20. The 2009-10 policy allows for small ⁸ public bodies to make a case to analogue to another appropriate existing pay regime. Public bodies wishing to put forward a case should speak with the Finance Pay Policy team in the first instance and well in advance of their next due settlement date.

Finance Pay Policy
13 May 2009