Public sector pay strategy 2023 to 2024: technical guide

1. New for 2023-24

Purpose

1.1 This Technical Guide, alongside the Pay Strategy for 2023-24, sets out the parameters for staff pay remits for public bodies. It also includes guidance in relation to pay for senior appointments, including Chief Executives, and for Chairs, Board Members, and Public Appointees remuneration.

1.2 The exceptional economic turmoil over the past year and the associated fiscal pressures sets an important context for pay decisions for 2023-24. The Pay Strategy reflects the Scottish Government's limited funding position as set out in the 2023-24 Scottish Budget. It also takes account of the impact that high inflation has had on households and governments whilst balancing the need for sustainable public services.

1.3 Pay and workforce are linked to fiscal sustainability and reform to secure the delivery of effective public services over the medium term. The public sector needs to look creatively at ways to sustainably maintain services and deliver fair rates of pay in the public sector.

1.4 It is recognised that public bodies are best placed to ensure workforce plans are financially sustainable in both the short and medium term.

1.5 Individual bodies should balance their overall paybill, so they deliver public services efficiently and effectively within the context of their overall budget allocation. This recognises that the 2023-24 Budget reflects the over-arching priorities of the Scottish Government.

1.6 Public sector employers are expected to explore fair and feasible 2023-24 pay levels in dialogue with respective employee representatives / trade unions considering associated funding options and living within their budget.

Key principles

1.7 The Scottish Government Pay Strategy for 2023-24 is available on the Scottish Government website at:

Public sector pay web pages

1.8 The Scottish Government's Public Sector Pay Strategy is based on the following principles.

• To invest in our public sector workforce which delivers top class, person-centred public services for all, supports employment and the economy, while providing for sustainable public finances.
• To provide progressive pay awards that are fair, affordable, deliver value for money and consider workforce and service reform.
• To protect those on lower incomes, being cognisant of the journey towards pay restoration for the lowest paid and recognise recruitment and retention concerns.

1.9 The 2023-24 Pay Strategy also includes the following.

• Strongly encourages employers to work towards standardising to a 35-hour working week.
• Introduces the requirement for employers to implement a Right to Disconnect.
• Commits to delivering a 4 Day Working Week public sector pilot.
• Retains discretion for individual employers to reach their own decisions about pay progression.
• Encourages the promotion of wellbeing in the workplace and a healthy work-life balance.
• Maintains the suspension of non-consolidated performance related pay (bonuses).
• Continues our commitment to No Compulsory Redundancy.

Pay parameters and limits for 2023-24

1.10 The pay parameters and limits for 2023-24 are set out below and apply to all employees, and senior appointments. Those who are paid a Daily Fee are covered separately.

Progressive Pay Awards

Pay awards are expected to target lower earners while restraining increases for higher earners to address pay erosion for those facing the greatest detriment and to continue to help work towards reducing overall income inequality. See paragraph 3.1.

Real Living Wage

All staff including interns and modern apprentices to be paid at least the real Living Wage of £10.90 per hour. See paragraphs 4.7 and 4.8.

Cash Underpin

A suggested cash underpin of £1,500 for public sector workers who earn £25,000 or less. See paragraphs 4.6 and 4.9.

Floor metric of 2%

Based on the assumed 2% overall increase in paybill included in the Resource Spending Review for 2023-24 to 2026-27.

Central Metric of 3.5%

The Pay Strategy recommends that the average paybill increase will be 3.5%.

Ceiling metric of 5%

Where business efficiencies and/or savings have been identified, paybill increases are restricted to an overall maximum of 5%.

Chief Executive Pay Cap

For all Chief Executives the basic award is capped at the same cash amount as the lowest paid employees. See paragraph 6.3.

No Compulsory Redundancy

Public bodies should work with their staff representatives to negotiate extensions to their no compulsory redundancy agreements. Proposals to change (extend or reverse) the NCR will be considered on a case-by-case basis through the application of the Severance Policy for Scotland. We would expect any proposals to amend NCR to be discussed with a public bodies trade union and included in a business case. See paragraphs 3.4 to 3.10.

Affordability

Public bodies must demonstrate affordability in 2023-24 and future years by providing the evidence, assumptions and agreement to do so based on future budget assumptions.

Workforce

Pay metrics must balance flexibility with fairness and affordability, which may mean taking decisions on the size and shape of the workforce. Past and planned workforce growth (particularly since pre-covid) should be reviewed to ensure affordability, financial sustainability and that it aligns with Scottish Government priorities.