Public sector pay strategy 2023 to 2024: technical guide

10. Glossary of Terms used in the Public Sector Pay Documents

Assimilation point: The position of a salary on a proposed/revised pay range which reflects the number of years' experience an individual has at the recognised weight for the post.

Baseline paybill: The cost of employing staff for the full 12 months of the pay remit year before implementing the pay award. It should include mandatory increases in employer's pension or National Insurance contributions (NIC) but exclude the costs of increases in pay and benefits for which approval is being sought. The baseline paybill may also include other paybill increases that are not directly a result of the proposed pay award such as the changes to paternity pay and leave entitlement (or holiday pay) etc.

Baseline salaries: These are the base salaries before implementing the pay award. As such they exclude allowances, overtime, employer's pension or National Insurance contributions (NIC).

Base pay or basic pay: This is an individual's net annual salary. It excludes on-costs (pension contributions and payroll tax), the monetary value of any non‑consolidated performance payment (bonus), and other non-salary rewards, etc.

Basic award: This is normally the inflation or cost of living element of the pay award. It is one element of a standard remit. The basic award has different meanings in different pay systems. For public bodies with a step or spine-based system it refers to the revalorisation of steps/spines. For those without step or spine-based mechanisms for pay progression the basic award will normally be defined as the consolidated increase to the pay range minima, maxima, milestones and/or individual employee's base salaries within the pay range.

Bonus: See non‑consolidated performance payment.

Business case: A document which contains information and evidence to support the proposals that are being made.

Buying out: The offering of a one‑off non-consolidated payment in return for agreeing to the removal of a particular pay or non-pay reward.

Ceiling: The absolute limit for salary / pay range maxima in the Scottish Chief Executive Pay Framework or for a Daily Fee in the Daily Fee Framework.

Consolidated pay: Pay which is taken into account for pension and tax purposes.

Consolidated performance payments: Payments that reward exceptional or outstanding performance and are consolidated into individual employees' basic pay.

Current salary: This is an individual's salary prior to any uplift including progression (where eligible).

Daily Fee: The amount a Chair, Member, or Public Appointee is remunerated per day. This can also be expressed as an annual sum. The fee may be paid in a half‑day or hourly amounts.

Daily Fee Framework: The Framework within which the Daily Fee of a Chair, Member or Public Appointee is expected to sit. It contains minima, maxima and ceilings for the four Tiers.

Financial proforma: Excel spreadsheets that set out: what was actually paid as a result of the last pay award; the costs of the increase in pay and benefits proposed and details of the pay and reward structure as well as details of current and projected staffing.

Gross Daily Fee: The Daily Fee for a Chair, Member or Public Appointee inclusive of any pension contribution made by the public body.

Hourly rate: The hourly rate should be calculated on the same basis as the National Minimum Wage as defined by HM Revenue and Customs.

Host public body: This is the public body which another (usually smaller) public body aligns or analogues to for its annual pay award.

Increase for staff in post: This is the cost of the proposed increase in pay and benefits to an average member of staff as a percentage of the baseline paybill.

Increase in paybill per head: The result of comparing the paybill per head for the current remit with the paybill per head for the last remit. It is expressed as a percentage of the paybill per head for the last remit.

Journey time: The time taken (in years) by an individual on a pay range to move (subject to satisfactory performance) from the minimum to the maximum of that pay range.

Lowest quartile: This is the lowest quarter of the pay range, and it is also known as the 25th percentile.

Market median or Market rate: The value of the midpoint of comparator salaries in the relevant market for similarly weighted posts.

Maximum/maxima: The highest point on a pay range, sometimes known as the rate for the job this includes staff who are on spot rates of pay. Staff are not normally paid above the maximum of their pay range. Where a member of staff is paid above the maximum and eligible for a pay increase, the award should be non‑consolidated. There should also be arrangements to move such staff onto their pay range maximum within a defined time scale. Such staff are often referred to as "red-circled".

Median: The value of the midpoint in a series.

Minimum/minima: The lowest point on a pay range. Staff are not normally paid below the minimum of their pay range. Where a member of staff is paid below their pay range minimum there should be arrangements to move them onto their pay range minimum within a defined time scale. Such staff are often referred to as "green‑circled".

Net Paybill Increase: This is the percentage increase to the baseline paybill as a result of the overall pay proposals.

Non-consolidated performance payments: These are normally payments such as bonuses or performance payments which are awarded in addition to the annual pay award. They are awarded to staff, at an individual, team or organisational level, and would normally be based on performance in the preceding year. Such payments are re-earnable and as they are not consolidated into basic pay they do not have associated future costs. Non-consolidated payments would be taxable but not pensionable. The current Pay Strategy position is that all non-consolidated performance payments are suspended.

Non-salary Rewards: Remuneration other than pay, pension or tax. It covers for example, car allowance, health insurance, etc.

Notional cost: These are costs which have a benefit to the individual but with no actual cost to the employer. This could for example include changes to the working week, annual leave or public holiday entitlement.

Outturn: This is the total paybill at the end of the pay year. It takes into account the pay award as well as any other changes in staffing such as new starts, promotions and leavers.

Pay coherence: This is the move towards greater consistency in rates of pay for roles with the same job weighting, as well as standardisation of terms and conditions in public bodies covered by the Pay Strategy. The Pay Strategy expectation is for the Scottish Government to be the main benchmark for salary levels and for terms and conditions.

Pay ranges: The pay scale for each grade or role within a public body, with a minimum and a maximum or target rate and through which staff progress as they develop in knowledge, skills, experience and performance. It is not usual that staff will be paid at a level either below the pay range minimum or above the pay range maximum.

Pay remit: Pay proposals made by public bodies that seek approval for increases in pay and benefits for staff.

Paybill: The full annual cost of employing all staff, including employer's pension and National Insurance contributions (NIC).

Paybill savings: Savings in the Paybill that can be used to part-fund a pay award. This can include;

• Permanent savings such as the removal of outdated allowances; reductions in overtime costs and reductions in staffing. These will all have an impact on future baseline paybills.
• In-year non-recurring savings such as recyclable savings or deferring filling vacant posts which occur only in the year in which they are implemented.

Progression: The movement an individual makes from the minimum of a pay scale to the maximum or target rate. For example, if a pay range had 6 spine points an individual would expect to progress from minima to target rate in 5 years. The Pay Strategy expects the movement to be dependent on performance or competency.

Progression journey times: The number of years it takes to move from the minimum of a pay range to the maximum or target rate.

Public sector labour market: The labour market data provided by the Public Sector Pay team. This covers the public bodies in Scotland subject to Scottish Government Pay Strategy.

Real Living Wage (rLW): This is the minimum hourly rate an individual must earn, before tax, to afford a basic but acceptable standard of living. The rate is £10.90 per hour for 2023-24.

Recyclable savings: Savings which are a consequence of a higher paid member of staff being replaced by a lower paid individual (see Paybill Savings).

Relevant labour market: The Scottish public sector labour market or a more appropriate specialist labour market for specific workforce groups, specialisms or locations.

Salary Sacrifice Scheme: HM Revenue and Customs define a salary sacrifice as "when an employee gives up the right to receive part of the cash pay due under his or her contract of employment. Usually, the sacrifice is made in return for the employer's agreement to provide the employee with some form of non-cash benefit. The 'sacrifice' is achieved by varying the employee's terms and conditions of employment relating to pay".

Scottish Chief Executives Pay Band: The category (1, 1A, 2 or 3) within the Scottish Chief Executive Pay Framework to which a Chief Executive is allocated following a job evaluation exercise. It reflects equivalent Senior Civil Service bands. There is not necessarily any relationship between the pay band of a Chief Executive and the Daily Fee Framework Tier of the same public body.

Scottish Chief Executive Pay Framework: The framework of minima, maxima and ceilings within which the pay of a Chief Executive of a Scottish public body sits.

Settlement date: The date on which any annual pay award would normally be implemented

Settlement information: This is based on the staff in post and paybill immediately following implementation of the pay award.

Smoothing increase: These are higher increases applied to pay points that are just above any threshold for applying a cash underpin, as set by a Public Body, to maintain the integrity of their existing pay and grading structure.

Spot rates: These are staff who are on a single pay point. Staff who are on spot rates of pay, which is set at the rate for job, should be treated in the same way as staff who are on their pay range maximum.

Submission: The paper to Senior Officials, the Remuneration Group or Ministers which seeks approval for the proposed increases in pay and benefits.

Target rate: The point in a pay system that reflects competence in a role and/or the market rate for the role, often the maxima of the pay range.

Tier: The category (1, 2, 3 or Tribunal) within the Daily Fee Framework to which a public body or appointee is allocated for the purposes of assessing Daily Fees. There is not necessarily any relationship between the pay band of a Chief Executive and the Daily Fee Framework Tier of the same public body.

Total increase for staff in post: This is the full cost of the proposed increase in pay and benefits to an average member of staff, regardless of whether or not they add costs to the paybill. This is expressed as a percentage of the Baseline Paybill.

Turnover: The movement of staff to and from the organisation in a year.