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PUBLIC SECTOR PAY IN 2004-05: GUIDANCE FOR SCOTTISH PUBLIC SECTOR PAY GROUPS
THE REMIT PROCESS 2004-2005
Outcome from 2003-2004
36. All organisations should provide outturn information for last year's pay round using the settlement pro forma. The Finance Pay Policy Team provide an updated report to the Finance Minister on the outcome of last year's pay round, and in particular, how each organisation met recruitment and retention difficulties, or plans to take forward reform or make changes to implement equality proofing strategies. Where remits were approved with conditions, evidence that the conditions have been met, or are in progress with expected timescales for full implementation will also be required. Annex E provides further detail and a copy of the standard proforma.
37. This information should be sent to Finance Pay Policy Team by all organisations by the end of May 2004 for all 2003-04 settlements including those which are part of a multi-year deal.
Meetings
38. In more complex cases, the Finance Pay Policy Team are happy to continue to meet organisations on an individual basis to discuss specific pay proposals; organisations should contact their sponsor branch to make the necessary arrangements. The relevant Finance teams should also be invited, particularly where there are funding implications.
The Process for Clearing remits
39. This year we have simplified the process for clearing remits; it is only those organisations which propose an average earnings growth increase at or above the threshold of 3.5% which will be required to submit a pro forma and detailed business case for Ministerial approval. The pro forma should be submitted electronically and an excel version is available from your sponsor branch or the Finance Pay Policy team. A copy of the pro forma is attached at Annex A; what is required in the detailed business case at Annex B; and a summary of the outturn for 2003-04 at Annex E.
40. Organisations which propose increases below the earnings growth threshold only need submit a pro forma, which assuming there are no substantive issues will be signed-off by the Head of the Finance Pay Policy team. The pro forma should be submitted electronically and an excel version is available from your sponsor branch or the Finance Pay Policy team. To ensure accountability, the Sponsor Division and Finance team will jointly consider whether there are any substantive issues such as affordability or risk to delivery. Organisations should not enter into negotiations with staff and trade unions prior to it being signed off by the Pay Policy Team.
41. NDPBs, Nationalised Industries and the Public Corporations (Scottish Water) should send their remit proposals to their Sponsor Division; all other bodies should send theirs to Finance Pay Policy Team direct. Each remit will be considered by both Finance Pay Policy Team and the appropriate Finance Team. We will jointly assess the accuracy of the financial information and the justification of the supporting business case, including reform proposals and how recruitment and retention difficulties are being addressed. Individual Finance teams are responsible for considering issues concerning affordability.
42. In the case of the NDPBs, the NIs and Scottish Water, the sponsor branch, within the Scottish Executive, should initially assess the draft remit, consulting the relevant Finance team where there are funding implications. The sponsor branch should then send the remit to Finance Pay Policy Team and the line Finance Team (if they have not been previously consulted) with their assessment. The Finance Pay Policy Team will assess the remit in relation to public sector pay policy generally and any proposals on reform and modernisation. They will consult sponsor branches on issues concerning affordability, achievement of key business objectives and targets and reform plans if they have not provided comment in their initial assessment of the remit.
43. Where conditions were set in previous pay remits, the sponsor branch and the line Finance teams will be asked to comment on these before the current remit goes forward for approval.
44. Although pay is a delegated matter, terms and conditions of those staff who are civil servants is not. Therefore, where an Agency makes significant changes to staff terms and conditions there will be a need to consult with Cabinet Office. Cabinet Office has overall responsibility for staff under the Civil Service Code and the Government's policies on pay and performance management in the Civil Service and ensures that proposals are consistent with the Government's policy on reward. The Cabinet Office's role is to provide an assessment of pay and performance management systems, in terms of both the current systems and any proposed changes. Whilst there is clearly a direct link between reward policy and the financial consideration of a remit, it is important to consider pay in the wider context of performance management. For this reason, where the information is provided, the Cabinet Office's assessment will in addition draw on related factors such as the appraisal system and the use of non-pay incentives.
45. Once this consultation is complete, the sponsor branch should consider whether there is a requirement for the body to modify its proposals, to provide further information in support of the remit and/or the business case or to proceed with obtaining approval.
46. Once the consultation process has been completed, formal approval can be sought:
- For NDPBs, remits should be approved by the relevant Departmental Head prior to seeking Ministerial approval.
- Other groups should obtain whatever clearance is appropriate at official level before seeking Ministerial approval.
47. The Pay Policy team will advise individual sponsor divisions on the requirements for obtaining Ministerial approval and clearance should be sought from both the relevant subject Minister and the Deputy Finance Minister. The Deputy Finance Minister must be a principal recipient of all submissions seeking approval to pay remits and related pay issues, including modernisation proposals. Bodies must not begin negotiations with Trade Unions until they have received Ministerial clearance to their remit proposals.
The role of the Sponsor Division
48. The sponsor division is the primary contact for individual NDPBs, the NIs and Scottish Water. Organisations should submit their pay remit to their sponsor team within the Scottish Executive. The sponsor team initially assess the draft remit, consulting the relevant Finance team where there are funding implications. The sponsor branch should then send the remit to Finance Pay Policy Team and the line Finance Team (if they have not been previously consulted) with their assessment.
49. Once the consultation process is complete, it is the responsibility of the sponsor division to seek formal approval as detailed above.
The role of the Finance Team
50. The role of the individual line Finance Team is to provide comments on:
Affordability: the proposals are affordable within the administrative costs limits set in the Spending Review, and that approval of the remit will not trigger other spending concerns such as a claim on the Reserve. Finance teams must approve any other financial changes to budgets before the pay remit can be considered. This includes transfers between programmes or into administrative costs.
- Service Delivery: whether the pre-determined objectives and targets are on line to being achieved. In particular, where an organisation is proposing to pay bonuses, these should be clearly linked to achievement through meeting job and/or organisational objectives and targets.
Timing of Remits
51. Ministers have expressed concern that remits in the 2003-04 pay round continued to be submitted months after the settlement date. Whilst a number of these were a result of addressing the modernising pay agenda, they have indicated that they do not consider it acceptable for an organisation to wait to see what the levels of settlement are elsewhere before entering the pay round. They take the view that each organisation needs to consider its pay in a way that is consistent with its own operational needs and that maximises efficient and effective performance.
52. The expectation is that remits should be submitted in sufficient time to allow them to obtain Ministerial approval and Union agreement to enable staff to be paid as near as possible to the settlement dates. To achieve this, we are recommending that remits should reach us as follows:
- April settlement dates: by mid April.
- July and August dates: by mid June.
- Others: allow one month.
53. If, therefore, for whatever reason, a body submits their pay remit after their settlement date, it must provide an explanation for the Ministerial submission.
54. In recent years, many bargaining units have moved settlement date from April to July, August or even later in the year, and others may be contemplating doing so. This means that clearance of remits will be concentrated during a relatively short period of the year. Organisations are asked to do whatever they can to ensure that the system does not become overloaded. It is particularly important that remits are submitted as early as possible, recognising the concentration of settlement dates on 1 August, and the difficulties of working around the holiday period and the unavailability of Ministers during parts of the Parliamentary recess.
55. Regarding the timing of the process, once a remit has been received by the sponsor branch it is likely to take a minimum of 4 weeks to obtain Ministerial clearance. Organisations should allow for this when planning meetings with the Trade Unions. Finance Pay Policy Team's target is to provide any substantive comment on remits within ten working days of receiving it. Where this is not possible, we will advise the sponsor branch immediately. If remits are clearly set out and provide all the necessary information, we expect to turn these round more quickly. Organisations should also be aware that where it is necessary to seek clarification and additional information, clearance may take longer. The modernising public sector pay agenda is likely to mean that some remits will raise complex issues, which may also lengthen the consultation process. Sponsor Branches should mark submissions as "Routine" and allow at least 1 week for Ministerial approval. This should be extended where the proposals are complex or cover more than one year. Ministers have expressed concern at being asked to approve remits within a day or 2, particularly when these were significantly past the settlement date. Bodies should therefore allow reasonable flexibility in their internal planning when seeking approval for remits.
What will hold up a remit being approved?
56. If there are questions or uncertainties about the details in the pay remit pro forma or the business case, Finance Pay Policy will continue in consultation with the organisation, sponsor branch, and Finance team until the matter is resolved and we can submit to the Ministers. The types of issues which are likely to result in delays in submitting to Ministers, are:
- Concerns about whether the remit is affordable.
- The remit is too high and is not justified against the current economic outlook, achievement of high-level targets, or reform plans.
- There are concerns or questions about the organisation's plans on performance management and reform, especially where the cost of implementing the reform plans could be inflationary or the proposals are not consistent with the Executive's policy on pay.
- The information in the business case provides poor justification for recruitment, retention and motivation difficulties, and the proposals do not target the areas of difficulties.
- Insufficient, or poorly supported, information on the cost of the remit and how it will be used.
Ministerial Updates
57. The Finance Pay Policy Team provides the Finance Minister and Deputy Finance Minister with regular updates on the progress and status of all remits. If sponsor divisions or individual organisations have specific issues they wish to be included please contact the Pay Policy Team to discuss.
Revised Remits
58. In exceptional circumstances a body may, after entering negotiations with its Unions, decide that it needs to depart from the proposals set out in its agreed remit. If this happens, the body should not continue with negotiations without contacting their sponsor branch. The sponsor branch will, in consultation with Finance Pay Policy, advise as to whether the body is required to submit a revised remit for consideration. The revised remit should give a full explanation of the reasons why negotiations broke down etc and costings of any changes to the original proposals. Revised remits will require Ministerial approval (and Departmental approval where appropriate).
Settlements
59. For some public bodies there is a statutory requirement for the First Minister to approve the terms of the settlement before they are implemented. If this applies to a body for which you have sponsorship responsibility, you should remind them of the requirement at the same time that you notify them of formal approval to its remit. Since settlements should all be within the terms of the remit (which will already have been agreed) you can give approval at official level if there is not a requirement for Ministerial approval. It is recommended that formal approval to the remit and the terms of the settlement should be given at Senior Civil Service level.
60. If there no statutory requirement for Ministerial approval, then the Pay Policy team will advise as to whether Ministerial consent to the settlement is required. Generally, Ministerial consent can be taken as read where the settlement (including any changes to terms and conditions) are within the terms of the agreed remit.
61. In all cases, the Pay Policy Team should be advised of the outcome of the settlement as soon as it is known. All organisations should complete the proforma in Annex F within 1 month of the award being implemented and send it to the Pay Policy Team.
Security of remits
62. Pay remits contain sensitive information, which, if it became public knowledge, could jeopardise an organisation's pay negotiations. Therefore all remits should be circulated internally within the Scottish Executive with a "RESTRICTED - MANAGEMENT" marking. When forwarding sensitive information, externally, to a body it should be given a "SEC 2" protective marking (refer to the Security Home page under Reference on the Scottish Executive Intranet for further details).
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