D CHIEF EXECUTIVES: ANNUAL INCREASE 2008-09
What is the annual increase for Chief Executives on spot rates?
1. For Chief Executives on spot rates of remuneration -
- A public body may propose an increase in the remuneration of a Chief Executive on a spot rate of up to 2.00% (the basic award). This increase is limited to the ceiling of the relevant Pay Band within the Scottish Chief Executive Pay Framework.
- This is subject to confirmation of satisfactory performance from the Chair / Board.
What is the annual increase for Chief Executives on pay ranges?
2. For Chief Executives on pay ranges.
- A public body may propose an increase in total of up to 3.75% (the Total Award Limit) this includes:
- an increase in the minimum and maximum of a Chief Executive's pay range of up to 2.00% (the basic award). This increase is limited to the ceiling of the relevant Pay Band within the Scottish Chief Executive Pay Framework; and
- a progression increase of one step, up to the maximum of the pay range.
3. This means that -
- if the intended progression is 2.50%, then the basic award must be constrained to 1.25%;
- a basic award of 2.00% can only be awarded where progression is 1.75% or less.
4. This is subject to confirmation of satisfactory performance from the Chair / Board.
What are the arrangements for Chief Executives remunerated at, or near, the ceiling?
5. The ceilings in the Scottish Chief Executive Pay Framework remain unchanged from 2007-08 and therefore different arrangements apply to Chief Executives remunerated at, or near, the ceiling.
6. Where the application of the basic award (up to 2.00%) would result in a salary above the ceiling of the relevant Pay Band in the Scottish Chief Executive Pay Framework, then the Chief Executive may be offered a consolidated amount up to that ceiling and the remainder (the difference between the consolidated percentage and the maximum basic award of 2.00%) as a non-consolidated, non-pensionable payment. In addition, the Chief Executive may also receive a progression increase towards the maximum of their pay range where this has not already been reached. No consolidated increases can be proposed which would take the base pay above the relevant ceilings in the Scottish Chief Executive Pay Framework.
7. By way of examples:
Chief Executives on spot rates
- where the spot rate is already at the ceiling of the relevant Pay Band the Chief Executive may receive a 2.00% non-consolidated, non-pensionable payment.
- where the spot rate is 1.00% below the ceiling of the relevant Pay Band the Chief Executive may receive a maximum 1.00% consolidated award to the ceiling of the relevant Pay Band and up to a 1.00% non-consolidated, non-pensionable payment.
Chief Executives on pay ranges
- where a pay range maximum is less than 2.00% below the ceiling of the relevant Pay Band, the maximum may be increased up to that ceiling. The Chief Executive may also receive a progression increase where they are not already on the maximum. The total increase must not exceed 3.75%.
- where a Chief Executive is already at the maximum of their pay range they may receive the consolidated increase in that maximum but this will be limited to the ceiling of the relevant Pay Band.
- where a Chief Executive is already at the maximum of their pay range, they may receive consolidated progression up to the ceiling of the relevant Pay Band. If the maximum is already at the ceiling, the Chief Executive may receive a non-consolidated, non-pensionable payment of up to 2.00%.
8. Where any increase under this policy would be less than 2% in total, then a non-consolidated, non-pensionable payment may be made to bring the total award for 2008-09 up to 2.00%.
9. Where Ministers have exceptionally agreed salaries and pay ranges for Chief Executives above the ceilings in the Scottish Chief Executive Pay Framework, proposals for consolidated increases in line with the policy limits may be made to the Scottish Government Remuneration Group.
When do the increases apply?
10. Public bodies may backdate any increases to 1 April 2008 or to the usual settlement date should this be later.
What are the arrangements for bonuses?
11. Bonuses are only one element of the remuneration package and therefore must be considered alongside the other aspects (pay increase, change in non-salary rewards, etc.). A bonus reflects performance in the previous year and so can only become due after the end of that performance year.
12. In submitting proposals that include a bonus, the Chair must provide a statement confirming:
- that the Chief Executive's performance has been assessed;
- that this assessment shows exceptional performance in terms of the outcomes achieved in the performance year;
- states the proposed level of bonus in monetary and percentage terms (of existing base pay); and
- sets out the objective method by which the percentage level of bonus has been determined.
13. Under this approach, the Chair would need to be satisfied that the exceptional performance justifies the percentage bonus and be prepared to defend it.
14. The Scottish Government sponsor Director must support the bonus proposals for them to be approved. The Scottish Government sponsor Director will therefore consider the proposed bonus and may seek to discuss it with the Chair.
What are the arrangements for multi-year proposals?
15. Similar to the approach taken with the policy for staff pay remits, a public body may submit multi-year pay proposals for its Chief Executive. Approval may be sought for proposals for up to three years, up to the maximum of the Chief Executive's pay range and up to the ceiling of the relevant Pay Band in the Scottish Chief Executive Pay Framework. This is also subject to confirmation by the public body of affordability for each year of the proposals (particularly where proposals go beyond the current Spending review period).
16. Multi-year proposals can only be approved by the Scottish Government Remuneration Group. When seeking approval for a multi-year pay award for the Chief Executive, a public body must provide:
- details of costings based on maximum performance increases setting out the impact on the overall paybill;
- details of how the proposals relate to the pay remit for other staff in the public body concerned; and
- an assurance that increases would only be implemented based on performance (any future bonus payments still require Scottish Government approval).
17. Public bodies might wish to consider aligning the duration of the proposals with those for staff in the pay remit. All years of your proposals will be assessed and approved on the basis of the Public Sector Pay Policy for Senior Appointments for 2008-09. Increases in this and subsequent years will be limited, in each year, to the percentages (basic award and total award limit) in this year's uprate. A public body will not be expected to seek to re-open an approved multi-year arrangement.
18. A public body must still provide annual outturn information to the Finance Pay Policy team. However, annual bonuses will still require Scottish Government approval based on the policy in force in the year in which they become due. If the public body does not provide such information or adhere to the policy then this will be referred to the Scottish Government Remuneration Group. Any change in the Chief Executive will require new proposals to be submitted.