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5. CHIEF EXECUTIVES: APPROVAL
What must you do before you submit proposals for approval?
5.1 Public bodies and Sponsor Teams should complete the Excel templates to ensure they have included all the information necessary for the Finance Pay Policy team to assess the proposals. If you have any questions or wish to clarify anything, then please speak to the Finance Pay Policy team.
When must you submit proposals for approval?
5.2 Public bodies must consult the Finance Pay Policy team and obtain Scottish Government approval prior to implementing any proposals relating to a Chief Executive's remuneration package:
- the annual pay rise or payment of bonus (non-consolidated performance payment), including the determination of any final salary increase / bonus payment prior to the departure a Chief Executive;
- any revision or change to the remuneration package:
- the salary, pay range, progression or bonus (non-consolidated performance payment);
- the introduction of, or change to, non-salary rewards (for example: car, pension, etc.);
- any proposals for a new appointment (whether to an established public body or a new public body); and
- any proposals for a temporary or interim Chief Executive arrangement.
5.3 Public bodies must obtain Scottish Government before advertising, negotiating or appointing a Chief Executive and ensure sufficient time to obtain this is built into any timetable.
How will remuneration proposals be rated?
5.4 The Red AmberGreen ( RAG) rating system for Chief Executives proposals, introduced last year, continues. The Finance Pay Policy team will assess remuneration proposals and rate the proposed annual award or remuneration proposals for a new Chief Executive or following a review as Red, Amber or Green. A separate Red, Amber or Green rating will be given in respect of the information provided by the Chair in relation to any bonus proposal.
How is the Scottish Government going to assess remuneration proposals?
5.5 The Finance Pay Policy team will rate the proposed annual award or any new or revised remuneration arrangements as Green if -
| For a proposed annual award: - Outturn information indicates that previous years' uprates were in line with what was approved and there has been no further change to any aspect of the remuneration package (paragraph 1.10.1);
- The proposals do not include the introduction of private health benefits, life cover or car, etc. unless this relates to retention of any of these where this was agreed previously (paragraphs 3.38 to 3.40);
- The proposals are in line with the limits set out in Section 4 and the general requirements in relation to the Scottish Chief Executive Pay Framework, etc. set out in Section 3; and
- Proposals are confirmed by the Scottish Government Sponsor Team as affordable and sustainable within existing budgets (paragraph 1.9).
Additionally - for any other proposed changes in the remuneration of a Chief Executive (for example; a new appointment to a new public body or to an existing public body; or an existing Chief Executive following a review or movement from a spot rate to a pay range): - The proposed pay range and salary is based on a formal job evaluation is: supported by clear and relevant market evidence; confirmed as meeting equalities obligations; and supported by a business case which covers all of the requirements set out in paragraph 3.14; and
- The proposed starting salary is in the lower quartile of the pay range (paragraph 3.14.3).
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5.6 The Finance Pay Policy team will rate the proposed annual award or any new or revised remuneration arrangements as Amber if -
5.7 The Finance Pay Policy team will rate the proposed annual award or any new or revised remuneration arrangements as Red if -
How is the Scottish Government going to assess any bonus (non-consolidated performance payment) element?
5.8 A second rating will be given to proposals to make bonus payments. The Finance Pay Policy team will rate these as follows:
- A Green rating indicates that the statement provided by the Chair has been provided and meets fully the requirements set out in paragraphs 4.8 to 4.12.
- An Amber rating indicates that the statement provided by the Chair does not indicate an objective method of determining the percentage bonus or that it is not otherwise apparent how the percentage bonus was arrived at.
- A Red rating indicates that a statement from the Chair has not been provided or that one or more of the elements required as part of the statement provided by the Chair has not been included.
5.9 The rating will be given by the Finance Pay Policy team in relation to the Chair's statement supporting the bonus proposals but this does not indicate approval of the bonus element. The approval of the bonus will be a matter for the Scottish Government Sponsor Director and Deputy Director of Finance Expenditure Policy or the Scottish Government Remuneration Group. The assessment by the Finance Pay Policy team is only in relation to the provision of the four criteria and the extent to which the objective method of determining the percentage level of bonus being proposed has been set out - it is not an assessment of whether or not the bonus is warranted.
Who is going to approve remuneration proposals?
5.10 The following table sets out who in the Scottish Government will make decisions Chief Executives' remuneration proposals:
Table 2: Chief Executives - Scottish Government approval
Annual increase proposals, including bonuses |
|---|
Remuneration proposals | Chair's statement on bonus | Decision |
|---|
Green | Green / Amber | Officials |
Amber | Green / Amber | Remuneration Group |
Red | Green / Amber / Red | Cannot be approved |
Green / Amber / Red | Red | Cannot be approved |
All other proposals |
|---|
Any rating | Remuneration Group |
5.11 For those annual increase proposals which can be approved at official level, the Sponsor Team should seek approval by emailing 1. Scottish Government Sponsor Director and 2. Deputy Director Finance Expenditure Policy and include the completed Excel template and the confirmation of affordability. Either approver may refer approval to the Scottish Government Remuneration Group for any reason.
5.12 Any proposals relating to annual increases in remuneration, including bonuses, rated as Amber / Green or Amber / Amber; those referred by officials; changes to or reviews of the remuneration packages of existing Chief Executives; and, the setting of the remuneration packages for new Chief Executives, must be approved by the Scottish Government Remuneration Group. The Group may refer the approval to the portfolio Cabinet Secretary / Minister and the Cabinet Secretary for Finance and Sustainable Growth where they consider there is likely to be significant Ministerial interest.
5.13 If any aspect of the remuneration or bonus proposals are rated as Red then these cannot be approved. The public body must revise any such proposals, following advice from the Finance Pay Policy team and resubmit them.
How long should the process take?
5.14 Allow for up to 5 working days for consideration by the Finance Pay Policy team provided completed Excel templates and, where necessary, a business case is included with proposals. If the issue is complex and is likely to take longer, then the Finance Pay Policy team will discuss this with the sponsor body and Sponsor Team.
5.15 The timescales for approving proposals at official level is expected to be no more than two weeks, unless officials refer the proposals to the Scottish Government Remuneration Group for approval.
5.16 If the proposals are referred to the Scottish Government Remuneration Group, then these are normally considered at a Remuneration Group meeting (the dates for which are supplied at Annex A). Referral to Ministers will require further time.
What might happen if you exceed the approved increases?
5.17 If the approved increases are exceeded this could result in punitive action being taken by the Scottish Government, such as the recovery of any overpayments, the capping of future increases or a governance review of the public body.
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