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Non Salary Rewards

NON SALARY REWARDS

Contents:

Scope

Key Points

Background

Cash Bonuses etc

Amenities and Recreational Facilities

Other Benefits

Tax Implications

Annex: Regularity, Propriety and Value for Money

Scope

1. This section gives guidance on the propriety and regularity aspects to be taken into account when introducing non-salary rewards in addition to contractual salary arrangements. The guidance is aimed primarily at the constituent parts of the Scottish Administration (i.e. the core Scottish Government (SG), the Crown Office and Procurator Fiscal service, SG Executive Agencies and non-ministerial departments) and bodies sponsored by the SG. However, it is equally relevant to other organisations to which the Scottish Public Finance Manual (SPFM) is directly applicable.

Key Points

2. Active consideration should be given as to whether non-salary reward schemes represent an appropriate use of public funds.

3. Public bodies should be open and transparent in the way they deal with non-salary rewards. They should have clear policies on disclosure of information about the awards which have been made and the procedures adopted for making those awards.

4. The SG Finance Pay Policy Team should be consulted prior to the implementation of any non-salary reward scheme.

5. The tax implications for both employers and employees of the provision of non-salary rewards should be carefully considered.

Background

6. In devising staff benefits and non-salary reward schemes particular attention should be paid to propriety. The scope of propriety in relation to public bodies is wider than elsewhere and includes the standards of behaviour which the Parliament and the public would expect from public bodies in the way they spend public money. The Annex to this section sets out general guidance on regularity, propriety and value for money in relation to staff benefits and non-salary rewards.

7. When introducing non-salary reward schemes active consideration should be given as to whether they represent an appropriate use of public funds. Public bodies should be open and transparent in the way they deal with non-salary rewards. They should have clear policies on disclosure of information about the awards which have been made and the procedures adopted for making those awards.

8. The SG Finance Pay Policy Team should be consulted prior to the implementation of any non-salary reward scheme to determine whether it will require approval under the Public Sector Pay Policy for Staff Pay Remits or Senior Appointments.

Cash Bonuses etc

9. Cash bonuses to reward individuals and groups may be offered subject to the necessary criteria attached to reward schemes being met. Funds may also be allocated to: the improvement in the working environment; job-related items required for official duties; and token gifts or one-off awards. In all such cases the scale of the expenditure must be reasonable for an employer to incur.

Amenities and Recreational Facilities

10. Reasonable provision may be made for amenities and recreational facilities for the use of all staff. Arrangements will vary between bodies depending on numbers and location of staff, but are subject to the following points:

  • expenditure needs to be assessed in terms of staff welfare, morale and motivation, and also the value and propriety of using public money to finance the provision of such facilities - it may not be sufficient to draw analogies to the provision of similar facilities in the private sector.
  • Accountable Officers should take a close interest in such facilities and be satisfied that guidelines are clearly and properly drawn up, and that arrangements are in place to ensure that management adheres to these guidelines. It is recommended that these guidelines should provide for the Accountable Officer to approve any major or unusual cases or any cases carrying the risk of public criticism.
  • expenditure on these facilities should be assessed in the same way as it would for any other investment project. Consideration should be given as to whether alternative options might get better value for money such as: negotiated discounts for use staff to use alternative providers; or a group subscription for staff use.
  • there should be consideration whether staff could reasonably contribute, either collectively through representative groups or individually through charges for the use of facilities.

11. If the costs of recreational facilities are being included in another wider project the costs and nature of the amenity or recreational facility should be clearly identified and assessed in its own right.

Other Benefits

12. Other non-salary benefits include the following examples:

  • gifts, vouchers, and entertainment offered as rewards under recognition schemes;
  • payment by the employer of its staffs' personal subscriptions to sports or leisure clubs;
  • rewards leading to donations to a charity or other external body; and
  • provision of cars where they are needed for official purposes and are covered by an existing and agreed scheme which includes charging for any private use.

13. Care should be taken to avoid any criticism of unfair preference being given to certain shops, companies or charities. It is therefore recommended that the recipient of the reward be given some choice or that third-party suppliers are used where, for example, voucher schemes are introduced.

Tax Implications

14. The tax implications for both employers and employees of the provision of all non-salary rewards - cash and non-cash - should be carefully considered. In considering such schemes, it may be appropriate to seek expert PAYE advice - see separate guidance on Tax Planning and Tax Avoidance.

15. When consulting about a proposed scheme, or advising employees of a scheme to be implemented, employers should advise employees of the tax implications for recipients and how these are to be handled.

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Page Published / Updated: August 2009