6. Chairs, Board Members and Public Appointments
Key pay policy parameters for chairs, board members and public appointments for 2020-21
What is a daily fee and what is it for?
6.1 Where Ministers have agreed that an appointee should be remunerated, the daily fee framework for Chairs, Board Members and Public Appointments must be used to determine the appropriate daily fee. The appropriate daily fee may be expressed in terms of daily, half‑day or hourly rates for calculating payments, but changes to the number of days worked should not result in changes to the level of daily fee paid. The cost of any remuneration is met from the public body's existing administration costs or from the budget of the appointee's "owning" Directorate where the appointment is not linked to a specific public body.
6.2 If a daily fee is paid to an appointee, then the payment should reflect the time commitment involved. The daily fee should take into account provision for reasonable time spent by individuals in undertaking their agreed duties effectively, though there must be clear prior agreement on which activities are to be remunerated. A daily fee (or proportion thereof) can therefore cover activities other than attendance at board meetings, functions or events and for example may include time spent preparing for meetings, time travelling to and from meetings, etc.
6.3 The daily fee and the related activities covered by it should be agreed between the public body and the sponsor team (or owning Directorate where the appointee is not linked to a public body), recorded formally and embodied in the letters of appointment issued to the appointee. The agreement must abide by the general requirements of the pay policy and may be reviewed from time to time or at the request of the public body or sponsor team. There must also be a formal and proportionate arrangement in place for the claiming of daily fees which should be subject to audit by the public body.
What about appointments that are not linked to a public body?
6.4 The Daily Fee Framework applies to all public and ministerial appointments, regardless of whether they are linked to a public body or not. The guidance contained in this section is therefore relevant for public and ministerial appointments funded both by public bodies and by all other means.
What are the key metrics and thresholds for 2020-21?
6.5 The key features of the 2020-21 pay policy is set out in paragraph 1.3. Each proposal will be assessed on the following:
- affordability and sustainability - the financial impact of the pay remit proposals will be considered by the sponsor team, public body, or policy team
- application of the increases within the pay thresholds
What are the daily fee thresholds for 2020-21?
6.6 For 2020-21, the Upper Pay Threshold will remain at £307.
What are the daily fee increases that can be applied?
6.7 For daily fees that are below £307, an increase of up to 3 per cent can be applied. For daily fees that are £307 and above an increase of up to £8 can be applied.
What is the pay policy position on the remuneration of public appointments?
6.8 This section applies equally to the introduction of remuneration for public appointments or where an annual uplift, review or change to that remuneration is proposed.
6.9 Not all public appointees are remunerated. Public appointees benefit personally in a number of non‑financial ways, for example: in the enhancement or application of professional expertise; general networking and personal development; or the opportunity to contribute to policy-making in an area of personal interest. The main objective in offering remuneration for such posts is to increase diversity. Remuneration may be proposed where it is particularly important to have representation from as wide and diverse a range of candidates as possible or where there is specific need for appointees to be drawn from otherwise under-represented groups.
6.10 Where a post is remunerated, it should be noted that any remuneration payable is not intended to meet in full the market rate that could be commanded by the individuals concerned.
What are the pay policy parameters for chairs and members and other public and Ministerial appointments in 2020-21?
6.11 An equivalent £80,000 per annum threshold applies to the daily fees for all public and Ministerial appointments those who are paid less than £307 per day (this equates to £80,000 per annum) can receive up to a 3 per cent increase; those receiving £307 or more are limited to a maximum increase of £8 per day.
6.12 There is an expectation that daily fee pay proposals for all public and Ministerial appointments will cover one year only.
6.13 Where a public or Ministerial appointee is already paid a daily fee in whole pound amounts, the proposed daily fee may be rounded (under standard accountancy practices) to the nearest whole pound. Where such rounding results in an increase in a daily fee of less than 3 per cent, then the post may move to being paid daily fees on the basis of pounds and pence. This arrangement would not be applicable to those earning £307 or more as a round figure of £8 is being added.
6.14 The pay policy expectation is that a daily fee should lie within the minimum and maximum of the relevant assessed tier in the daily fee framework. The daily fee should only exceed the maximum if it is demonstrated that this is required to recruit or retain chairs and/or members with the necessary skills, knowledge, experience or calibre for the role they are to undertake. daily fees are limited to and must not exceed the ceiling of the relevant assessed tier.
What is the position on progression?
6.15 There is no progression for appointees receiving a daily fee.
Chairs and Members: Framework
What is the Daily Fee Framework?
6.16 To ensure consistency and comparability across public bodies, a number of remuneration tiers have been developed within the daily fee framework. Appropriate rates of remuneration should be determined within this framework.
6.17 In general, Tier 1 bodies include a small number of the most significant Scottish NDPBs and public corporations; Tier 2 includes the majority of executive NDPBs and significant ad hoc bodies and appointments; Tier 3 includes the smaller NDPBs, advisory bodies and most short-life and ad hoc groups, etc.
6.18 The Daily Fee Framework tiers are uplifted annually in line with the pay policy and the Framework for 2020‑21 is as follows:
Chairs & Members Daily Fee Framework 2020-21 (gross daily fees)
|Tribunal (specialist skills only)||£262||£387||£507|
What are the tier parameters?
6.19 Each tier consists of a minimum, maximum and a ceiling. There are different rates for chairs and members reflecting the different levels of responsibility. The pay policy expectation is that a daily fee should lie within the minimum and maximum of the relevant tier in the daily fee framework. The daily fee should only exceed the maximum if it is demonstrated that this is required to recruit or retain chairs and/or members with the necessary skills, knowledge, experience or calibre for the role they are to undertake. Daily fees are limited to and must not exceed the ceiling of the relevant tier.
6.20 The daily fee rates in the framework are considered gross daily fees in that they must include any contribution made by the public body towards any pension (if offered). A daily fee must not be increased to cover the chair or member's own contributions to any pension.
6.21 It is usual practice for the daily fee for a chair to be set at a higher level than the daily fee for members, in recognition of the additional responsibilities placed upon chairs. There are no rules as to how high the level of differential between the chair and members' daily fees should be. Where there is a deputy chair, their daily fee would usually be somewhere between that for the chair and members. The main exception to this is where the deputy chair was required to have specialist skills, then they would fall within the relevant members tier.
How is the Tribunal tier different?
6.22 The 'Tribunal' tier within the chair and members daily fee framework covers the daily fees for Scottish Tribunal NDPBs and other tribunal‑type bodies (where approval of the Remuneration Group has been obtained to allocate to this tier). The expectation is that Tribunal members would be allocated in the following way:
- Chair of the public body - Tribunal chair tier
- Specialist members (for example: those required to have professional qualifications or specialist knowledge, such as legal and medical members) - Tribunal member tier
- Non-executive board members of public body and layperson members - Tier 1 member tier
6.23 A member of a Tribunal who acts as a convener of a tribunal hearing may receive a higher daily fee than other members so long as that daily fee remains within the appropriate member tier in the daily fee framework.
6.24 Tribunal tiers in this section currently apply to the devolved tribunals. Those tribunals which are to be transferred in to the 'Scottish Tribunals' - as created by the Tribunals (Scotland) Act 2014 - will undergo an independent role evaluation. As such, the pay policy specifically for those tribunals may be subject to change.
What is the process for allocation to a tier?
6.25 Most appointees covered by this Technical Guide are associated with an established formal public body. The appointees are generally assigned the same tier as the public body they are associated with.
6.26 Each standard public appointment is allocated to one of the tiers by reference to the significance of the body - based on its size (staff numbers) and the resources managed (budget / grant), as well as consideration of its likely public profile.
6.27 When a new public body or public appointment is being established, the sponsor team must discuss with the finance pay policy team which tier in the daily fee framework might be appropriate. The finance pay policy team must also be consulted if a case is being made to move a public body to a different tier in the daily fee framework.
6.28 Ad hoc appointments are generally short life appointments with specific tasks or functions, with an anticipated end date and are also quite often small in size, ranging from just one member to a dozen or so. This includes, but is not limited to, appointments to Tribunals, advisory committees or to lead Reviews, Enquiries etc. Each ad hoc public body or appointment is allocated to one of the tiers by reference to its creation reason, the role specific knowledge and experience required, the expected interaction with Ministers, as well as consideration of its likely public profile.
6.29 Advice on the appropriate tier of a public body and a public or Ministerial appointment must be sought from the finance pay policy team. Details must be provided of the criteria listed above for standard and ad hoc appointments to allow the finance pay policy team to provide appropriate advice.
How to determine the daily fee of a Chair or Member of a public body?
6.30 The first consideration should be whether there is any need to pay a daily fee. In addition to the Scottish Government policy to reduce the number of public appointees, it is also the policy to consider reducing, where possible, the daily fees paid to appointees. It is therefore open to the sponsor team to decide whether a payment need be made (apart from expenses) or to set a level of remuneration below the minimum of the band.
6.31 If it is considered a daily fee is required but the relevant tier is still to be determined, sponsor teams need to contact the finance pay policy team, who will conduct an assessment based on set criteria, Each standard public or Ministerial appointment is allocated to one of the tiers by reference to the significance of the body - based on its size (staff numbers) and the resources managed (budget / grant), as well as consideration of its likely public profile.
6.32 Each ad hoc public or Ministerial appointment is allocated to one of the tiers by reference to its creation reason, the role specific knowledge and experience required, the expected interaction with Ministers, as well as consideration of its likely public profile.
6.33 If it is considered a daily fee is required, sponsor teams need to consider the appropriate level of fee, taking into account the pay policy expectations and the daily fee framework. When determining the proposed daily fee, the daily fees paid to appointees in the same tier should be considered (the finance pay policy team can provide assistance and information on daily fees paid). Only if it is anticipated the appointee will be recruited from further afield should the levels of remuneration offered elsewhere be considered.
6.34 When considering daily fee proposals for Scottish public and Ministerial appointments, it is sometimes reasonable to consider rates paid to comparable appointees in England and Wales undertaking similar duties. Historically, a MSP salary was 87.5 per cent of that of a MP but this linkage no longer applies. However, it is still the expectation that the daily fees for Scottish public and Ministerial appointments undertaking similar duties should continue to reflect a similar proportionate reduction unless a strong justification for doing otherwise is presented.
Chairs and Members: additional information
Can a daily fee be paid monthly or annually?
6.35 In relation to fees, letters of appointment may refer to a monthly or annual amount, as long as it is based on the approved daily fee multiplied by the 'authorised' number of days worked per month / year. The authorised number of days is the number of days stated in the letter of appointment expected to be worked (per month / year) as a result of the appointment.
6.36 It may be more convenient to remunerate appointees monthly (sometimes the fees are expressed as an annual amount), but problems may arise if the person works more or less than the authorised number of days.
6.37 If the remuneration is paid monthly, at a fixed amount based on an authorised number of days per month and the appointee commits more days per month, then the sponsor team may recompense them for this.
6.38 Conversely, if the remuneration is paid monthly, at a fixed amount based, say, an authorised four days a month, but an appointee spends, say, only two days a month in relation to their appointment, then clearly the sponsor team should review such an arrangement.
6.39 If a public body or sponsor team fixes the (monthly or annual) remuneration irrespective of the number of days actually worked and appointees feel they are not being remunerated sufficiently for their time commitment, then this is not necessarily an issue about the level of the daily fee but possibly more about being recompensed appropriately for their time commitment. This would therefore be a budgetary matter for the sponsor team rather than a daily fee issue for the finance pay policy team - it is not in itself justification for increasing the daily fee but rather a matter of reviewing the time commitment. Changes to the number of days worked should not result in a change to the level of the daily fee paid or the effective daily fee received (if the remuneration is expressed monthly or annually) although it will change the overall monthly or annual remuneration received.
Are appointees classed as employees?
6.40 Unless expressly provided for in legislation appointees are not employees of the public body nor of the Scottish Government (and likewise are not paid a salary). As such, they do not qualify for the rights and entitlements that are normally associated with the status of 'employees'. Public bodies and sponsor teams should therefore exercise care when drafting letters of appointment or advertisements to avoid references to salary or employment, or give an impression of such, as this may create expectations of other benefits (such as annual leave, sick pay, redundancy, etc.). Appointees can still be an "employee for tax purposes" when daily fee payments are paid through payroll because of the broad definition of "employee" for these purposes, but that does not make them an employee for any other purpose.
How are Chairs and Members to be paid?
6.41 Daily fee payments made to appointees must comply with the tax planning and tax avoidance section of the Scottish Public Finance Manual: www.gov.scot/Topics/Government/Finance/spfm/taxavoidance
6.42 In line with the Scottish Public Finance Manual, all appointees must be paid through a payroll system with tax deducted at source. Where there is no payroll system in place, then the Scottish Government payroll system may be available for use, but would be considered on a case by case basis through a clear commissioning process or charging model. For further information, please contact Scottish Government Pay Services: HR.Help@gov.scot. As daily fees are not usually pensionable, public bodies and sponsor teams are reminded the payroll system used should ensure no employer's pension contributions are made.
6.43 Where the appointee is employed elsewhere and their main employer allows such duties within work time, then it may be appropriate to reimburse the employer for the time commitment, rather than the individual receiving a daily fee. In such circumstances the daily fee may be paid direct to the employer. When such an arrangement is being considered and the appointee is a partner of, or shareholder in the 'employer' or is 'employed' through a private service company, then you must contact the finance pay policy team for advice before any payment is made.
What about offering a pension?
6.44 Given the relatively short duration of some appointments, the limited number of days on which appointees actually serve on bodies and the generally non‑executive nature of their duties, approval is not usually given to offering pension arrangements to appointees.
6.45 However, in exceptional circumstances, pension arrangements may be considered, but the approval of the Remuneration Group must be obtained before proposals are implemented. Any such proposals must be supported by a business case which clearly demonstrates why offering a pension is necessary, including whether it is necessary as a matter of law, the detail of the proposed pension arrangements (as they are not employees, appointees may not be eligible to join the public body's pension scheme and a bespoke scheme may have to be set up) as well as confirmation of affordability.
6.46 Where it is approved that a pension may be offered, the level of daily fee must not be increased to cover the individual's resulting pension contributions. The daily fees in the daily fee framework are gross in that they include any contribution made by the public body towards any pension. So in the rare circumstance where a pension is provided, the daily fee figure used when considering the daily fee framework should be the 'net' daily fee receivable by the individual plus the amount of contribution made by the public body towards the pension.
6.47 Where pension arrangements are a result of previous practice, sponsor teams and public bodies must not assume this is justification for their continuation. Each case must be reconsidered on its merits prior to each appointment round.
What about expenses?
6.48 Expenses may be paid to appointees. The basic principle is no appointee should be out of pocket as a result of expenses arising from their appointment, provided such costs are considered reasonable.
6.49 Appointees may be reimbursed for the reasonable costs of travel and, when appropriate, accommodation associated with their public duties.. The tax associated with these expenses should be in accordance with HMRC guidance. To ensure consistency across public bodies, appointees' terms of appointment should provide that travel expenses should be paid at standard Scottish Government travel rates and have regard to the Scottish Government's Travel Management policy on air and rail travel.
What about other tax matters?
6.50 Responsibility for ensuring compliance with all relevant HM Revenue and Customs requirements concerning any payments made to appointees lies with the public body itself. Individual appointees must also satisfy themselves as to their own tax liabilities resulting from their appointment.
6.51 In certain circumstances, where an individual has been making sufficient National Insurance contributions to be considered to be an "employed earner" and meets other applicable qualifying criteria, they may be entitled to statutory family-related benefits (for example, Statutory Maternity Pay).
What to do when making a public appointment where the individual is already a senior employee of another public body
6.52 Issues to be considered by sponsor teams prior to the appointment of a chair or member where the individual is already a chief executive (or other senior employee) of another public body covered by the Scottish Government Public Sector Pay Policy includes conflict of interest; time commitment; and remuneration. Such matters, including (where relevant) the need to liaise with the sponsor team of the public body to which the individual might be appointed, are outlined in more detail in the Public Bodies Information Update 109 which is available as a downloadable document on the Scottish Government website at: www.gov.scot/publications/public-bodies-information-update-109-public-sector-pay-policy/
Chairs and Members: approval
What must you do to seek approval of proposals?
6.53 The relevant Scottish Government approval must be sought prior to implementing any proposals to:
- make any annual uplift
- change the tier of a body or appointment
- introduce, review or change the remuneration package, for example:
- the daily fee
- other matters, such as pension arrangements
6.54 Where no change is proposed, confirmation of details of the current daily fees is all that is required to be submitted to the finance pay policy team.
6.55 If proposals are simply the annual uplift in line with pay policy, then a chairs and members proforma should be either completed by the sponsor team and sent to the finance pay policy team; or, completed by the public body and sent to the finance pay policy team, copied to the sponsor team. The approval approach being taken under the pay policy for staff pay remits and chief executive pay remits by the public body (fast-tracked, streamlined, full remit) bears no relation to how the daily fee proposals for the chair and members are approved and these should follow the steps outlined in this guide.
6.56 For proposals that go beyond the annual uplift, further information will be required. For example, if proposals entail a change in remuneration or tier (for example, following a review) or the introduction of a benefit (for example: pension or car) then a supporting business case will need to be prepared. For new appointments, details of the proposals and supporting business case would be prepared by the sponsor team.
What should a business case contain?
6.57 Proposals for setting or reviewing a daily fee must be supported by a business case which should include:
- the need for paying a daily fee and/or reasons for introducing or reviewing it, which should include diversity and recruitment / retention issues
- details of the criteria needed to assign a tier
- the proposed daily fee, taking into account the pay policy expectations around the daily fee framework (minimum, maximum and ceiling of the relevant band)
- the remuneration of comparable appointees in Scotland and elsewhere (where relevant)
- (for Chairs) the remuneration of the last occupant of the post
- (for Members) the remuneration of other Members and the differential with the Chair's daily fee
- the ancillary activities expected to be covered by the daily fee (for example: preparation time and travel time, etc.)
- affordability and sustainability
6.58 Apart from annual uplifts, the level of daily fee for existing appointees is not expected to require adjustment during the period of appointment. However, where there are significant recruitment or retention difficulties; or a significant change in the role and responsibility; proposals to review the existing daily fee rates may be submitted to senior officials or the Remuneration Group, dependent on the extent to which the proposals remain in line with pay policy.
Who is going to approve your remuneration proposals?
6.59 The finance pay policy team will assess all daily fee proposals and confirm the relevant approval route. The approval route will depend on the circumstances of your proposals as set out below.
|Current or new Chair or Member||Daily fee proposal||Approval (in all cases, affordability must be confirmed by the sponsor team)|
|Existing body||No Change / Annual increase (in line with pay policy)||Sponsor team once the finance pay policy team have 'signed-off' the proposals|
|Current and previous annual increases (in line with pay policy)||Sponsor team once the finance pay policy team have 'signed-off' the proposals|
|Change to any other aspect of current remuneration package (e.g. introduction of car, pension, etc.)||Remuneration Group|
|Existing body - review of Tier or daily fee rates||Setting tier and daily fees - in line with pay policy expectations||Senior Officials (who may refer to the Remuneration Group)|
|Setting tier and daily fees - goes beyond Pay Policy expectations (i.e. above maximum in framework / profile used to justify a higher tier)||Remuneration Group|
|New body or new Appointment not linked to a public body||Setting tier and daily fees - in line with pay policy expectations||Senior Officials (who may refer to the Remuneration Group)|
|Setting tier and daily fees - goes beyond pay policy expectations (i.e. above maximum in framework / profile used to justify a higher tier)||Remuneration Group|
6.60 Where the proposed annual award is wholly in line with pay policy, provided affordability has been confirmed by the sponsor team, the proposals will be 'signed off' by the finance pay policy team. The sponsor team will then notify the public body / the public appointee(s). Any increase should not be implemented until this notification has been received.
6.61 Proposals for the introduction of or changes to tiers and daily fees for existing or new bodies, where these are wholly in line with pay policy, may be approved by senior officials. For those which are to be considered for approval by senior officials, once the sponsor team has confirmed affordability, the sponsor team should send the proforma and short note to senior officials (the sponsor Director or Deputy Director and Director of Budget and Public Spending). For their part in the approval, the sponsor Director is required to confirm they are content with and support the proposals. The Director for Budget and Public Spending will then confirm formal approval. Either Director has the option of referring the proposals to the Remuneration Group. Once approved, the sponsor team will notify the public body / the public appointee(s). Any increases or changes should not be implemented until this notification has been received. The finance pay policy team will also notify the Remuneration Group at the next meeting.
6.62 More significant changes, such as the introduction of a benefit (for example: pension or car) will require consideration by the Remuneration Group. The sponsor Director is responsible for putting forward the submission for any proposals which are required to be considered by the Remuneration Group. This submission must include details of the proposals, supporting business case and a confirmation of affordability. The finance pay policy team must be asked to contribute advice to this submission. The Remuneration Group will either approve the proposals or they may refer the approval to Ministers where they consider there is likely to be significant Ministerial interest. Once approved, the sponsor team will notify the public body / the public appointee(s). Any increases or changes should not be implemented until this notification has been received.
6.63 If proposals are out with the pay policy, they cannot be approved, even by the Remuneration Group. The public body (or sponsor team) must review any such proposals, following advice from the finance pay policy team.
How long should the process take?
6.64 Allow for up to five working days for consideration by the finance pay policy team. 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. Allow for up to a week for proposals to be considered by relevant senior officials.
6.65 If the proposals are referred to the Remuneration Group, then these are normally considered at the next available Remuneration Group meeting - the dates of which are set out on the Scottish Government Public Sector Pay webpages: www.gov.scot/Topics/Government/public-sector-pay/RemunerationGroup
6.66 Under exceptional circumstances, some items may be able to be taken in correspondence. Referral to Ministers will require further time.
What might happen if the Pay Policy is not followed?
6.67 Where daily fees have been introduced without approval or increased beyond that for which approval had been obtained previously, the sponsor Director will be required to explain the matter to the Remuneration Group. Such actions 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.