Public sector pay policy 2021 to 2022: technical guide
Supports the application of the 2021 to 2022 public sector pay policy and applies to staff in the Scottish Government and its associated departments, agencies, non-departmental public bodies (NDPBs) and public corporations.
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3. Staff pay remits
Please note this section should be read in conjunction with sections 1 and 2.
Key pay policy priorities and key metrics for staff pay in 2021-22
What are the key metrics that will be used to assess pay remits?
3.1 The key features of the 2021-22 pay policy are set out in paragraphs 1.4 and 1.5. Public bodies are expected to implement the real Living Wage uplift by 1 April 2021 and the basic pay increases on the recognised settlement date (which is 1 April for the majority of public bodies) and the costs of applying these increases should be included in the pay remit which will be assessed on the following:
- Affordability and sustainability - the financial impact of the pay remit proposals – which includes:
- the cost of the basic pay increases
- the cost of paying progression
- any known changes to staffing over the year
- as well as any mandatory changes and/or changes outwith the annual pay award (such as an increase in employer's pension contributions) that may create budgetary pressures
- The use of paybill savings particularly if there are proposals to address inequalities. This will include, where relevant, the provision to carry forward any unused flexibilities from 2020-21.
What is the limit on the overall increase to the paybill?
3.2 The aim of the policy is to assist public bodies to reach effective pay settlements that help them to reward staff fairly and manage their staffing numbers to deliver services within constrained budgets.
3.3 The pay policy does not set any metric relating to the overall increase in paybill. Each public body covered by the policy must ensure that their pay proposals are affordable within their financial settlement for 2021-22.
3.4 The amount a public body can add to its paybill as a result of its pay proposals will be determined by their agreed[8] financial settlement. Public bodies will need to include the cost of all elements of their proposals to determine the total value of the proposed increase in pay and benefits for staff in the organisation. The public body must confirm the total value of their pay proposals are affordable within their agreed[8] financial settlement. They must also demonstrate, particularly where there are proposed changes to existing pay and grading structures, that their pay proposals are sustainable and that all savings identified to part-fund the proposed award are deliverable.
3.5 It is a matter for individual public bodies and their staff representatives to make decisions on their proposed pay remit and how they will meet the cost within the agreed[8] financial settlement. Employers and their staff representatives should give consideration to securing productivity improvements and flexibilities to help them afford pay increases, while ensuring public services continue to deliver best value for the public purse. Such decisions should take into account the policy requirements, while ensuring that there is no detrimental impact to staff and the provision of services. Where there are affordability pressures, the public body must contact their sponsor division and Finance Business Partner at the earliest opportunity to discuss.
3.6 If a public body is likely to implement its pay award after the recognised settlement date an explanation should be provided. Where appropriate this should include confirmation that staff and their representatives are aware of any delays to the implementation of their pay award.
What are the basic pay increases that a public body can apply?
3.7 Employers must apply the guaranteed £800 cash underpin for all staff whose current full-time equivalent salary is below the Lower pay threshold (£25,000). For staff earning between the Lower and Intermediate pay thresholds (i.e. between £25,000 and £40,000) employers must apply the guaranteed 2 per cent pay increase. For all staff earning between the Intermediate and Upper pay thresholds (i.e. between £40,000 and £80,000) employers must apply the guaranteed 1 per cent pay increase. If a public body proposes to award more than this to address evidenced inequalities, the additional cost of applying above the levels guaranteed in the pay policy must be met from the 0.5 per cent limit for flexibilities (paragraphs 3.71 to 3.75). The only exception being where higher increases are required to maintain the integrity of existing pay and grading structures for grades which are close to or cross the Lower or Intermediate pay thresholds (see paragraphs 3.35 to 3.41 and 3.46 to 3.52).
3.8 For staff above the Upper pay threshold (£80,000), the basic pay award increase is limited to a maximum of £800. It is the responsibility of each organisation to ensure their full paybill costs can be met from within their agreed[8] budget provision.
What is the position on applying the pay uplift to individuals where a public body has an established policy on pay protection and/or linking pay to performance?
3.9 If a public body has an established policy on pay protection (sometimes known as "red-circled staff") and/or linking pay to performance, this may be taken into account in developing pay proposals, and may be used to determine whether or not an individual is entitled to the guaranteed basic pay uplift. Depending upon local arrangements, some staff may receive a non-consolidated payment in line with the basic award for other staff in the same grade, or for others their pay may be frozen. In all circumstances, the public body would be required to set out the details of their relevant remuneration policies and the number of staff affected in their business case.
Can paybill savings be used to part-fund the pay award?
3.10 Public bodies can use paybill savings to part fund their proposals but such savings should not be used to award pay increases that would otherwise result in the pay proposals exceeding the pay policy limits. Savings include those arising from staff turnover (recyclable savings), reductions in staffing and the removal of allowances or reductions in overtime.
3.11 In addition, public bodies may use paybill savings to make affordable and sustainable changes to their existing pay and grading structures, or changes to existing terms and conditions to address evidenced equality issues, or to award higher increases as part of identified pay coherence issues. The 2021-22 pay policy allows public bodies to be able to use paybill savings of up to 0.5 per cent of baseline salaries to address such inequalities. Public bodies will also be able to add to this any unused flexibilities from 2020-21, potentially taking their total flexibilities to a maximum of 1 per cent. For further detail refer to paragraphs 3.71 to 3.75.
3.12 Where a public body proposes to part fund any consolidated increase from an in-year non-recurring saving they will be required to confirm that future baseline paybills are affordable.
3.13 The proposals should include confirmation from the public body that they will deliver the specified savings during the period of the proposed remit and that they have agreement to carry forward any unused savings, where appropriate. Public bodies should provide a risk assessment on their likelihood of achieving the projected savings. The Chief Executive/Accountable Officer will be expected to confirm in the outturn proforma that the proposed savings were delivered.
What costs must be included in the pay remit?
3.14 The pay remit costings must include the cost of all[9] proposed increases in pay and benefits as well as the consequential increases to allowances, overtime rates, employer's pension and National Insurance contributions that directly relate to the pay remit proposals. This is the Total Increase for Staff in Post of the proposals and reflects the aggregate value of the increases in pay and benefits existing staff will receive.
3.15 The pay remit costings should also include the costs of any changes to existing allowance rates[10], the buying-out of existing allowances or the introduction of new allowances[10] that will form part of the negotiations. Changes in overtime rates or proposals for new allowances will only be considered where these can be demonstrated to be cost neutral. If your proposals include any changes to existing terms and conditions, you will be expected to consider the impact on the overall remuneration package particularly in regard to delivering the pay policy expectations for the lower paid.
3.16 Proposals which carry a notional cost (such as, for example, reduction in the working week or changes in the qualifying period for annual leave etc.) must also be included in the remit proforma. There should be a supporting business case which sets out the current arrangements as well as the benefits and the read across for other public bodies. The additional benefit for staff will not add an actual cost to the paybill and will therefore not impact on the Net Paybill Increase. However, if the proposals result in ancillary costs such as additional staffing, overtime or any other staffing costs these costs will require to be included in the remit proforma, with confirmation the costs can be met within the agreed budget for the period. Such costs are not required to be included within the pay policy limits (paragraph 3.68).
3.17 The Scottish Government encourages employers to offer assistance with green transport initiatives. Where a public body proposes to introduce such initiatives, the detail should be set out in the business case and the associated costs for setting-up and maintaining the scheme should be included as well as an indication of the value to staff. Such costs are not required to be included within the pay policy limits (paragraph 3.68) although the public body is required to provide confirmation the costs can be accommodated within the agreed budget for the period.
3.18 Proposals to introduce non-pay rewards such as salary sacrifice schemes also fall under this category. As above, the financial proforma should include the administrative costs of setting-up and maintaining any such schemes as well as an estimate of the value to the individual. Public bodies should provide evidence to support any proposals in their business case.
3.19 Salary sacrifice proposals which aim to reduce employees' pension contributions to a public service pension scheme with off-set increases to the employer contribution will not be considered acceptable.
3.20 Once these decisions have been taken, to ensure consistency in assessing individual proposals, the expectation is that each public body should model the paybill costs of their proposed pay award in the following order, taking account of any affordability pressures (see paragraph 3.5):
- progression (if proposed)
- applying the real Living Wage of £9.50 per hour
- the guaranteed cash underpin of £800 for staff below the Lower pay threshold (£25,000)
- the guaranteed 2 per cent pay increase for staff earning between the Lower and Intermediate pay thresholds (£25,000 to £40,000)
- the guaranteed 1 per cent pay increase for staff earning between the Intermediate and Upper pay thresholds (£40,000 to £80,000)
- the pay increase for staff earning above the Upper pay threshold (£80,000)
- proposals to access the additional flexibilities for addressing inequalities
- associated increases in the costs of overtime and/or allowances
Public bodies must also include the employer's pension and National Insurance contributions that result from the increases in pay and benefits that are proposed.
What costs are excluded from the pay remit?
3.21 Any changes to the baseline paybill such as: mandatory increases to the employer's pension and/or National Insurance contributions; or increases related to ensuring the financial health of the pension fund; or any other changes to terms and conditions directly outwith the control of the public body are not to be treated as increases within the annual pay award. Such costs however, should be included in the baseline paybill as they help determine overall affordability. Where the actual costs are not known at the time of preparing the remit costings, then an estimate should be provided along with a note of the methodology for the calculation.
3.22 The costs of paying the employer's Apprenticeship Levy should also be noted in the pay remit as the cost could have a potential impact on the affordability of the annual pay award.
What are the measures to support lower paid staff?
3.23 Employers covered by the policy are required to:
- pay at least the real Living Wage of £9.50 per hour
- ensure all staff below the Lower pay threshold (£25,000) receive the guaranteed cash £800 underpin
Further details are set out in paragraphs 3.25 to 3.30 below.
What is the pay policy position on the real Living Wage?
3.24 Scottish Ministers support the payment of the real Living Wage across all sectors. While not a pay policy requirement, public bodies are encouraged, if they have not already done so, to demonstrate their backing of the Scottish Government's commitment to support lower paid staff by becoming Accredited Living Wage employers.
What is the real Living Wage rate and how should it be applied?
3.25 The pay policy intention is that the employer of every worker whose pay is controlled directly by the Scottish Government will be paid at least the real Living Wage rate. For 2021-22 this is set at £9.50 per hour.
3.26 The real Living Wage should be applied as an hourly rate and is expected to be implemented from 1 April 2021 at the latest. See paragraphs 3.27 and 3.28 for the position for Interns and Modern Apprentices.
How does the pay policy apply to Modern Apprentices?
3.27 The pay policy supports the Government's target for Modern Apprentices, recognising the importance of providing opportunities for youth training and employment, and as such it does not create a barrier to delivering on this. Where a public body takes on a Modern Apprentice in a:
- Recognised/existing job role - then the public body is expected to pay them the rate for that role.
- Specific training role - they are expected to pay at least the real Living Wage rate of £9.50 per hour, unless it is the lowest pay point in the existing pay and grading structure, and there is a need to create a differential between established roles and the training role. In such circumstances the public body would be expected to pay at least the adult National Minimum Wage rate rather than the statutory Youth Development or Apprentice rates. Where a public body pays a Modern Apprentice at a lower rate than the real Living Wage they would be required to provide details of the rates paid. The public body would be required to pay the Modern Apprentice the established rate for the job on completion of the agreed training period.
How does the pay policy apply to Interns?
3.28 The pay policy does not apply directly to interns who are on short-term, developmental placements. However, public bodies are encouraged to consider best practice when offering an internship, particularly, if they are in a recognised/existing job role or specific training role, as set out in paragraph 3.27 for Modern Apprentices. Where it is appropriate and where they can afford to do so, employers should pay the real Living Wage rate of £9.50 per hour, particularly where the intern is undertaking a job equivalent to other staff within the organisation.
How should the guaranteed £800 cash underpin be applied?
3.29 The policy requires that employers provide a guaranteed £800 cash underpin to all staff whose current[11] full-time equivalent base salary is below the Lower pay threshold (£25,000). The policy expectation is for the guaranteed £800 cash underpin to be applied on a pro-rata basis for all part-time employees. Further detail on the application of the pay policy for part-time employees is set out in paragraphs 2.27, 3.57 to 3.60.
3.30 The policy position is that the guaranteed £800 cash underpin should be consolidated and paid in addition to any progression increase (where eligible). The only exceptions to this being, where:
- A public body has an established policy on pay protection or an established policy on linking pay to performance (see paragraph 3.9).
- An existing pay point is uplifted for the real Living Wage and the increase on the pay point is less than £800. In such cases public bodies may seek approval for the difference to be awarded as a non-consolidated payment.
What is the increase for staff earning between the Lower and Intermediate pay thresholds?
3.31 The pay policy intention is that every worker whose current[12] full-time equivalent salary is between the Lower and Intermediate pay thresholds (£25,000 and £40,000) should receive a guaranteed 2 per cent basic pay increase. The pay policy position is that this payment should be in addition to any progression increase (where eligible).
3.32 The pay policy expects public bodies to apply the guaranteed 2 per cent pay increase as a consolidated basic pay award. The only exceptions to this being, where a public body has an established policy on pay protection or an established policy on linking pay to performance (see paragraph 3.9).
Can a public body propose to pay more than 2 per cent to staff earning between the Lower and Intermediate pay thresholds?
3.33 A public body may propose to apply more than the 2 per cent to address evidenced equality issues. In such cases, the additional amount above the 2 per cent would normally require to be costed from the flexibility allowed in the 2021-22 pay policy (see paragraphs 3.71 to 3.75). Employers may also propose a "smoothing" increase of more than 2 per cent to address any "leapfrogging" or structural issues as a result of the guaranteed cash underpin for lower earners (see paragraphs 3.35 to 3.41).
3.34 While public bodies can identify savings to part-fund their pay award (see paragraphs 3.10 to 3.13) they cannot use any such savings to make a case to exceed the policy limits.
What can a public body do if they have staff whose base pay is currently just above the Lower pay threshold?
3.35 A public body may propose to pay a higher "smoothing" increase to provide an overall increase of up to £800 to staff who are currently on a base salary that is just over the Lower pay threshold (£25,000) to address any possible "leapfrogging", and to maintain the integrity of their current pay system. The level of increases within a pay range may be tapered to mitigate the impact on the pay gap between pay ranges. It will depend upon the proposals as to how the costs will be treated within the pay remit, and the following paragraphs set out the expected approach for a pay range that crosses, or is just above the Lower pay threshold (£25,000).
The application of "smoothing" increases within a pay range which crosses the Lower pay threshold
3.36 It will depend upon the amount above the Lower pay threshold (£25,000) as to how the costs will be treated within the pay remit.
3.37 If less than half (50 per cent) of the difference, between the pay point and the pay range minima, is above the Lower pay threshold (£25,000) then the costs of providing an increase up to the £800 cash underpin will be included within the low pay measures. Otherwise, the top-up will require to be costed from the paybill flexibilities to address inequalities. The same principle would apply to a pay range minima which is just above the Lower pay threshold (£25,000).
3.38 Where a public body proposes to apply more than the guaranteed £800 for lower paid staff then the additional amount above the £800 would require to be costed from the flexibilities allowed in the 2021-22 pay policy to address evidenced equality issues (see paragraphs 3.71 to 3.75).
3.39 This is illustrated in the following two examples:
Example 1: based on maintaining a fixed monetary amount between pay points:
- In this first example the proposal is to apply £800 on all pay points while maintaining a £750 differential between pay points.
- The cost of providing the £295 top-up for all staff on the Min+2 pay point would be costed under the low pay measures. This is because only 17 per cent of the difference between Min+2 and the Minimum is above the £25,000 Lower pay threshold (£250/£1,500).
- Similarly, the costs for providing the additional £280 top-up for staff on the Min+3 point would also be costed under the low pay measures as again it meets the 50 per cent criteria.
- The cost of providing the £265 top-up for staff on the pay range Maximum would require to be costed from the flexibilities to address inequalities. This is because more than half (58 per cent) of the difference between Minimum and the Maximum is above the £25,000 Lower pay threshold.
| Current Pay point | Minimum £23,750 | Min+1 £24,500 | Min+2 £25,250 | Min+3 £26,000 | Maximum £26,750 |
|---|---|---|---|---|---|
| Difference between pay point and the minimum | £0 | £750 | £1,500 | £2,250 | £3,000 |
| Amount above the £25,000 Lower pay threshold | £0 | £0 | £250 | £1,000 | £1,750 |
| Percentage of the pay range above the £25,000 Lower pay threshold | 0% | 0% | 17% | 44% | 58% |
| Additional increase above 2% to deliver a £800 uplift | £0 | £0 | £295 | £280 | £265 |
| Proposed Pay point | £24,550 | £25,300 | £26,050 | £26,800 | £27,550 |
Example 2: based on maintaining the same percentage between pay points
- In this second example the proposal is to apply additional increases of up to £800 to maintain the same percentage difference between pay points.
- The cost of providing the £297 top-up for staff on the Min+2 pay point would be costed under the low pay measures. This is because only 14 per cent of the difference between Min+2 and the Minimum is above the £25,000 Lower pay threshold.
- The cost for providing the additional £282 top-up for staff on the Min+3 point would also be costed under the low pay measures as again it meets the 50 per cent criteria.
- The cost of providing the £265 top-up for staff on the pay range Maximum would require to be costed from the flexibilities to address inequalities. This is because more than half (58 per cent) of the difference between Minimum and the Maximum is above the £25,000 Lower pay threshold.
- The 3 per cent difference between the current pay points reduces to between 2.90 per cent and 2.91 per cent following application of the £800 cash underpin. Any further adjustments to the pay points which result in applying more than £800 to equalise the pay steps would require to be costed under the paybill flexibilities.
| Current Pay point | Minimum £23,750 | Min+1 £24,463 | Min+2 £25,196 | Min+3 £25,952 | Maximum £26,731 |
|---|---|---|---|---|---|
| Difference between pay point and the minimum | - | £713 | £1,446 | £2,202 | £2,981 |
| Amount above the £25,000 Lower pay threshold | - | - | £196 | £952 | £1,731 |
| Percentage above the £25,000 Lower pay threshold | - | - | 14% | 43% | 58% |
| Additional increase above 1% to maintain the same percentage difference between pay points | - | - | £296 | £282 | £265 |
| Proposed Pay point | £24,550 | £25,263 | £25,996 | £26,752 | £27,531 |
The application of "smoothing" increases for pay ranges which are above the Lower pay threshold
3.40 A public body may propose to pay "smoothing" increases of more than 2 per cent on pay points in pay ranges which sit above the Lower pay threshold (£25,000) to address any possible "leapfrogging" and/or to maintain the integrity of their current pay systems. The level of increases within a pay range may be tapered to mitigate the impact on the pay gap between pay ranges.
3.41 In such cases, an overall increase of up to £800 may be made to staff who are currently on a pay points that are above the Lower pay threshold (£25,000). The cost of applying increases above the 2 per cent basic award will be costed from the flexibilities to address inequalities.
What is the increase for staff earning between the Intermediate and Upper pay thresholds?
3.42 The pay policy intention is that every worker whose current[13] full-time equivalent salary is between the Lower and Intermediate pay thresholds (£40,000 and £80,000) should receive a guaranteed 1 per cent basic pay increase. The pay policy position is that this payment should be in addition to any progression increase (where eligible).
3.43 The pay policy expects public bodies to apply the guaranteed 1 per cent pay increase as a consolidated basic pay award. The only exceptions to this being, where a public body has an established policy on pay protection or an established policy on linking pay to performance (see paragraph 3.9).
Can a public body propose to pay more than 1 per cent to staff earning between the Intermediate and Upper pay thresholds?
3.44 A public body may propose to apply more than the 1 per cent to address evidenced equality issues. In such cases, the additional amount above the 1 per cent would normally require to be costed from the flexibility allowed in the 2021-22 pay policy (see paragraphs 3.71 to 3.75). Employers may also propose a "smoothing" increase of more than 1 per cent to address any "leapfrogging" or structural issues as a result of the guaranteed cash underpin for lower earners (see paragraphs 3.46 to 3.52).
3.45 While public bodies can identify savings to part-fund their pay award (see paragraphs 3.10 to 3.13) they cannot use any such savings to make a case to exceed the policy limits.
What can a public body do if they have staff whose base pay is currently just above the Intermediate pay threshold?
3.46 A public body may propose to pay a higher "smoothing" increase to provide an overall increase of up to 2 per cent to staff who are currently on a base salary that is just over the Intermediate pay threshold (£40,000) to address any possible "leapfrogging" and to maintain the integrity of their current pay systems. The level of increases within a pay range may be tapered to mitigate the impact on the pay gap between pay ranges. It will depend upon the proposals as to how the costs will be treated within the pay remit and the following paragraphs set out the expected approach for a pay range that crosses or is just above the Intermediate pay threshold (£40,000).
The application of "smoothing" increases within a pay range which crosses the Intermediate pay threshold
3.47 It will depend upon the amount above the threshold as to how the costs will be treated within the pay remit.
3.48 If less than half (50 per cent) of the difference, between the pay point and the pay range minima, is above the Intermediate pay threshold (£40,000) then the costs of providing an increase of up to 2 per cent will be included within the low pay measures. Otherwise the top-up will require to be costed from the paybill flexibilities to address inequalities. The same principle would apply to a pay range minima which is just above the Intermediate pay threshold (£40,000).
3.49 Where a public body proposes to apply more than the guaranteed 2 per cent for staff earning between the Lower and Intermediate pay thresholds (£25,000 to £40,000) then the additional amount above the 2 per cent would require to be costed from the flexibilities allowed in the 2021-22 pay policy to address evidenced equality issues (see paragraphs 3.71 to 3.75).
3.50 This is illustrated in the following two examples:
Example 1: based on maintaining a fixed monetary amount between pay points:
- In this first example the proposal is to apply 2 per cent on all pay points and to maintain a £1,250 differential between all .
- The cost of providing the £408 top-up for all staff on the Min+3 pay point would be costed under the cost of the 2 per cent uplift for staff earning between the Lower and Intermediate Thresholds (£25,000-£40,000). This is because only 20 per cent of the difference between Min+3 and the Minimum is above the £40,000 Intermediate pay threshold.
- Similarly, the costs for providing the additional £420 top-up for staff on the Min+4 point would also be costed under the 2 per cent uplift for staff earning between the Lower and Intermediate Thresholds (£25,000-£40,000) as again it meets the 50 per cent criteria.
- The cost of providing the £433 top-up for staff on the pay range Maximum would require to be costed from the flexibilities to address inequalities. This is because more than half (52 per cent) of the difference between Minimum and the Maximum is above the £40,000 Intermediate pay threshold.
| Current Pay point | Minimum £37,000 | Min+1 £38,250 | Min+2 £39,500 | Min+3 £40,750 | Min+4 £42,000 | Maximum £43,250 |
|---|---|---|---|---|---|---|
| Difference between pay point and the minimum | £0 | £1,250 | £2,500 | £3,750 | £5,000 | £6,250 |
| Amount above the £40,000 Intermediate pay threshold | £0 | £0 | £0 | £750 | £2,000 | £3,250 |
| Percentage above the £40,000 Intermediate pay threshold | 0% | 0% | 0% | 20% | 40% | 52% |
| Additional increase above 1% to deliver a 2% uplift | £0 | £0 | £0 | £408 | £420 | £433 |
| Proposed Pay point | £37,740 | £39,015 | £40,290 | £41,565 | £42,840 | £44,115 |
Example 2: based on maintaining the same percentage between pay points:
- In this second example the proposal is to apply additional increases of up to 2 per cent to maintain the same 3.2 per cent difference between pay points.
- The cost of providing the £407 top-up for staff on the Min+3 pay point would be costed under the cost of the 2 per cent uplift for staff earning between the Lower and Intermediate Thresholds (£25,000-£40,000). This is because only 18 per cent of the difference between Min+3 and the Minimum is above the £40,000 Intermediate pay threshold.
- Similarly, the costs for providing the additional £420 top-up for staff on the Min+4 point would also be costed under the 2 per cent uplift for staff earning between the Lower and Intermediate Thresholds (£25,000-£40,000) as again it meets the 50 per cent criteria.
- The cost of providing the £433 top-up for staff on the pay range Maximum would require to be costed from the flexibilities to address inequalities. This is because more than half (52 per cent) of the difference between Minimum and the Maximum is above the £40,000 Intermediate pay threshold.
- The 3.2 per cent difference between the current pay points is unchanged after applying the above "smoothing".
| Current Pay point | Minimum £37,000 | Min+1 £38,184 | Min+2 £39,406 | Min+3 £40,667 | Min+4 £41,968 | Maximum £43,311 |
|---|---|---|---|---|---|---|
| Difference between pay point and the minimum | £0 | £1,184 | £2,406 | £3,667 | £4,968 | £6,311 |
| Amount above the £40,000 Intermediate pay threshold | £0 | £0 | £0 | £667 | £1,968 | £3,311 |
| Percentage above the £40,000 Intermediate pay threshold | 0% | 0% | 0% | 18% | 40% | 52% |
| Additional increase above 1% to deliver a 2% uplift | £0 | £0 | £0 | £407 | £420 | £433 |
| Proposed Pay point | £37,740 | £38,948 | £40,194 | £41,480 | £42,808 | £44,177 |
The application of "smoothing" increases for pay ranges which are above the Intermediate pay threshold
3.51 A public body may propose to pay "smoothing" increases of more than 1 per cent on pay points in pay ranges which sit above the Intermediate pay threshold (£40,000) to address any possible "leapfrogging" and/or to maintain the integrity of their current pay systems. The level of increases within a pay range may be tapered to mitigate the impact on the pay gap between pay ranges.
3.52 In such cases, an overall increase of up to 2 per cent may be made to staff who are currently on a pay points that are above the Intermediate pay threshold (£40,000). The cost of applying increases above the 1 per cent basic award will be costed from the flexibilities to address inequalities.
What is the increase for staff earning above the Upper pay threshold?
3.53 The policy limits the basic pay increase for those with a current full-time equivalent base salary above the Upper pay threshold (£80,000) to £800.
3.54 The £800 is the limit on the increase in base pay. Where an individual is eligible, they may also receive a progression increment in addition to this, if this is proposed for other employees. It is noted all proposed increases will be subject to any established policy a public body has on pay protection and/or linking pay to performance (see paragraph 3.9).
3.55 In determining the level of increase for those staff earning above the Upper pay threshold (£80,000), each public body should take in to account the progressive approach set out in this pay policy and what they propose for other staff to ensure that pay inequalities are not introduced or exacerbated.
What can a public body do if they have staff whose base pay is currently just above the Upper pay threshold?
3.56 A public body may propose to pay a higher "smoothing" increase of up to 1 per cent to staff who are currently on a base salary that is just over the Upper pay threshold (£80,000) to address any possible "leapfrogging" and to maintain the integrity of their current pay system. If less than half (50 per cent) of the pay range is above the Upper pay threshold (£80,000), the cost of applying the 1 per cent can be included within the costs for those above the Upper pay threshold. If more than half (50 per cent) of the pay range is above the Upper pay threshold (£80,000), the proportion of the cost of applying 1 per cent which is above the £800 limit must be included under the costs for the paybill flexibilities. See paragraphs 3.35 to 3.41 for an example on the application for staff just above the Lower pay threshold.
How should pay increases be applied to part-time employees?
3.57 The policy intention is for all increases to be based on an individual's full-time equivalent salary so that part-time employees will receive all increases on a pro-rata basis. The reason for this, is that it is the most equitable approach and maintains the integrity of existing pay and grading structures. This approach provides all staff in the same grade and/or job weight the same proportionate increase, ensuring equal pay for like work or work of equal value.
3.58 However, the pay policy provides scope for employers to take their own decisions in this regard. It does not prevent individual employers choosing to submit proposals to pay the same level of increase to all staff regardless of work-pattern to address their own specific circumstances. The additional cost above the pay policy limits would require to be met from the paybill flexibilities (paragraphs 3.71 to 3.75) allowed in the pay policy to address inequalities.
3.59 If the same consolidated monetary increase was paid to all employees regardless of hours worked this could undermine some pay and grading structures. It could also create a legacy of a future higher base salary for some individuals solely as a result of part-time working, compared within other employees with the same length of time in post but have worked full-time. There is also a risk that to pay all staff the same increase regardless of hours worked could undermine working relations between employees.
3.60 This may be better illustrated by the following two examples where the full-time and part-time equivalent salaries are above and below the Lower and Intermediate thresholds based on a full-time working week of 37 hours although the principles would be the same for a 35 hour working week.
Example 1: based on salaries above and below the Lower pay threshold:
Employee A: works full-time with a salary of £24,000
Employee B: works part-time with a take-home salary of £24,000 (based on a full-time equivalent salary of £ 35,520)
Employee C: works full-time with a salary of £35,520
| Employee | Hours | Current salary | Current Hourly rate* | Increase | Revised Salary | Revised Annual Salary FTE | Revised Hourly rate* |
|---|---|---|---|---|---|---|---|
| A | 37 | £24,000 | £12.43 | £800 | £24,800 | £24,800 | £12.84 |
| B | 25 | £24,000 | £18.39 | £800 | £24,800 | £36,704 | £19.00 |
| C | 37 | £35,520 | £18.39 | 2% | £36,230 | £36,230 | £18.76 |
*Annual salary divided by hours worked and 52.2 weeks per year
In this example, both employee A and employee B have a salary of £24,000 regardless of hours worked, however the full-time employee's (employee A) current hourly rate is £12.43 compared with the part-time employee (employee B) of £18.39. Therefore, if the part-time employee (employee B) were to receive a £800 increase, on the basis that their take-home pay was less than £25,000, this would mean that their hourly rate following the pay increase would then be higher than their full-time equivalent co-worker (employee C) on the same grade and equivalent full-time pay point (£19.00 compared with £18.76).
Example 2: based on salaries above and below the Intermediate pay threshold:
Employee A: works full-time with a salary of £38,000
Employee B: works part-time with a take-home salary of £38,000 (based on a full-time equivalent salary of £ 46,867)
Employee C: works full-time with a salary of £46,867
| Employee | Hours | Current salary | Current Hourly rate* | Increase | Revised Salary | Revised Annual Salary FTE | Revised Hourly rate* |
|---|---|---|---|---|---|---|---|
| A | 37 | £38,000 | £19.67 | 2.0% | £38,760 | £38,760 | £20.07 |
| B | 25 | £38,000 | £24.27 | 2.0% | £38,760 | £47,804 | £24.75 |
| C | 37 | £46,867 | £24.27 | 1% | £47,335 | £47,335 | £24.51 |
*Annual salary divided by hours worked and 52.2 weeks per year
In this example, both employee A and B have a salary of £38,000 regardless of hours worked, however the full-time employee's current hourly rate is £19.67 compared with the part-time employee of £24.27. Therefore if the part-time employee were to receive a 2 per cent increase, on the basis that their take-home pay was less than £40,000, this would mean that their hourly rate, following the pay increase, would then be higher than their full-time equivalent co-workers on the same grade and equivalent full-time pay point (i.e. £24.75 compared with £24.51).
What is the position on progression?
3.61 Nothing in the policy is intended to interfere with existing pay progression arrangements or to constrain discussions between employers and staff on this issue. However, any progression increase should not result in an individual exceeding their recognised pay maxima. If for any reason that it does, then the balance up to the guaranteed amount must be paid as non-consolidated.
3.62 Where there is no contractual commitment to pay progression, bodies may continue to pay progression if they choose to, subject to any established policy they have on pay protection and/or linking pay to performance (see paragraph 3.9). Decisions taken to pay progression should be based on business needs, maintaining headcount and affordability.
3.63 It remains a matter for individual public bodies and their staff representatives to agree a pay settlement that is affordable. However, where there are affordability pressures, decisions may be required on whether to cap progression increases, or suspend progression in order to maintain headcount and services, and meet the policy requirements for lower paid staff within the agreed financial settlement. In taking such decisions, consideration is required to ensure that no direct or indirect discrimination is introduced or perpetuated. In addition, if there is any proposed change to existing progression arrangements, consideration should be given to the impact for future years to ensure the public body is able to meet its equality obligations. The pay policy encourages public bodies to continue work towards ensuring maximum journey times are no more than 5 years. Where there are affordability pressures, the public body must contact the Finance Pay Policy team and their sponsor division and Finance Business Partner at the earliest opportunity.
3.64 Where necessary, public bodies must ensure they have sought legal advice as to the extent of contractual obligations in relation to paying progression.
3.65 All proposals to cap or suspend progression will be considered by Remuneration Group. The supporting business case should include the rationale for the decision, taking into account affordability and legal advice.
3.66 The cost of paying progression under existing arrangements continues to be costed outwith the pay policy limits (see paragraph 3.69) and, as with all pay increases, will require to be met fully from within the agreed budget provision. Where a public body proposes to make a change to existing progression arrangements, such as reducing journey times, the cost of introducing the change should be included within the 0.5 per cent flexibilities allowed to address pay inequalities.
3.67 The cost of progression should be based on a full 12 month cost regardless of whether or not a public body awards increments to staff based on individual anniversary dates. Therefore, the cost should not be scaled down to the cost payable within the pay remit period if that is different. Any savings arising from paying staff on individual anniversary dates should take in to account the residual progression costs from the previous year. The savings may be noted for affordability of the pay remit but may not be used to off-set the costs of any proposals which seek to address pay inequalities, as detailed in paragraphs 3.71 to 3.75.
What is included within the pay policy limits?
3.68 All increases to pay must be included within the specified pay policy limits set out for 2021-22 unless they are specifically identified to address evidenced equality issues, and it is proposed to seek to use the flexibilities within the pay policy outlined in paragraphs 3.71 to 3.75. Increases within the limits will include:
- The basic award including the specified low pay measures (see paragraph 3.23).
- The cost of any payment to staff on pay protection
What are outwith the pay policy limits?
3.69 The following costs are all outwith the respective pay policy limits for basic pay increases:
- progression
- flexibility to use paybill savings to address inequalities
- introducing assistance with green transport initiatives
- proposals which carry a notional cost (where there is no actual cost to the employer)
- the ancillary increases to allowances, overtime, employer's pension and National Insurance contributions as a result of the pay proposals.
3.70 For costs that are outwith the pay remit refer to 3.21 and 3.22 .
Does the pay policy provide flexibility for public bodies to use paybill savings to address inequalities?
3.71 Public bodies will be able to use paybill savings, of up to an additional 1 per cent of baseline salaries (see paragraph 1.4), to address any or all of the following:
- Considering affordable and sustainable changes to their existing pay and grading structures, or terms and conditions to address evidenced equality issues.
- Address inequalities arising from recruitment and retention issues.
- Addressing pay coherence and closer alignment to equivalent Scottish Government pay ranges and/or terms and conditions.
What is required if a public body is seeking to use paybill savings to address inequalities?
3.72 The following sets out some examples of the types of proposals that public bodies might submit to address inequalities:
- Reducing any gender pay gap and/or the overall pay gap between the highest and lowest earners.
- Applying "smoothing" increases to remove the risk of "leapfrogging" and reduce the impact of the stepped increases on existing pay and grading structures.
- Reviewing and redesigning existing pay and grading structures, including:
- reducing progression journey times (removing minima and/or recalibrating pay steps)
- recalibrating existing pay steps
- reducing and/or removing overlaps between grades
- See paragraphs 3.76 and 3.77 for further detail.
- Applying higher increases to work towards standardising rates of pay (pay coherence).
- Equalising contractual and working hours.
- Removing / changing out-dated allowances.
- Changes to wider HR policies, including:
- increases to maternity, paternity and adoption leave
- changes to recruitment/promotion policies to encourage greater uptake of individuals with a protected characteristic, where they are under-represented in a specific grade or grades
- reviewing service related benefits such as reducing the qualifying time for maximum annual leave entitlement.
- Future-proofing for the real Living Wage and National Living Wage.
3.73 To assist public bodies in framing their proposals, the following sets out some guiding principles/benchmarks:
- Public bodies should aim to have journey times of no more than 5 years for all grades.
- The proposed changes should not result in terms and conditions becoming more generous than the majority of other public bodies, in particular the Scottish Government.
- Any proposed increases to existing band maxima of more than the limits set out in the 2021-22 pay policy, should not result in the band maxima exceeding the median of the equivalent market maxima by more than 5 per cent.
- Public bodies should aim to have a maximum qualifying time for annual leave entitlement of no more than 5 years.
3.74 Where a public body provides clear evidence of equality issues, they must demonstrate each of the following points.
- The cost does not exceed 0.5 per cent of baseline salaries (plus any carry forward of flexibilities from 2020-21) (see paragraph 1.4)
- The proposals can be evidenced to show a tangible improvement (such as reducing the overall gender pay gap)
- The cost of making the changes can be wholly funded from paybill savings. However, where a public body has difficulty in meeting the full cost from paybill savings, but meets the other criteria outlined, they are invited to contact the Finance Pay Policy team and their Sponsor team (where applicable) to discuss options
- A risk assessment of being able to deliver the identified paybill savings
- The proposed changes are sustainable (i.e. they do not create pressure on future baseline paybills).
3.75 See the worked example on using paybill savings to address equality issues (paragraph 3.133).
What is required if a public body submits proposals for amending or restructuring their pay and reward system?
3.76 If a public body is developing proposals that make any changes to their existing pay and grading structure it should take into account the following points:
- The wider read across of their proposals for other public bodies.
- The pay policy expectation is that any new pay range maxima should not result in it being more than 5 per cent above the median of the maxima in the relevant labour market. In most instances, the expectation is for the relevant labour market to be the other public bodies subject to the Public Sector Pay Policy. Public bodies should ensure any job evaluation scheme they use enables them to fully utilise this data.
- There is no similar expectation for the pay range minima. However, public bodies should ensure that any proposed increases to a pay range minima will not result in paying above the relevant market for that grade or build in future paybill pressures as a result of paying new recruits and/or promotees a higher starting salary.
- Affordability and sustainability – public bodies undergoing pay system review, redesign and reconstruction are permitted to address structural costs in their remits. They are expected to confirm the changes are affordable and sustainable in the years following the implementation of the restructuring. To demonstrate this public bodies are expected to provide projected annual progression costs for the 3 years following implementation of the restructuring.
3.77 Where a public body is considering proposals which include restructuring their existing pay and grading system. they should discuss them with the Finance Pay Policy team at the earliest opportunity.
Can a public body align to another public body's pay proposals or submit joint pay proposals?
3.78 The 2021-22 pay policy continues to encourage smaller[14] bodies to consider making a business case to align with another appropriate existing pay system (such as the Scottish Government or another Agency / Non‑Departmental Public Body) which will be referred to as the host public body.
3.79 Thereafter, a brief review of the alignment arrangements should be carried out every three years to ensure it remains fit for purpose and continues to allow the body to recruit, retain and motivate its staff.
3.80 Public bodies wishing to put forward a case to align to another public body's pay system should speak to the Finance Pay Policy team in the first instance, and in advance of their 2021-22 settlement date.
3.81 While the alignment arrangements continue to be available only for the smaller public bodies, there is no restriction on larger public bodies seeking to submit joint remit proposals where there are clear business benefits of doing so. Where two or more bodies propose to submit a joint pay remit they should seek early discussions with the Finance Pay Policy team.
What happens if a public body is legally committed to elements of the pay award?
3.82 There may be rare occasions when a public body is contractually obliged to pay progression or where the pay award is legally linked to that of another group of staff (such as local government employees), for example after the transfer of staff or the creation of a new public body. Where this is the case and the commitment is not compatible with meeting the requirements of the pay policy, the public body should set out in its business case: the basis of the contractual obligations; whether or not they have sought legal advice; how it intends to resolve the situation; the potential impact with other employees and the timeframe for its resolution.
3.83 Public bodies should note the basis of approval of pay remits in paragraphs 3.123 to 3.125 and ensure they do not create any new contractual obligations.
Staff pay remit approvals process
What is the pay remit process in 2021-22?
3.84 Pay proposals will be assessed by the Finance Pay Policy team, and where relevant in conjunction with the Sponsor team using a risk-based approach to the pay remit process. Based on some key indicators, each public body will be assigned to one of three remit processes. The following chart summarises the 2021-22 risk assessment process:
Graphic text below
Risk Assessment*
Is the 2020-21 out turn rated Red?
Yes - Proposals require to be considered by Remuneration Group
No - Is the 2020-21 outturn rated Green?
Yes - Out line proposals within pay policy framework?
Yes - Affordability confirmed & no other issues that might impact on the remit
No - No - Proposals require to be considered by Remuneration Group
No - Out line proposals within pay policy framework?
Yes - Fast-track process
No - Out line proposals within pay policy framework?
Yes - Affordability confirmed & no other issues that might impact on the remit
Yes - Streamlined process
No - No - Proposals require to be considered by Remuneration Group
* The Scottish Government's pay proposals require to be approved by Scottish Ministers. Analogue bodies will be rated low risk
Low Risk - Fast-track process - The public body can go ahead and engage in formal pay negotiations. The public body would then only be required to provide settlement information once the pay award was implemented.
Medium Risk - Streamlined process - The public body can go ahead and work up detai led proposals in conjunction with their Staff Representatives/Trade Unions but would require to seek formal approval prior to concluding formal pay negotiations.
High Risk - Full pay remit process - The public body requires to have their pay proposals considered by the Scottish Government 's Remuneration Group prior to engaging in formal negotiations.
3.85 For the purpose of the 2021-22 risk assessment, the rating for the 2021-22 remit will be based on the following criteria:
Rating: Low Risk - Fast-track process:Criteria - The 2021-22 remit will be rated low risk if both of the following apply:
- the 2020-21 outturn is rated Green.
- the 2021-22 proposals are in line with pay policy and are affordable.
Criteria - The 2021-22 remit will be rated as medium risk if any of the following apply:
- the 2020-21 outturn is rated either Green or Amber.
- the 2021-22 remit is affordable but includes proposals to use the flexibilities to address inequalities which require Remuneration Group consideration.
- the 2021-22 remit includes proposals for restructuring.
Criteria - The 2021-22 remit will be rated as high risk if any of the following applies:
- the 2020-21 outturn is rated Red.
- the 2021-22 remit proposals are outwith pay policy.
- the 2021-22 remit proposals are not affordable.
3.86 This process provides greater autonomy to public bodies and reduces the time required for approval of pay proposals. The process also underpins the pay policy expectation for public bodies to actively engage with their staff representatives / trade unions as early as possible in the pay round as part of a positive partnership approach to pay negotiations. Regardless of the risk rating, the pay policy expects public bodies and their trade unions to have constructive and collaborative pay scoping discussions prior to the public body submitting their outline proposals.
What should a public body provide for the risk assessment of their outline pay proposals?
3.87 All public bodies will be required to complete an assessment proforma in which they are asked to provide:
- 2020-21 Outturn information.
- The 2021-22 baseline position.
- Indicative costs for applying the basic pay increases, progression and where relevant, proposals under the flexibilities.
- Forecast paybill savings and the likelihood of being able to deliver these savings, particularly if the proposals include using the flexibilities to address inequalities.
3.88 Public bodies will also be asked to provide a brief outline of their pay proposals, in particular details of any changes proposed to existing pay and grading structures or terms and conditions to address pay inequalities.
3.89 The sponsor division and Finance Pay Policy team will comment on the outline proposals. It will be the responsibility of the sponsor division to highlight any issues or affordability pressures and along with the Finance Business Partner approve the optimum funding envelope. The Finance Pay Policy team will advise on the risk rating of the proposals and provide guidance, if necessary, to ensure the proposals remain in line with pay policy. This rating will then provide the framework for public bodies to engage in formal pay negotiations with their Staff Representatives/trade unions.
How will the outturn be assessed?
3.90 The previous year's outturn information is required be provided as part of the current year's pay proposals. As noted in paragraphs 2.10 to 2.12, it is the responsibility of the Chief Executive or Accounting Officer to confirm the outturn is within the approved remit, and the assumptions made in respect of savings to fund the pay award were met.
3.91 The Finance Pay Policy team will rate the outturn for the previous year as follows:
Rating Green:Criteria - The outturn will be rated as Green if all of the following apply:
- the settlement information for 2020-21 has been provided and confirms the pay award was implemented within the approved remit.
- the outturn is fully in line with the approved remit (it did not exceed the limits of the approved remit; all changes to pay structures were implemented as approved; all conditions placed on approval had been met; and where appropriate, all assumptions about paybill savings are still valid) and this has been confirmed by the Chief Executive.
- any paybill changes are attributable to factors not directly related to the approved remit.
Criteria - The outturn will be rated as Amber if any of the following apply:
- the settlement information for 2020-21 has not been provided.
- the outturn exceeded the approved limits, and there is insufficient information to determine that any other paybill changes are attributable to factors not directly related to the approved remit. However, the increase in paybill per head indicates proposals were implemented as approved.
- the savings identified in the approved remit have not been fully realised but were sufficient to cover the costs of implementing any changes to address inequalities.
Criteria - The outturn will be rated as Red if any of the following apply:
- the implemented pay award differed from the basis of the approved remit.
- the outturn exceeded the approved limits; there is insufficient information to determine that any other paybill changes are attributable to factors not directly related to the approved remit and/or the increase in paybill per head is higher than the approved remit.
- the savings identified in the approved remit have not been fully realised and were insufficient to cover the costs of implementing any changes to address inequalities.
- the public body did not comply with any conditions placed on approval.
3.92 If the outturn is rated as Red, the public body must provide an explanation as to why the outturn was exceeded and the current remit and outturn must be considered by the Remuneration Group.
3.93 Where a public body has exceeded the approved remit and the increase cannot be explained by changes in staffing over the year, or has moved away materially from the basis of that remit, then the Remuneration Group may refer the outturn and the current remit proposals to Ministers. The Remuneration Group expect Ministers will take action where the explanation is not adequate. The potential consequences of significantly exceeding a remit in such circumstances are set out in paragraphs 3.126 to 3.131.
What is required under the fast-track (low risk) process?
3.94 Where a public body has been assigned to the fast-track process then they are able implement the negotiated pay award without further recourse to the Scottish Government, if it is within the terms of the approved remit. If there are any changes to the approved remit then the public body should speak to the Finance Pay Policy team before concluding pay negotiations (see paragraphs 3.125 to 3.126).
3.95 The public body would then be required to submit a settlement proforma within 1 month of the pay award being implemented (see paragraphs 3.127 to 3.128).
What is required under the streamlined (medium risk) process?
3.96 Where a public body has been assigned to the streamlined process they would be required to obtain approval to their pay remit proposals prior to concluding formal pay negotiations and implementing the pay award. The pay remit proposals will be rated as set out in 3.85 and this will determine who approves the pay remit (paragraphs 3.102 to 3.109).
3.97 All public bodies are required to submit a settlement proforma within 1 month of the pay award being implemented (see paragraphs 3.127 to 3.128).
What is required under the full pay remit (high risk) process?
3.98 Where a public body has been assigned to the full pay remit process they would be required to submit their pay proposals, with the necessary supporting information, for approval by the Scottish Government's Remuneration Group prior to engaging in formal pay negotiations. Where the Remuneration Group consider the proposals as novel or have the potential of a wider read-across to other public bodies, they may decide to refer them to Ministers.
3.99 Once the pay remit has been approved the public body is able to engage in formal pay negotiations with its trade unions. It is then able to implement the negotiated pay award without further recourse to the Scottish Government if it is within the terms of the approved remit. If there are any changes to the approved remit then the public body should speak to the Finance Pay Policy team before concluding pay negotiations (see paragraphs 3.125 to 3.126).
3.100 All public bodies are required to submit a settlement proforma within 1 month of the pay award being implemented (see paragraphs 3.127 to 3.128).
What if the proposals have been rated Red?
3.101 If the current remit proposals are rated Red the public body will be required to revise its proposals to bring them in line with Public Sector Pay Policy before they can be given further consideration and before they can be submitted for approval.
Who approves the pay remit proposals?
3.102 Ministers have decided some remits may be delegated to be approved by the Scottish Government's Remuneration Group or senior officials depending upon their rating.
Senior Officials
3.103 Senior officials may approve proposals where the current remit is rated Green and the outturn is rated either Amber or Green. All other proposals will be considered by the Remuneration Group who will decide whether they can be approved or need to be brought to the attention of Ministers. This is summarised below:
Outturn: Green or Amber:Current remit proposals - Green
Decision - Senior officials
Outturn: Red:Current remit proposals - Green or Amber
Decision - Remuneration Group
Outturn: Green or Amber:Current remit proposals - Amber
Decision - Remuneration Group
Outturn: Green or Amber or Red:Current remit proposals - Red
Decision - Requires further consideration as Remuneration Group would not be able to approve
3.104 Who approves the remit at senior official level will depend upon whether the public body is a NDPB, Public Corporation, Agency or Associated Department:
Public body: NDPB or Public Corporation:Portfolio approval - Director of the relevant Sponsor Directorate[15]
Finance approval - Director of Budget and Public Spending
Public body: Agency:Portfolio approval - Director General[16] of the relevant Sponsor Directorate
Finance approval - Director of Budget and Public Spending
Public body: Associated Department:Portfolio approval - Permanent Secretary
Finance approval - Director of Budget and Public Spending
3.105 Senior officials will consider the proposals and on the basis of the information provided will decide whether to approve the proposals, to seek further information or to refer them to Remuneration Group.
Remuneration Group
3.106 All proposals that require Remuneration Group consideration need to have the support of the relevant portfolio senior official.
Public body: NDPB/ Public Corporation:Relevant senior official - Director[15] of the relevant Sponsor Directorate
Public body: Agency:Relevant senior official - Director General[16] of the relevant Sponsor Directorate
Public body: Associated Department:Relevant senior official - Permanent Secretary
3.107 The Remuneration Group will consider the proposals, which will include the Chief Executive's foreword to the business case, the advice from the Sponsor team (where applicable), the Finance Business Partner (where applicable), the Finance Pay Policy team and the views of the portfolio senior official. On the basis of this information, the Remuneration Group will decide whether to approve the proposals, to seek further information or to refer them to Ministers.
Ministers
3.108 Examples of proposals that may be referred to Ministers include those where the outturn is rated as red and the Remuneration Group consider the supporting explanation to be inadequate; or where the current remit is novel or contentious; or where the remit is of particular interest to Ministers. Each decision will be made on a case-by-case basis but the Remuneration Group expects to approve most proposals under the delegated approval arrangements. If Ministerial approval is required, it will be the approval of the Cabinet Secretary for Finance and the relevant Portfolio Cabinet Secretary or Minister.
3.109 The pay remit proposals for the Scottish Government's main bargaining unit require to be approved by Ministers regardless of its rating.
How long will approval take?
3.110 Where a public body is required to submit a full pay remit the aim will be to approve this within 7 weeks.
- This provides for up to 4 weeks for assessing the outturn and remit proposals and resolving queries with the Finance Pay Policy team and Sponsor team (where applicable). The aim is to conclude this assessment within a couple of weeks, but this will depend upon the complexity of the proposals, and the number of other remits submitted to the team at the time. Where possible the Finance Pay Policy team will try and advise on the likely length of time that might be required.
- It could then take up to 3 weeks for the formal approval of proposals. During these 3 weeks, the formal submission will be prepared and submitted to Remuneration Group for approval.
3.111 Please note that if the proposals require to be approved by Ministers then this may take longer than 7 weeks.
3.112 The Remuneration Group meets regularly throughout the year and the Finance Pay Policy team will be able to advise on meeting dates. If the deadline for the submission of papers is missed, the proposals will be put on the agenda of the next available meeting of the Remuneration Group. However, in exceptional circumstances, the submission may be put to the Remuneration Group in correspondence at the agreement of the Remuneration Group Secretariat and / or the Chair.
3.113 To achieve the above timescales, it is important that the proposal each public body submits to the Finance Pay Policy team includes all the necessary information, and the public body responds timeously to any queries raised. The Finance Pay Policy team will aim to provide feedback on the initial proposals within 5 working days.
3.114 The following flow chart summarises the expected length of time which will be taken at each stage of the process:
Graphic text below
Remit process
Public Body (PB) submits their previous year's outturn and outline remit proposals to the Finance Pay Policy team (FPP) and (where relevant ) their Sponsor Team (ST)(1)
The FPP team, and where relevant, the ST assess the information provided, affordability and any other known factors (See Risk Assessment flow chart ) and advise on the remit process(2):
Streamlined process
PB engages in formal negotiations with their Trade Unions (TUs) but must seek formal approval to the proposed award prior to implementation(3).
Remit proposals are approved by : Remuneration Group or Ministers
Full pay remit process
PB must submit assessment proforma with supporting business case for approval
The FPP team and where relevant the ST and Finance Business Partner assess the remit.
Remit proposals are approved by : Officals or Remuneration Group or Ministers
Fast-track process
The negotiating framework is considered approved and the PB can engage in and conclude formal negotiations wi th their TUs(3).
Once the pay settlement has been Implemented, PBs are required to return their settlement proforma to the FPP team within 1 month. Failure to do so will result in a PB not being assigned to the fast-track process the following year.
Up to 2 weeks
Up to 3 weeks
Up to 4 weeks
(1) Public bodies are expected to engage with their Trade Unions in preparing their draft proposals prior to submitting their assessment proforma to the Scottish Government.
(2) The Scottish Government 's pay proposals will follow the streamlined process. Analogue bodies will be rated low risk.
(3) PB/ TUs must inform FPP of any issues arising during pay negotiations which may result in any implemented settlement deviating from the basis of the approved remit.
How will public bodies be notified of the outcome of the approval process?
3.115 Once the pay proposals have been approved; a letter will be issued to the public body setting out the decision made and where appropriate any requirements or conditions made in respect of that decision. The public body can, if it wishes, request a meeting with Scottish Government officials to discuss the submission and the subsequent decision made.
Who is required to submit a settlement proforma?
3.116 All public bodies are required to complete a settlement proforma to confirm that the implemented settlement is wholly in line with pay policy. This confirmation will form an important part of the process to determine the risk rating for 2021-22 (see paragraph 3.90).
What are public bodies who analogue or align to another public body expected to provide?
3.117 All public bodies which align or analogue to another public body (referred to as the "host public body") are dependent upon the host public body having an agreed settlement before they can determine the impact for their own staff. The public body should discuss the affordability of the host pay award with their Sponsor team prior to implementation. If a public body is not able to fully implement the host public body's pay award then they should also discuss with the Finance Pay Policy team.
3.118 Public bodies which align or analogue to another public body are expected to submit a completed settlement proforma once they have implemented the pay settlement. This will confirm that they have implemented the pay award in line with the host public body as well as providing the supporting pay and equalities information.
Staff pay discussions and negotiations
When should a public body engage with its trade union(s)?
3.119 The policy encourages all public bodies to have constructive and collaborative pay discussions with their relevant trade union(s) on the development of their overall pay and reward strategies, prior to submitting their assessment proforma and / or their remit for formal approval.
3.120 However, while informal discussions can take place, public bodies must not enter into formal negotiations with their trade union(s) until their remit has been formally approved. Trade unions should note that points considered in informal discussions cannot be treated as agreed until the public body's pay remit is approved.
3.121 The approved pay remits sets out the public body's maximum negotiating position within the pay policy limits, taking account of affordability, and this will set the parameters for detailed negotiations with their recognised trade union(s).
3.122 If during pay discussions or negotiations any points arising regarding the application of the pay policy, public bodies and / or their trade unions are encouraged to speak with the Finance Pay Policy team to seek clarification.
What is the policy on legal commitments?
3.123 Approval of pay remits is on the basis that a public body does not enter into any legally-binding contractual agreements in trade union negotiations that effectively commits it to automatic costs in the future (i.e. beyond the duration of the approved remit).
3.124 All existing legally-binding commitments should take into consideration affordability and potential financial constraints in current and future years. All public bodies are advised to take legal advice on the drafting of pay commitments to ensure these are affordable and consistent with the pay remit process.
Can a public body make changes to its approved remit during negotiations?
3.125 If, during negotiations, a public body is considering: entering into an agreement that exceeds the key pay metric percentages approved in its remit, or; deviating from the basis of approval, then the public body will need to contact the Finance Pay Policy team. The team will advise if the public body requires to revise its proposals and / or seek further approval from the Scottish Government. Changes proposed within the limits approved are a normal part of negotiations and should not need to be referred for further approval unless the Finance Pay Policy team consider them novel or contentious.
3.126 Where a public body proposes to make any changes to its existing pay and grading structure, or any of its terms and conditions, at any time during the year and had not included the detail within the pay remit, they should contact the Finance Pay Policy team to discuss. The team will be able to advise if the changes require formal approval from the Scottish Government. Failure to notify the Finance Pay Policy team will result in the public body's outturn being rated Red and may result in further action as set out in paragraphs 3.129 to 3.131.
Staff pay settlements
What information is a public body required to provide once it has implemented its pay settlement?
3.127 It is important that public bodies provide confirmation that they have implemented their pay settlement and met all the conditions made as part of their approved remit in the settlement proforma. The settlement proforma must be completed and returned to the Finance Pay Policy team within one month of a public body's pay award being implemented.
3.128 Public bodies should contact the Finance Pay Policy team if they require any assistance in providing any of the required information.
What happens if a public body exceeds its pay remit?
3.129 Ministers expect all public bodies to adhere to the basis on which their remit has been approved. If a public body exceeds the key pay metrics in the approved remit; or deviates from the basis on which the remit was approved; or negotiates changes to pay and conditions without detailing or costing them in the pay remit proposals, then they will be considered to have exceeded the approved pay remit.
3.1310 There may be circumstances that could not have been foreseen at the time the public body submitted its remit for approval. If this means the public body will exceed or deviate from its approved remit, they must contact the Finance Pay Policy team at the earliest opportunity. The Finance Pay Policy team will advise if the changes require to be considered by Remuneration Group.
3.131 If Remuneration Group consider the issue needs to be brought to the attention of Ministers, it will then be the responsibility of the Sponsor team and Accountable Officer to justify the matter to the Portfolio Minister, and the Cabinet Secretary for Finance. Examples of this would be where the public body has significantly exceeded the approved remit, or has materially moved away from the basis of that remit. In such instances, the Remuneration Group expect Ministers will take action such as the capping of future pay remits or a governance review of the body.
Staff pay worked example
Using the flexibility to use paybill savings to address equality issues
3.132 The following example illustrates how the public body can choose to use the flexibility in the policy to use up to 1 per cent of identified paybill savings to address pay inequalities.
The example is based on a public body with 140.0 FTE across 9 grades and includes seasonal staff.
Current pay structure for staff (£)
| Grade | Min | Min+1 | Min+2 | Min+3 | Min+4 | Max |
|---|---|---|---|---|---|---|
| A | 17,965 | 18,465 | 18,965 | - | - | 19,465 |
| Seasonal | - | - | - | - | - | 20,250 |
| B | 20,250 | 20,750 | 21,250 | 21,750 | - | 22,250 |
| C | 23,750 | 24,500 | 25,250 | 26,000 | - | 26,750 |
| D | 29,000 | 30,000 | 31,000 | 32,000 | 33,000 | 34,000 |
| E | 37,000 | 38,250 | 39,500 | 40,750 | 42,000 | 43,250 |
| F | 46,000 | 47,500 | 49,000 | 50,500 | 52,000 | 53,500 |
| G | 56,000 | 58,000 | 60,000 | 62,000 | 64,000 | 66,000 |
| H | 70,000 | 72,750 | 75,500 | 78,250 | 81,000 | 83,750 |
Staff profile (FTE)
| Grade | Min | Min+1 | Min+2 | Min+3 | Min+4 | Max |
|---|---|---|---|---|---|---|
| A | 1 | 4 | 2.5 | - | - | 8.5 |
| Seasonal | - | - | - | - | - | 3.5 |
| B | 2 | 8.5 | 9 | 4 | - | 6.5 |
| C | 2 | 6.5 | 9.5 | 6.5 | - | 19.5 |
| D | 1 | 5 | 2 | 1 | 1 | 5 |
| E | 1 | 2.5 | 1 | 1 | 1 | 8.5 |
| F | 1 | 2.5 | 1.5 | 0.5 | 0 | 4 |
| G | 1 | 0 | 1 | 0 | 0 | 2 |
| H | 0 | 1 | 0 | 1 | 0 | 1 |
Base salary costs (£)
| Total net baseline paybill for all staff, of which: | £4,211,315 |
|---|---|
| Below the Lower pay threshold of £25,000 | £1,222,065 |
| Between the Lower and Intermediate pay thresholds: £25,000-£40,000 | £1,578,625 |
| Between the Intermediate and Upper pay thresholds: £40,000-£80,000 | £1,326,875 |
| Above the Upper pay threshold of £80,000 | £83,750 |
Summary of the proposals and costs for the proposed award as a percentage of baseline paybill:
| Increase applied | Cost | Percentage of base salaries |
|---|---|---|
| Applying progression under existing arrangements | £68,000 | 1.61% |
| Applying the real Living Wage(1) | £0 | 0% |
| £800 for those earning a full-time equivalent salary of £25,000 or less(1) | £50,978(2)(3) | 1.21% |
| 2% increase for those with full-time equivalent salaries between £25,000 and £40,000 | £35,395(4)(5) | 0.84% |
| 1% increase for those with full-time equivalent salaries between £25,000 and £80,000 | £13,069(5) | 0.31% |
| £800 basic pay increase for those earning £80,000 and above | £800 | 0.02% |
| Flexibilities – see breakdown below | £29,540 | 0.70% |
| Total | £197,782 | 4.70% |
(1) The Grade A minimum has been increased by £800 which is more than the real Living Rate.
(2) The £800 is pro-rated for part-time employees
(3) This includes £4,578 to provide a top-up staff in Grade C on pay points (Min+2 and Min+3) which are just above the Lower pay threshold (£25,000).
(3) This includes £828 to provide a top-up staff in Grade E on pay points (Min+3 and Min+4) which are just above the Intermediate pay threshold (£40,000).
(5) The cost of the percentage basic award is after applying the progression increase
In this example it has been assumed that the public body has a carry forward of 0.3% of flexibilities providing a maximum pot of 0.8% of which it is proposed to use 0.74%.
The flexibilities are costed as follows:
| Flexibility | Cost (£) | Percentage of baseline paybill |
|---|---|---|
| The cost of providing a £800 uplift on the Grade C pay maxima(1) | 6,890 | 0.16% |
| The cost of providing a 2% uplift on the Grade E pay maxima(2) | 4,109 | 0.10% |
| Removing Min+3 pay point in Grade B and equalising pay steps | 7,667 | 0.18% |
| Removing Min+3 pay point in Grade C and equalising pay steps | 10,875 | 0.26% |
| Total | 29,540 | 0.70% |
(1) This is costed under the flexibilities as the maxima is 58% of the pay range above the £25,000 Lower pay threshold. (see worked example at paragraph 3.39).
(2) This is costed under the flexibilities as the maxima is 52% of the pay range above the £40,000 Intermediate pay threshold. (see worked example at paragraph 3.50).
Proposed pay structure after applying just the basic pay increases (£)
| Grade | Min | Min+1 | Min+2 | Min+3 | Min+4 | Max |
|---|---|---|---|---|---|---|
| A | 18,765 | 19,265 | 19,765 | - | - | 20,265 |
| Seasonal | - | - | - | - | - | 21,050 |
| B | 21,050 | 21,550 | 22,050 | 22,550 | - | 23,050 |
| C | 24,550 | 25,300 | 25,755 | 26,520 | - | 27,285 |
| D | 29,580 | 30,600 | 31,620 | 32,640 | 33,660 | 34,680 |
| E | 37,740 | 39,015 | 40,290 | 41,158 | 42,420 | 43,683 |
| F | 46,460 | 47,975 | 49,490 | 51,005 | 52,520 | 54,035 |
| G | 56,560 | 58,580 | 60,600 | 62,620 | 64,640 | 66,660 |
| H | 70,700 | 73,478 | 76,255 | 79,033 | 81,800 | 84,550 |
Proposed pay structure after applying basic pay increases and flexibilities (£)
| Grade | Min | Min+1 | Min+2 | Min+3 | Min+4 | Max |
|---|---|---|---|---|---|---|
| A | 18,350 | 19,265 | 19,765 | - | - | 20,265 |
| Seasonal | - | - | - | - | - | 21,050 |
| B | 21,050 | 21,717 | 22,383 | - | - | 23,050 |
| C | 24,550 | 25,550 | 26,550 | - | - | 27,550 |
| D | 29,580 | 30,600 | 31,620 | 32,640 | 33,660 | 34,680 |
| E | 37,740 | 39,015 | 40,290 | 41,565 | 42,840 | 44,115 |
| F | 46,460 | 47,975 | 49,490 | 51,005 | 52,520 | 54,035 |
| G | 56,560 | 58,580 | 60,600 | 62,620 | 64,640 | 66,660 |
| H | 70,700 | 73,478 | 76,255 | 79,033 | 81,800 | 84,550 |
Staff profile after applying the pay award (FTE)
| Grade | Min | Min+1 | Min+2 | Min+3 | Min+4 | Max |
|---|---|---|---|---|---|---|
| A | 1 | 0 | 4 | - | - | 11 |
| Seasonal | - | - | - | - | - | 3.5 |
| B | 0 | 2 | 8.5 | - | - | 19.5 |
| C | 0 | 2 | 6.5 | - | - | 35.5 |
| D | 0 | 1 | 5 | 2 | 1 | 6 |
| E | 1 | 0 | 2.5 | 1 | 1 | 9.5 |
| F | 0 | 1 | 2.5 | 1.5 | 0.5 | 4 |
| G | 0 | 1 | 0 | 1 | 0 | 2 |
| H | 0 | 0 | 1 | 0 | 1 | 1 |
Contact
Email: financepaypolicy@gov.scot
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