Public sector pay policy for staff pay remits 2019-2020: technical guide

Supports the application of the 2019-2020 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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A. Glossary Of Terms Used In The Public Sector Pay Policy Documents

Baseline paybill: The cost of employing staff for the full 12 months of the pay remit year before implementing the pay award. It should include mandatory increases in employer's pension or National Insurance contributions (NIC) but exclude the costs of increases in pay and benefits for which approval is being sought. The baseline paybill may also include other paybill increases that are not directly a result of the proposed pay award such as the changes to paternity pay and leave entitlement (or holiday pay) etc.

Baseline salaries: These are the base salaries before implementing the pay award. As such they exclude allowances, overtime, employer's pension or National Insurance contributions (NIC).

Basic award: This is normally,the inflation or cost of living element of the pay award. It is one element of a standard remit. The basic award has different meanings in different pay systems. For public bodies with a step or spine based system it refers to the revalorisation of steps/spines. For those without step or spine based mechanisms for pay progression the basic award will normally be defined as the consolidated increase to the pay range minima, maxima, milestones and/or individual employee's base salaries within the pay range.

Business case: A document which contains additional information and evidence to support the proposals that are being made.

Buying-out: The offering of a one‑off non-consolidated payment in return for agreeing to the removal of a particular pay or non-pay reward.

Coherence: The principle of aligning levels of pay towards a market median with the aim of making sure individuals undertaking similar roles in different public bodies receive similar levels of pay.

Consolidated performance payments: Payments that reward exceptional or outstanding performance and are consolidated into individual employees' basic pay.

Financial proforma: Excel spreadsheets that set out: what was actually paid as a result of the last pay award; the costs of the increase in pay and benefits proposed and details of the pay and reward structure as well as details of current and projected staffing.

Harmonising: A process of equalising the pay and benefits of two or more groups of staff usually following a merger.

Hourly rate: The hourly rate should be calculated on the same basis as the National Minimum Wage as defined by HM Revenue and Customs.

Increase for staff in post (ISP): This is the cost of the proposed increase in pay and benefits to an average member of staff as a percentage of the baseline paybill.

Increase in paybill per head: The result of comparing the paybill per head for the current remit with the paybill per head for the last remit. It is expressed as a percentage of the paybill per head for the last remit.

Lower Pay Threshold: set at £36,500 for 2019-20 the level at which approximately 50 per cent of all public sector employees earn below.

Maximum / maxima: The highest point on a pay range, sometimes known as the rate for the job this includes staff who are on spot rates of pay. Staff are not normally paid above the maximum of their pay range. Where a member of staff is paid above the maximum and eligible for a pay increase, the award should be non‑consolidated. There should also be arrangements to move such staff onto their pay range maximum within a defined time scale. Such staff are often referred to as "red-circled".

Minimum / minima: The lowest point on a pay range. Staff are not normally paid below the minimum of their pay range. Where a member of staff is paid below their pay range minimum there should be arrangements to move them onto their pay range minimum within a defined time scale. Such staff are often referred to as "green‑circled".

Net Base Salary: This is an individual's salary excluding allowances and on-costs (pension and NIC).

Net Paybill Increase: This is the percentage increase to the baseline paybill as a result of the pay proposals. The New Money is the monetary value of the proposed increase in pay and benefits added to the existing paybill.

Non-consolidated performance payments: Payments that are not consolidated into basic pay. These are normally payments such as bonuses or performance payments or payments to staff on their maxima (subject to satisfactory performance). They are not pensionable and are awarded to staff based on performance at an individual, team or organisational level. Such payments are re-earnable and do not have associated future costs. Currently such payments are suspended.

Non-consolidated pot: Percentage of consolidated baseline paybill used to make non-consolidated performance payments. Once established, the percentage is carried forward in the baseline paybill each year for the use of making future non‑consolidated performance payments.

Notional cost: These are costs which have a benefit to the individual but with no actual cost to the employer. This could for example include changes to the working week, annual leave or public holiday entitlement.

Pay ranges: The pay scale for each grade or role within a public body, with a minimum and a maximum or target rate and through which staff progress as they develop in knowledge, skills, experience and performance. It is not normal for staff to be paid at a level either below the pay range minimum or above their relevant pay range maximum.

Pay remit: Pay proposals made by public bodies that seek approval for increases in pay and benefits for staff.

Paybill: The full annual cost of employing the staff subject to the pay remit, including employer's pension and National Insurance contributions (NIC).

Paybill per head: This is calculated by dividing the total paybill by the number of staff (full time equivalent).

Paybill savings: Savings in the Paybill that can be used to part fund a pay award.

  • Permanent savings such as recyclable savings; savings resulting from the removal of outdated allowances; reductions in overtime costs and reductions in staffing. These will all have an impact on future baseline paybills.
  • In-year non-recurring savings such as deferring filling vacant posts which result in a saving only in the year in which they are implemented.

Progression: The movement an individual makes from the minimum of a pay scale to the maximum or target rate. For example if a pay range had 6 spine points an individual would expect to progress from minima to target rate in 5 years. The policy expects the movement to be dependent on performance or competency.

Progression journey times: The number of years it takes to move from the minimum of a pay range to the maximum or target rate.

Public sector labour market: The labour market data provided by the Finance Pay Policy team. This covers the public bodies in Scotland subject to Scottish Government policy on public sector pay.

Recyclable savings: Savings which are a consequence of a more highly paid member of staff being replaced by a lower paid individual (see Paybill Savings).

Relevant labour market: The Scottish public sector labour market or a more appropriate specific or specialist labour market for specific workforce groups, specialisms or locations.

Salary Sacrifice Scheme: HM Revenue and Customs define a salary sacrifice as "when an employee gives up the right to receive part of the cash pay due under his or her contract of employment. Usually the sacrifice is made in return for the employer's agreement to provide the employee with some form of non-cash benefit. The 'sacrifice' is achieved by varying the employee's terms and conditions of employment relating to pay".

Scottish Living Wage: this is the annual amount an individual must earn, before tax, to afford a basic but acceptable standard of living. The annual gross salary is rate based on a 37 hours working week as this is the most common length of week for public bodies covered by the pay policy. This is then multiplied by the hourly rate and 52.2 weeks per year to calculate the annualised figure.

Spot rates: staff who are on spot rates of pay should be treated in the same way as staff who are on their pay range maximum.

Standard remit elements: The elements which form part of almost all pay remits: progression, the basic award, non-consolidated payments (over and above the existing non-consolidated pot included the baseline paybill), consolidated performance payments and the resulting increases in the costs of overtime, allowances, employer's pension and National Insurance contributions (NIC).

Submission: The paper to senior officials, the Remuneration Group or Ministers which seeks approval for the proposed increases in pay and benefits.

Target rates: The points in a pay system that reflects competence in a role, often the maxima of the pay ranges.

Total increase for staff in post (TISP): This is the full cost of the proposed increase in pay and benefits to an average member of staff, regardless of whether or not they add costs to the paybill,as a percentage of the Baseline Paybill.

Total reward: All rewards for staff, including base pay, performance related pay, bonuses and employee benefits, such as flexible working and training & development opportunities.

Turnover: The movement of staff out of and in to the organisation in a year.

Upper Pay Threshold: set at £80,000 for 2019-20.



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