Public sector pay policy: technical guide - April 2025

4. Staff Pay Remits

Pay remit assessments

4.1 The pay remit approval process that public bodies should follow is set out below.

• Complete Pay Remit - Business Case and Proforma. The two documents should be completed by the Public Body, detailing the proposed pay award and any changes to non-pay elements. (Further detail on what should be considered and what is required is provided in paragraphs 4.2 to 4.32 below and 4.35).
• Testing the proposals. The proposals should be submitted to the Public Body’s Sponsor Team^[5]. The Sponsor Team will undertake an initial assessment of the remit and will lead engagement with Finance Business Partners and the Public Sector Pay team as and when required. (See paragraphs 4.36 to 4.39).
• Public Sector Pay Team Assessment of proposals. The Sponsor Team should submit the final proposals to the Public Sector Pay team. The Public Sector Pay team will advise the Sponsor Team on the approval requirements. (See paragraph 4.36 and the details of the approvals process are set out in paragraphs 4.41 to 4.57).
• Settlement. Once the pay award has been implemented, the Sponsor Team will submit settlement data detailing true costs to the Public Sector Pay team within 1 month. (See paragraphs 4.40 and 4.69 to 4.70)

4.2 Public bodies are expected to implement their pay increases on the recognised settlement date (which is 1 April for the majority of public bodies) and the details and costs of applying these increases should be included in the pay remit proposals which will be assessed on:

• affordability and sustainability - the financial impact of the pay remit proposals. The costings should also include 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
• · alignment with the published Public Sector Pay Policy.

Limit on the overall increase for pay

4.3 The aim of the Pay 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.

4.4 It is the responsibility of each organisation to ensure their full paybill costs are affordable and can be met from within their agreed^[6] budget provision and to adhere to the Pay Policy metrics.

4.5 Public bodies will need to include the cost of all elements of their pay 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 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.

4.6 It is a matter for individual public bodies and their trade unions/staff representatives to make decisions on their proposed pay remit and how they will meet the cost within the agreed⁵ financial settlement. Employers and their trade unions/staff representatives should give consideration to securing productivity improvements and savings 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 Pay 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.

The real Living Wage

4.7 Scottish Ministers support the payment of the real Living Wage across all sectors. Public bodies must pay at least the real Living Wage. The position for Interns and Modern Apprentices is set out in paragraphs 4.15 and 4.16.

4.8 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.

Smoothing

4.9 If a public body proposes a pay award that includes either a cash underpin or applies thresholds, then they may seek to provide tapered increases (smoothing) for staff who are on pay points that are just above any threshold.

Pay protection and/or linking pay to performance

4.10 Where 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. The public body is required to set out the details of their relevant remuneration policies and the number of staff affected in their business case.

Costs to be included in the pay remit

4.11 The pay remit costings must include the cost of all^[7] 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.

4.12 Proposals which carry a notional cost (such as, for example changes in the qualifying period for annual leave etc.) should also be included in the pay remit. Public bodies will be required to provide the detail 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 pay remit proforma, with confirmation the costs will be affordable within agreed budget provisions.

4.13 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 4.6):

• progression (if proposed)
• applying the real Living Wage
• basic pay increase for staff
• any other changes to existing pay and grading structure
• the costs of changing or introducing allowances or non-pay benefits
• 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.

Costs outwith the pay remit assessment metrics

4.14 Any changes to the baseline paybill such as mandatory increases to the employer’s pension and/or National Insurance contributions; increases related to ensuring the financial health of the pension fund; 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. These costs 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 with a note of the methodology for the calculation.

Modern Apprentices and Interns

4.15 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 either of the following roles:

• 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. The public body would be required to pay the Modern Apprentice the established rate for the job on completion of the agreed training period.

4.16 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 4.15 for Modern Apprentices. The expectation is that employers should pay at least the real Living Wage rate, or where the intern is undertaking a job equivalent to other staff within the organisation, the minimum equivalent salary point.

Progression

4.17 Nothing in the Pay Policy is intended to interfere with existing pay progression arrangements or to constrain discussions between employers and staff on this issue. Where necessary, public bodies must ensure they have sought legal advice as to the extent of contractual obligations in relation to paying progression. Any progression increase should not result in an individual exceeding their recognised pay maxima.

4.18 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 4.10).

4.19 Decisions taken to pay progression should be based on business needs in order to maintain services and affordability. Where there are affordability pressures, decisions may be required to cap or suspend progression. 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.

4.20 All proposals to cap or suspend progression will require to be set out in the supporting business case. This should include the rationale for the decision, affordability, legal advice and evidence of meaningful engagement with trade unions. This should ensure that the perspectives of employee representatives are considered and that the proposal is developed transparently and collaboratively.

4.21 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. 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 into account the residual progression costs from the previous year. The savings may be noted for affordability of the pay remit as detailed in paragraph 4.35.

4.22 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 overall paybill metrics. The Pay Policy encourages public bodies to continue working towards ensuring maximum journey times are no more than 5 years.

4.23 Where there are affordability pressures, the public body must contact their Sponsor Team at the earliest opportunity.

Addressing inequalities

4.24 The Pay Policy sets the overarching framework, and public bodies have the flexibility to draw up their own pay proposals which consider workforce planning and local pay issues such as recruitment and retention, equality, and the impact of the low pay measures on other staff. The pay negotiation principles within the Pay Policy actively encourage employers to consider their own staffing profile, local evidence, views of staff and unions, and equality issues in framing their pay proposals. While the list below is not exhaustive, examples of what could be included are:

• inequalities arising from recruitment and retention issues
• pay coherence and closer alignment to equivalent Scottish Government pay ranges and/or terms and conditions
• removing / changing out-dated allowances
• changes to wider HR policies
• additional non-consolidated increases to help reduce the impact of inflation on take-home pay particularly for lower earners.

4.25 The cost of addressing inequalities should be included within the pay remit costings and public bodies are expected to demonstrate the proposed changes are affordable and sustainable so they do not create pressure on future baseline paybills.

4.26 To assist public bodies in framing their proposals, some guiding principles/benchmarks are:

• 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 should be within the limits set out in the Pay Policy and 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
• the proposals can be evidenced to show a tangible improvement (such as reducing the existing overall income gap and/or gender pay gap).

Aligning or submitting joint pay proposals

4.27 The Pay Policy continues to encourage smaller^[8] bodies to consider making a business case to analogue, or align, with another appropriate existing pay system (such as the Scottish Government or another Agency or Non-Departmental Public Body) which will be referred to as the host public body.

4.28 Thereafter, a brief review of the alignment arrangements should be carried out regularly to ensure it remains fit for purpose and continues to allow the body to recruit, retain and motivate its staff.

4.29 Public bodies considering putting forward a case to align to another public body’s pay system should speak to their Sponsor Team and the Public Sector Pay team in the first instance.

4.30 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 their Sponsor Teams and the Public Sector Pay team. Public bodies seeking to align in this way should consider the pay coherence guidance at paragraph 2.27.

Legally committed pay award elements

4.31 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
• the timeframe for its resolution.

4.32 Public bodies should note the basis of approval of pay remits in paragraphs 4.64 to 4.66 and ensure they do not create any new contractual obligations.

Pay remit approvals process

4.33 Public bodies should submit their staff pay proposals to their Sponsor Team within the Scottish Government in sufficient time to ensure that they can implement their pay settlement as close to the date on which it is due (which for the majority of public bodies is 1 April).

4.34 Public bodies that analogue or align to another public body can only submit their pay proposals once the host public body that they analogue to has completed their negotiations and agreed a pay settlement.

4.35 Public bodies should provide a business case which summarises their pay proposals. This should include the key elements of the pay proposal and a summary of any changes to terms and conditions, including any non-pay elements. Public bodies are also required to complete a remit pro forma in which they provide:

• the baseline position for the current year
• indicative costs for applying the proposed pay award including basic pay increases, progression and where relevant, proposals to address inequalities – see paragraphs 2.13 to 2.18
• forecast paybill savings and the likelihood of being able to deliver these savings.

4.36 The Sponsor Team will assess the pay proposals and highlight any issues or affordability pressures. As part of that process, the Sponsor Team will consult with:

• the Finance Business Partner who will provide guidance on affordability in respect of the optimum funding envelope
• the Public Sector Pay team who will provide guidance on any Pay Policy queries and advise on the approvals process which will enable public bodies to engage in formal pay negotiations with their staff representatives/trade unions-the Public Sector Pay team will consider each finalised proposal to ensure that it aligns with the agreed pay metrics and does not create any unhelpful precedents. The key risks for contagion are the level of the proposed pay metrics and non-pay elements.

4.37 Any proposals which are assessed as unaffordable or exceed Pay Policy parameters are unable to be put forward for approval.

4.38 The Scottish Government's pay proposals require to be approved by Scottish Ministers. Analogue bodies’ will be required to discuss affordability of applying the Scottish Government’s pay offer with their Sponsor Team before implementing. It is the responsibility of the Sponsor Team to ensure the Public Sector Pay team is included in all relevant correspondence.

4.39 The process 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.

4.40 The public body is required to submit settlement information to their Sponsor Team and the Public Sector Pay team within one month of the implementation of a pay award.

4.41 Ministers have decided some remits may be delegated to be approved by the Scottish Government’s Remuneration Group or Senior Officials. The Public Sector Pay team will advise on the approvals process for all pay proposals. The table below summarises the key criteria which will inform the approval route.

Approval Routes

Senior Officials (see paragraphs 4.42 to 4.46 ) Criteria:

• The current proposals are within the metrics of the Pay Policy framework and are not considered novel or contentious or to be setting a precedent.
• Projected paybill costs and staffing numbers are consistent with the budget allocations.
• Proposals are demonstrably affordable and sustainable.

Remuneration Group (see paragraphs 4.47 to 4.51 ) Criteria:

• Proposals which might be considered as novel or contentious or could set a precedent across the wider public bodies covered by Public Sector Pay Policy.
• Projected paybill costs and staffing numbers are consistent with the budget allocations.
• Proposals are demonstrably affordable and sustainable.

Ministers (see paragraphs 4.52 to 4.53 ) Criteria:

• The Scottish Government’s pay proposals.
• The proposals do not align with the objectives of the Pay Policy.
• Proposals might be considered as contentious or could set a precedent across the wider public bodies covered by Public Sector Pay Policy.
• Proposals which are not affordable.

Senior Official approval

4.42 Depending on whether the public body is a Non Departmental Public Body, Public Corporation, Agency or associated department, the following Senior Officials within the relevant sponsor area can approve:

Public body:

Non Departmental Public Body or Public Corporation

• Portfolio approval: Director of the relevant Sponsor Directorate^[9]

Agency

• Portfolio approval: Director General^[10] of the relevant Sponsor Directorate

Associated department

• Portfolio approval: Permanent Secretary

4.43 The Deputy Director for Public Spending and the Public Sector Pay team should be copied in to all proposals that are submitted for portfolio approval.

4.44 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 the Remuneration Group.

4.45 Once the pay remit has been approved, the public body can then engage in formal pay negotiations. They are 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 their Sponsor Team and the Public Sector Pay team before concluding pay negotiations (see paragraphs 4.66 to 4.68).

4.46 The public body is required to submit a settlement proforma within one month of the pay award being implemented (see paragraphs 4.67 to 4.68).

Remuneration Group

4.47 All proposals that require Remuneration Group consideration need to have the support of the relevant portfolio Senior Official as detailed at paragraph 4.42.

4.48 It is the responsibility of the relevant Senior Official in the sponsor directorate to put the submission to the Remuneration Group to consider the proposals. The submission should include the advice from the Public Sector Pay team and the Finance Business Partner. On the basis of this information, the Remuneration Group will decide whether to approve the proposals, to seek further information or, where they consider the proposals as novel or having the potential of a wider read-across to other public bodies, to refer them to Ministers.

4.49 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.

4.50 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 their Sponsor Team before concluding pay negotiations (see paragraphs 4.66 to 4.68).

4.51 All public bodies are required to submit a settlement proforma within one month of the pay award being implemented (see paragraphs 4.67 to 4.68).

Ministers

4.52 Ministers will be required to approve the pay proposals from the larger public sector workforces where there is a higher risk of setting a precedent as well as the Scottish Government Main Bargaining Unit to ensure good governance.

4.53 If the current remit proposals are not considered to be within the Pay Policy limits, the public body will be asked to revise its proposals to bring them in line with Public Sector Pay Policy. If proposals remain outwith Pay Policy limits, they will be required to be submitted to Ministers for their consideration, including the views of the Remuneration Group.

Approval times

4.54 The aim will be to approve straightforward proposals within four weeks.

4.55 To achieve this timescale, it is important that the remit proposal includes all the necessary information, and the public body responds timeously to any queries raised. The Sponsor Team and Public Sector Pay team will aim to provide feedback on the initial proposals within five working days. The Sponsor Team will advise on any potential delays.

4.56 If the proposals require to be considered by Remuneration Group and/or Ministers, approval may take longer to allow time for the Sponsor Team to prepare the formal submission and submit it to the Remuneration Group and/or Ministers. The Sponsor Team will advise on expected timescales. See paragraphs 1.28 to 1.30 and 4.57.

4.57 All final, cleared papers must be with the Remuneration Group Secretariat within the requisite timescales for submission of papers as detailed on the Public Sector Pay webpages.

Notification of approval outcome

4.58 Once the pay proposals have been approved the Sponsor Team will notify 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.

Analogue or aligned to another public body

4.59 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. Once this the host pay settlement is agreed the public body should submit a remit proforma and light touch business case setting out the affordability of the host pay award to their Sponsor Team for approval and Public Sector Pay team consideration prior to implementation. If a public body is not able to fully implement the host public body’s pay award then their Sponsor Team will also discuss with their Finance Business Partner and the Public Sector Pay team.

Staff pay discussions and negotiations

Public body engagement with trade unions

4.60 The Pay Policy encourages all public bodies to have constructive and collaborative pay discussions with their relevant trade unions on the development of their overall pay and reward strategies, prior to submitting their assessment proforma and/or their remit for formal approval.

4.61 However, while informal discussions can take place, public bodies must not enter into formal negotiations with their trade unions 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.

4.62 The approved pay remit 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 unions.

4.63 If during pay discussions or negotiations any points arise regarding the application of the Pay Policy, public bodies and/or their trade unions are encouraged to speak with their Sponsor Team and then the Public Sector Pay team to seek clarification.

Legal commitments

4.64 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).

4.65 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.

Changes to approved remits during negotiations

4.66 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 their Sponsor Team in the first instance. Advice will be provided to determine if the public body requires to revise its proposals and/or seek further approval from the Scottish Government. Changes proposed within the limits of the approved remit are a normal part of negotiations and should not need to be referred for further approval unless their Sponsor Team considers them novel or contentious.

Staff pay settlements

Information required once pay award implemented

4.67 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 Sponsor Team within one month of a public body’s pay award being implemented.

4.68 Public bodies should contact their Sponsor Team if they require assistance in providing any of the required information. The Public Sector Pay team will provide advice to Sponsor Teams as required.

Exceeding a pay remit

4.69 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.

4.70 There may be unforeseen circumstances that occur after 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 their Sponsor Team at the earliest opportunity. The Sponsor Team will consult with the Public Sector Pay team who will advise if the changes require to be considered by the Remuneration Group.

4.71 If the 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 capping future pay remits or a governance review of the body.