Sector Pay Policy : 2008 - 09 - Briefing 183
This briefing provides an overview of the Scottish
Government's guidance for Scottish Public Sector Pay Groups in
This pay policy guidance applies to those public
sector bodies whose pay requires the approval of Scottish Ministers.
This includes the Scottish Government, Executive Agencies and
related Departments which have their own pay bargaining units
and others such as: Scottish Water, Learning & Teaching Scotland
and Highlands and Islands Airports Limited
The policy for 2008/09 applies to those public bodies
who will enter new pay settlements between May 2008 and April
The Scottish Government states that it aims to keep
pay settlements moderate, affordable and sustainable while allowing
some flexibility to allow more money to be targeted at specific
issues. These include addressing inequalities in pay and reward
systems and making sure that public bodies can recruit, retain
and motivate their staff.
The paper states that public bodies can negotiate
their pay awards to cover more than one year, with the length
of any deal being an issue for each public body and its recognised
The paper sets out what the relevant public bodies
have to do in order for the Scottish Government to approve their
pay remit proposals. This includes details of what was actually
paid out in their last pay award and the current remit proposals
as well as a business case that provides the information and evidence
supporting any proposal.
Standard Remit Increase
Excluding key priorities (see below) the general
guidance is that the total limit on standard remit elements is
an increase for staff in post (ISP) of 3.75%. This figure relates
to the cost of the proposed increase in pay and benefits as a
percentage of the baseline paybill.
However, within this amount the basic award (the
inflation/ cost of living element of the pay award) is limited
to no more than 2%. The current inflation rate (RPI) stands at
4.2% (April 2008).
The other elements contained within the standard
remit limit include performance related bonuses and increases
in overtime, allowances etc that result from the increase in pay
and benefits proposed.
Key Pay Policy Priorities
The guidance highlights some specific priorities
that should be addressed within the pay guidance. These are:
• inequalities within pay and reward systems and
• recruitment, retention or motivation issues that
directly impact on a public body's ability to deliver outcomes.
The headline cost of the full pay award (standard
and key pay policy elements) must not exceed 4.5%.
The sum of money available within a pay remit to
address the above depends on the cost of the standard remit proposals.
If the average increase under the standard remit is less than
3.75% there will be more available to address the pay priority
A further method for funding these priorities is
through recyclable savings. However any such savings that are
redirected to pay will be on top of savings already planned to
have been delivered or needed to deliver within the Efficiency
Delivery Plans 2008-11. These savings must be delivered in the
year in which they are being re-used.
The measures proposed to address the key pay policy
priorities fall into one or more of the following 3 categories:
- An increase in benefits or non-pay rewards
Examples include an increase in annual leave for
staff or a reduction in the hours in a working week. The additional
benefit for staff will not add actual costs to the paybill and
will therefore not impact on the headline cost limit to all
proposals of 4.50%.
These are proposals which have actual costs but
these are limited to a single year. These could include one-off
increases to buy out certain terms and conditions.
Increases with ongoing cost implications
This category covers increases which have ongoing
cost implications and therefore have the potential to significantly
increase paybills. They usually involve changes to pay and reward
structures or increases to minima and maxima of pay ranges above
the level of the basic award.
Although there are limits on the increases in pay
and benefits that can be made in any year, there is an exception
for the one-off costs of harmonising terms and conditions of employment
of different groups of staff as a direct result of the Scottish
Government's drive to have fewer national public bodies. Harmonisation
usually involves the buying-out of the more beneficial terms and
conditions of employment for one group of staff.
However, this does not apply to any increases in
the pay or non-pay benefits for the existing staff group. These
costs will count against the policy limits.
For multi-year pay deal it is possible to average
the basic award over the period of the pay remit deal so long
as the average basic award is no more than 2.00%.
It is also possible for organisations to make increases
to the minimum and maximum rates in their pay range. However when
deciding their maximum rates, these should be compared to the
medians of the maxima in the public sector labour market or a
particular labour market if that is more appropriate (i.e. for
specialist posts). Where the maxima is more than 5% above the
comparator, any rise in the basic award must be below 2%.
Proposals to make additional increases to the minima
of an organisation's pay ranges should take into account the "Solidarity"
target in the Scottish Government's Economic Strategy which is
"to increase overall income and the proportion of income
earned by the three lowest income deciles as a group by 2017"
by specifically considering your lowest paid groups of staff.
Action for Branches Further Information
This briefing paper is intended to update members
on the Scottish Government's Public Sector Pay Policy 2008-09
and to encourage debate within branches.
Scottish Government: Public Sector Pay Policy 2008-09
@ the P&I Team
14 West Campbell St
Tel 0845 355 0845
Fax 0141 307 2572
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