NOT FOR PUBLICATION by virtue of paragraphs 1, 2 and 4 of Part 1
of Schedule 12A to the Local Government Act 1972
HERTFORDSHIRE COUNTY COUNCIL
EMPLOYMENT COMMITTEE
MONDAY, 1 JULY 2013 AT 11.30AM
SALARY REVIEW APRIL 2013
CHIEF OFFICERS, DEPUTIES AND ASSISTANT
DIRECTORS AND HEADS OF SERVICE
Part 2
Agenda item No.
1
Report of the Chief Executive and Director of Environment
1.
Purpose of Report
1.1
To provide information to the Committee to enable it to make decisions on
those matters that it agreed at its meeting on 28 January 2013 should be
determined in July 2013.
2.
Summary
2.1
At its meeting on 28 January 2013 the Committee made decisions relating to
the pay review due in April 2013 for the Chief Executive and Director of
Environment and the Chief Officers and made recommendations to the Chief
Executive concerning the pay of Deputy and Assistant Directors and Heads of
Service.
2.2
The decisions made by the Committee on 28 January 2013 were:
(a) to apply no change to the salary of the Chief Executive and Director
Environment
(b) to review in July 2013 a ‘cost of living increase’ to the minimum and
maximum points of senior manager salary ranges
(c) that a performance related increase should be paid to those who
achieved an Exceed rating in their 2012/13 objectives; the amount of
such payment to be determined in July 2013
d) to review in July 2013 the payment of a performance related increase
for those who achieved a Fully Achieved outcome in their 2012/13
performance review
(The full text of the decisions made by the Committee on 28 January 2013 are
attached as Appendix 1 to this Report)
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2.3
The decisions mentioned above which were deferred until July 2013 were
deferred pending clarity on the overall financial position of the Council and the
relevant national pay and economic indicators.
2.4
The Committee needs to make decisions on the matters referred to in
paragraph 2.2 (b), (c) and (d) above in relation to Chief Officers and to make
recommendations to the Chief Executive on those matters in respect of
Deputy and Assistant Directors and Heads of Service.
3.
Recommendations of the Chief Executive
3.1.
Recommendations to the Employment Committee;
3.1.1 To apply a ‘cost of living’ increase to the minimum and maximum points of the
Chief Officer range by 1% in line with public sector increases proposed for
April 2013.
3.1.2 To apply a ‘cost of living increase’ of 1% (to be consolidated into pay) for all
Chief Officers who achieved an overall outcome of Fully Achieved or
Exceed in their 2012/13 performance review, backdated to 1 April 2013.
3.1.3 To apply a performance related increase of £1,000 (non consolidated into
basic pay) effective from 1 April 2013, to any Chief Officer who achieved an
overall outcome of Exceed, linked to delivery of the transformation agenda, in
their 2012/13 performance review.
3.2
Recommendations to the Chief Executive;
3.2.1 To apply a ‘cost of living’ increase to the minimum and maximum points of the
PMA, PMB and PMC salary range by 1% in line with public sector increases
proposed for April 2013.
3.2.2 To apply a ‘cost of living increase’ of 1% (to be consolidated into pay) for all
Officers on PMA, PMB and PMC who achieved an overall outcome of Fully
Achieved or Exceed in their 2012/13 performance review, backdated to 1
April 2013
3.2.3 To apply a performance related increase of £1,000 (non consolidated into
basic pay) effective from 1 April 2013, to any Officer on PMA, PMB or PMC
who achieved an overall outcome of Exceed, linked to delivery of the
transformation agenda, in their 2012/13 performance review
4.
Context for Senior Managers Pay
4.1
As of 1 June 2013 there are 118 senior managers in post.
4.2
The Council remains broadly competitive with similar councils for senior
manager pay. However there will be a significant impact to senior managers
total reward package from April 2014 due to the reform of public sector
pensions with pension contributions increasing significantly for higher earners.
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4.3
In April 2013 the NJC offered a 1% pay increase on all points effective from
the 1 April 2013 with the deletion of SCP 4 in October 2013. A final decision
is expected shortly. Unison has accepted a pay offer of 1% after a ballot of
members. We are still awaiting confirmation, however, from GMB and UNITE
and this is expected in early July. The indicators for public sector groups in
2013 are that pay awards will be limited to 1% on average. (See Table 1)
Table 1 - Public Sector Pay Settlements 13
Public Sector Group
Settlement Details
NJC Green Book
1% offered by NJC for 2013 with deletion of SCP 4.
Awaiting final outcome.
1% increase agreed - April 2013 and implemented for employees
on Agenda for Change and Medical Terms &Conditions.
Pay freeze 2012. No update on 2013 settlement.
1% increase provisionally agreed for September 2013 with
introduction of performance pay in September 2014.
1% increase in July 2012. 1% increase in July 2013
NHS
Police
Teachers
Fire Fighters (Grey Book)
JNC Youth & Community
Workers
Soulbury (Education)
The Skills Funding
Agency (Further Ed)
4.4
JNC have offered an increase of 1% from 1 September 2013 on pay and
allowance. Yet to be accepted by Trade Unions.
Pay freeze since 2009. No update on 2013 settlement.
Pay freeze 2012 (with staff reductions)
As part of the variation to terms and conditions in April 2012 for all employees
other than senior managers the payment of increments is linked to
performance for the first time from June 2013. This means that employees
receive any nationally negotiated cost of living increase (see above), and then
a performance related increment and / or one off payment (if they achieve an
Exceed rating) as set out in Table 2.
Table 2 – Performance Related Increment Awards
Performance rating
Not Met
Part Met
Fully Achieved (Met)
Exceed
Payment
 No increment
 No increment
 One increment, subject to the max of the pay grade
 One increment, subject to max of grade, + 1% unconsolidated payment
 2% unconsolidated payment , if already at max of grade
4.5
During 2013 it is proposed that a review of the Council’s approach to senior
manager pay will be undertaken to ensure that the system is fit for future
purpose. The current pay scheme dates back to the late 1990s and was
designed to meet the context of the Council at that time. Employment
Committee are being asked to approve the review at this meeting.
5.
Senior Manager Pay Options April 2013 (including Financial
Implications)
5.1
In April 2013 Chief Officers managed the moderation of all PMDS
performance ratings for Senior Managers with a final sign off via the Chief
Executive and Strategic Management Board. This was managed effectively to
achieve a consistent approach against an ideal distribution of ratings. Table 3
details both the ideal and actual performance ratings for 2012 and 2013.
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Table 3 - Ideal / Actual Distribution Performance Management Development Ratings
Year
Ideal
Distribution
Exceed
ratings
Actual
Distribution
Exceed
ratings
Ideal
Distribution
of Fully
Achieved
ratings
Actual Distribution of
Fully Achieved ratings
2012
2013
10 (10%)
11 (10%)
12 (11.8%)
18 (16%)
90.9 (90%)
101 (90%)
88 (87.13%)
89 (79%)
Notes:
Ideal distribution based on up to 10% of eligible population achieving an exceed rating.
5.2
In accordance with the decisions of this Committee taken in January 2013
consideration needs to be given at this meeting to the amount to be paid for
an Exceed rating and to the payment of a performance related increase for a
Fully Achieved rating. Four options have been illustrated in Table 4 below.
5.3
One of the options (Option 1) is to further delay any decision until agreement
is reached on the 2013 NJC settlement. If Option 1 is pursued a further date
will need to be set about when this should be reviewed again. Consideration
should also be given on the impact of a further delay.
5.4
Options 2 – 4 involve making a decision now. A Pay modelling table is
included as Appendix 2 which can be used to illustrate the impact on pay of
the different options.
Table 4 - Options (excludes on costs)
Details
Option 1
Option 2
To delay again
any decision on
senior
managers pay
until Apr 2013
NJC settlement
agreed
£2k Non
consolidated
payment for
Exceed
ratings only
(as per April
2011 / 2012)
TBC
Total =
£36,000
Costs
5.5
Option 3
(Recommended Option)
1% cost of living award,
consolidated into pay for
Fully Achieved and
Exceed
Option 4
1% cost of living award
consolidated into pay
for Fully Achieved and
Exceed
Exceeds additional
£1,000 non consolidated
payment
1% = £126,080
£1k for 18 Exceeds =
£18,000
Total: £144,080
£2,000 non
consolidated
payment for Exceeds
1% = £126,080
£2k 18 Exceeds =
£36,000
Total: £162,080
The Committee also decided in January 2013 to review at this meeting the
salary ranges for senior manager pay. It is proposed that a 1% increase is
applied to the actual salary ranges from April 2013. The table below sets out
the impact of this on the salary ranges if applied to the top and bottom of each
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salary band. If the pay scales were uplifted and Option 3 above was agreed
(i.e. apply a 1% increase consolidated into pay) there would be no employees
who fell outside the salary ranges.
Table 5 - Impact of 1% uplift on Senior Manager salary ranges for April 2013
Roles
Chief Officers
PMA
PMB
PMC
Salary Ranges April 2012
£115,000 - £155,290
£101,290 - £114,555
£74,270 – £102,155
£49,690 - £70,185
Salary Ranges 1% uplift
£116,150 - £156,843
£102,303 - £115,701
£75,013 - £103,177
£50,187 - £70,887
6.
Conclusions
6.1
The Council remains broadly competitive with similar councils for senior
manager pay. The overall context of financial pressures and ongoing public
sector pay restraint is also challenging at a time when the Council is placing
increasing emphasis on delivery of highly performing services. The number
of senior managers has reduced significantly since 2010 whilst the scope of
the remaining jobs continues to increase.
6.2
The recommendation of Option 3 in section 5 of this report, takes a slightly
different position on senior manager pay this year to previous years,
recommending a 1% consolidated cost of living increase to all senior
managers (Chief Officers / Deputy & Assistant Directors and Heads of
Service) who achieved either Exceed or Fully Achieved in 2013.
6.3
Usually cost of living increases are only applied to the salary ranges (not
individual pay) and senior managers received a performance increase which
included an element of ‘cost of living’.
6.4
However due to the current financial climate it would be appropriate in 2013 to
reward all ‘performing’ managers a moderate increase to base pay based on
the ‘market’ and then apply an additional payment to those who achieved
Exceed in their individual objectives. This aligns senior managers pay
practice with the rest of the workforce for pay adjustments in 2013.
7.
Next Steps
7.1
If the recommended option (Option 3) is employees will be sent a letter
setting out any amendments to pay and these will be implemented in July
payroll and backdated to April 2013.
7.2
Note: If Option 1 is selected this will need to be communicated to employees
and this is recommended to be done by email from the Chief Executive with a
date on when this decision will be taken.
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Appendix 1 – Employment Committee Decisions 28 January 2013
CONFIDENTIAL
EMPLOYMENT COMMITTEE
28 JANUARY 2013
PART II MINUTES
1.
SALARY REVIEW APRIL 2013
CHIEF EXECUTIVE, CHIEF OFFICERS, DEPUTY AND
ASSISTANT DIRECTORS AND HEADS OF SERVICE
Decision
The Committee agreed:1.
To apply no change to the salary of the Chief Executive and
Director of Environment.
2.
To agree to review a ‘cost of living’ increase to the minimum
and maximum points of the Chief Officer range; this review to
be undertaken in July 2013 following clarity on the overall
financial position of the Council and relevant national pay and
economic indicators. Any increases, if applicable, applied
from 1 April 2013.
3.
To apply a performance related increase (to be consolidated
into basic pay) to any Chief Officers who achieve an overall
outcome of Exceed, linked to delivery of the transformation
agenda, in their 2012/13 performance reviews. The amount
of such payment to be determined by the Employment
Committee in July 2013; the amount to be applied from 1 April
2013.
4.
To review the payment of a performance related increase (to
be consolidated into pay) for Chief Officers who achieve an
overall outcome of Fully Achieved in their 2012/13 performance
review; this review of payment to be undertaken in July 2013
following clarity on the overall financial position of the Council
and relevant national pay and economic indicators. Any
increases, if applicable, to be applied from 1 April 2013.
The Committee agreed to recommend to the Chief Executive:1.
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To apply the same ‘cost of living’ rises to the pay ranges for
Deputies and Assistant Directors (PMA/B) and Heads of
Service (PMC) as for Chief Officers.
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2.
To apply the same approach to the payment of a performance
related increase for a rating of ‘Exceed’ (to be consolidated
into pay) for Deputies and Assistant Directors (PMA/B) and
Heads of Service (PMC) as for Chief Officers.
3.
To apply the same approach to review the payment of a
performance related increase for a rating of ‘fully achieved’ (to
be consolidated into pay) for Deputies and Assistant Directors
(PMA/B) and Heads of Service (PMC) as for Chief Officers.
4.
That the distribution of performance ratings for 2013 will be
moderated, with advice from the Head of HR & OD, via a
collective moderation process.
Appendix 2 - Pay Modelling
Salary
£50,000
£60,000
£70,000
£80,000
£90,000
£100,000
£110,000
£120,000
£130,000
£140,000
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1% Cost of Living Award
Salary
Value of 1%
Increase
£50,500
£60,600
£70,700
£80,800
£90,900
£101,000
£111,100
£121,200
£131,300
£141,400
£500
£600
£700
£800
£900
£1000
£1,100
£1,200
£1,300
£1,400
Non
Non
Consolidated consolidated
Increase £1k Increase £2k
for Exceeds
for Exceeds
2%
4%
1.66%
3.33%
1.42%
2.86%
1.25%
2.5%
1.11%
2.22%
1%
2%
0.91%
1.82%
0.83%
1.67%
0.77%
1.54%
0.71%
1.43%
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