Under the Localism Act, which will come into force in April 2012, all public authorities must publish annual pay policy statements.
The statement must set out the Authorities policies for the
financial year relating to:
b. remuneration of its lowest paid employees;
c. the relationship between the remuneration of its Chief Officers and the remuneration of those employees who are not Chief Officers.
The term 'Chief Officers' in a local authority
context is defined as:
b. The Monitoring Officer
c. A statutory Chief Officer and non statutory Chief Officer under section 2 of the Local Government and Housing Act 1989
d. A deputy Chief Officer mentioned in section 2 of that Act
It is up to the Public Authority to determine who its lowest
paid employees are but they must give reasons as to why they have
defined them as such.
The statement must include the Authority's policies
relating to:
a. The level and elements of remuneration for each Chief
Officer
b. Remuneration of Chief Officers on recruitment
c. Increases and additions to remuneration for each Chief
Officer
d. The use of performance related pay for Chief Officers
e. The use of bonuses for Chief Officers
f. The approach to the payment of Chief Officers on their ceasing
to hold office under or to be employed by the Authority
g. The publication of and access to information relating to
remuneration of Chief Officers.
The term remuneration is defined as follows:
a. the Chief Officers salary or, in the case of a Chief Officer
engaged by the Authority as a self employed individual, payments
made by the Authority to the Chief Officer for the services;
b. any bonuses payable;
c. any charges, fees or allowances payable by the Authority to the
Chief Officer;
d. any benefits in kind to which the chief officer is entitled as a
result of their office or employment;
e. any increase in or enhancement of the Chief Officer's
pension entitlement where the increase or enhancement is as a
result of the resolution of the Authority;
f. any amounts payable by the Authority to the Chief Officer on the
Chief Officer ceasing to hold office under or be employed by the
Authority other than amounts that may be payable by virtue of any
enactment.
The pay policy statement may also set out the Authority's policies for the financial year relating to other terms and conditions applying to the Authority's Chief Officers.
The statement must be approved by a resolution of the Authority
before it comes into force and it can be amended by resolution
after the financial year is underway but, if it is amended, it must
be published. The statement must always be published on the Public
Authority's website.
It is important to note that the first statement must be approved
on or before 31 March 2012 and the Public Authority must then
comply with their pay policy statements when making any
determinations on pay. Action should be taken now with a view to
publishing the statement in time.
The Authority should ensure that any statements on pay sit
alongside any JES which are applied. However, one must bear in mind
that for job evaluation purposes an Authority is assessing roles
horizontally (i.e. similar roles which are objectively evaluated as
being on the same grade), whereas for the purposes of the Pay
Policy Statement one is assessing roles vertically, in other words,
how do the wages of the highest earner within the Authority compare
to the wages of the lowest earner?
The introduction of this requirement raises several employment law
issues.
For example, if a Chief Officer's remuneration is
reduced in order to ensure that it is in accordance with the
determination of the Authority and in line with the Pay Policy then
this may give rise to an unlawful deduction from wages claim from
the employee or, indeed, a constructive dismissal claim where it is
considered to be a fundamental breach of contract.
It may also give rise to equality issues. When one compares those
in a Chief Officer role to the lowest paid employees it may be
clear from the statistics that each of the groups are from a
certain protected group. A pay policy would need to take account of
any equality considerations and be able to stand up to any
arguments of indirect discrimination by demonstrating that there is
a legitimate aim in the pay policy and that the manner in which it
is implemented is a proportionate means of achieving that
legitimate aim.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
