COMMITTEE FOR FINANCE AND PERSONNEL

COMMITTEE MOTIONS

Senior Civil Service Pay and Bonuses

Information from DFP on Bonuses to Senior Civil Servants (SCS) in 2007/08

Assembly Section

Craigantlet Buildings
Stormont
BT4 3SX
Tel No: 02890 529147
Fax No: 02890 529148
email: Norman.Irwin@dfpni.gov.uk

Mr Shane McAteer
Clerk
Committee for Finance and Personnel
Room 419
Parliament Buildings
STORMONT

25 June 2008

Dear Shane

I have been asked to provide you with information about the bonuses paid to Senior Civil Service staff in the year 2007/2008.

The Northern Ireland Civil Service (NICS) generally mirrors the pay arrangements that apply to Senior Civil Service staff in the Home Civil Service. For the purposes of the annual pay award, the NICS applies the recommendations of the annual report of the independent Senior Salaries Review Body (SSRB) relating to Senior Civil Service pay in so far as they are accepted by the Government, and the supplementary guidance developed by the Cabinet Office.

In June 2007 the then Minister of Finance and Personnel accepted that the recommendations of the 2007 SSRB report should be applied to the NICS Senior Civil Service. An NICS Senior Civil Service pay strategy was then developed to reflect the SSRB recommendations and the associated Cabinet Office guidance.

I have enclosed a copy of the 2007 Senior Civil Service Pay Strategy which explains how decisions on the allocation of basic pay awards and non-consolidated bonus awards were made, the criteria used to make such decisions and the percentage of staff which received each category of basic pay and non-consolidated bonus award.

As part of the 2007 pay award, 49 staff received a Level 1 bonus, 50 staff received a Level 2 bonus, 50 staff received a Level 3 bonus and 50 staff received no bonus.

Yours sincerely

NORMAN IRWIN

NORTHERN IRELAND CIVIL SERVICE SENIOR CIVIL SERVICE PAY STRATEGY 2007

The aims of the NICS SCS pay strategy are:

to provide better incentives for delivering key results;
to give significant rewards to best performers;
to encourage continuous improvement ;
to enable the Service to compete in the market for high quality staff;
to achieve a simple, transparent and efficient pay system.

The SCS pay award is effective from 1 April and payable to staff in post at that date. It rewards performance over the year 1 April 2006 to 31 March 2007. The 2007 SCS base pay award will not be staged but will be payable at 1 April. Non-consolidated bonus payments will not be paid until 1 November 2007. An officer who is awarded a non-consolidated bonus but who retires or resigns before 1 November will still be eligible to receive payment of the non-consolidated bonus at 1 November 2007.
The NICS will shadow the pay arrangements in place for SCS staff in the Home Civil Service. The NICS therefore applies the recommendations of the Senior Salaries Review Body (SSRB), taking account of any supplementary guidance from Cabinet Office.
There are two elements to the SCS pay award – a base pay uplift and a non-consolidated bonus. The base pay award is determined on an assessment of performance, growth in competence, overall contribution and job challenge relative to peers. The award of a non-consolidated bonus is based on in-year delivery relative to objectives or other short-term personal contributions to wider objectives within the business area, as measured against specified criteria. Non-consolidated bonuses are not dependent on tranche allocation.

Pay Band Structure

The NICS operates a pay band structure for the SCS below Permanent Secretary as indicated below. Pay Band 1 covers Assistant Secretary level posts, Pay Band 2 covers Deputy Secretary posts. The pay bands effective from 1 April 2007 are:

Pay Band	Minimum £	Progression Target Rate (PTR) £	Recruitment & Performance Ceiling (RPC) £
1	56,100	78,540	116,000
2	81,600	N/A	160,000

From April 2004 the Cabinet Office introduced greater flexibility in order to allow Departments more clearly to differentiate between levels of performance and reward within an overall cost envelope – in 2007 this cost envelope is 2.6% for base pay, which limits the scope for differentiation. Following discussion at PSG, it was agreed that the aim should be to get Tranche 2 performers as close as possible to the inflation rate within the overall cost envelope of 2.6%, while allowing some limited differentiation for Tranche 1 and Tranche 3 performers. Accordingly, the following pay arrangements for Pay Bands 1 and 2 will apply for the 2007 SCS pay award.

Performance Tranche	Pay Band 1 below PTR at 31 March 2007	Pay Band 1 Above PTR at 31 March 2007	Pay Band 2 – All staff
Tranche 1 (25%)	3.75%	3%	3.75%
Tranche 2 (65 – 70%)	2.25%	2.0%	2.25%
Tranche 3 (5-10%) satisfactory performers	1%	1%	1%

Any SCS member in Tranche 3 whose performance is deemed unsatisfactory will receive no base pay award.
All base pay awards will be paid as a percentage of the individual’s salary. The overall target performance tranche distribution for the NICS SCS, based on Cabinet Office guidance, is:
Top Tranche: 25%
Middle Tranche: 65% - 70%
Bottom Tranche: 5 %– 10%
Staff on Pay Band 1 will be able to proceed along their pay band to the new revalorised Progression Target Rate (PTR). The Progression Target Rate is the threshold beyond which an individual cannot pass on a consolidated basis unless he/she is a top tranche performer. Top tranche performers in Pay Band 1 will be able to progress beyond the PTR and any increase due will be fully consolidated. Where an individual is not a Tranche 1 performer, any increase due above the PTR will be paid as a non-consolidated payment. The pay award of an individual whose salary is already above the revalorised Progression Target Rate but who is not a Tranche 1 performer will be fully non-consolidated.
The Progression Target Rate for Pay Band 2 was removed with effect from 1 April 2006. In practice this means that there will no longer be capping arrangements in place on consolidated pay progression for those staff in Pay Band 2 who are not Tranche 1 performers.

Pay Decisions

Pay recommendations on tranche allocation for Assistant Secretaries will be considered at Departmental Pay Conferences comprised of the Permanent Secretary and line managers of SCS entry-level staff. The tranche allocation for staff at Deputy Secretary level will be determined by the Permanent Secretary. Each Permanent Secretary will then bring to the NICS SCS Pay Committee his or her proposed Tranche 1, 2 and 3 awards for both Assistant Secretaries and Deputy Secretaries (in line with the distribution at paragraph 8 above).

NICS SCS Pay Committee

The role of the NICS Pay Committee is to ensure consistency of outcome with the terms of the agreed pay strategy and provide a moderation role if required. The Committee will consist of all NICS Permanent Secretaries and will be chaired by the Permanent Secretary of the Department of Finance and Personnel. The Head of the Civil Service will not participate in moderation discussion.
Pay recommendations are not final until after any SCS Pay Committee moderation, and pay recommendations should therefore not be divulged to individuals until the Committee’s task is complete and each Permanent Secretary has been informed in writing by the Secretary of the Pay Committee (the Director of Central Personnel Group).

Bonuses

The SSRB Report 2007 recommended that the bonus pot for the SCS pay award should be increased to 7.6% of the SCS paybill. It has been determined that approximately 75% of NICS SCS staff should be eligible to receive a non-consolidated bonus, split equally across the three levels.
Permanent Secretaries will be responsible for determining the eligibility for and the distribution of bonuses for both Grade 5 and Grade 3 level staff. In considering bonus allocation for Grade 5 level staff, Permanent Secretaries should take the views of the line managers of Grade 5s at the Departmental Pay Conference.
There will be 3 levels of Bonus Payments for SCS staff at Grade 5 and Grade 3 level:

Level 1 (25%) - £10,000
Level 2 (25%) - £6,500
Level 3 (25%) - £4,000

The criteria to be used in considering a bonus award will be:

a. the circumstances in which objectives are achieved;
b. the contribution made in a leadership capacity in the business area and more widely.

The following definitions will determine the level of bonus to be paid to those who meet the eligibility criteria:

BONUS LEVEL	DEFINITION
LEVEL 1	Achieved objectives despite the most difficult political, operational and economic environment, displaying exceptional leadership in the business area and more widely.
LEVEL 2	Achieved objectives despite moderately difficult political, operational and economic environment, displaying a high level of leadership in the business area and more widely.
LEVEL 3	Achieved objectives encountering only some political, operational and economic obstacles, displaying leadership in the business area and more widely.

Promotion Increases

Promotion shall be defined as a permanent move to a post in a higher pay band. On promotion an individual’s base pay will either increase to the minimum of the higher band or he or she will receive a 10% rise, whichever is the greater. The same principles will apply to staff on temporary promotion.

Leapfrogging

To ensure equity of treatment an individual on Pay Band 1 moving through the PTR will receive the proportion of their percentage pay increase to reach the PTR, with the balance being paid at the percentage rate appropriate above the PTR.

Pay Communication

Pay decisions by the Committee will be communicated in writing to each member of the SCS by their Permanent Secretary.

Appeals

Staff can appeal against the outcome of the Pay Committee within 10 days of the date of their pay notification by the Permanent Secretary. The Pay Committee’s decision cannot be challenged on the basis that an individual simply disagrees with the assessment of their contribution in relation to that of their peers. The grounds for appeal must be made on the following issues:

information that was not considered; and/or
failure to apply due process.