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Developing a Pay Policy in a Local Authority

This topic covers: Local Authorities and Pay Policies; Statutory Pay Policy Statements; Pay and Equalities; The Design of the Grading Structure, including contribution pay and other elements of the pay package; Retention, Recruitment and Market Issues, including market issues and benefits; Transparency and Affordability; Implementing Changes to Remuneration and Communicating the Policy.

The phrase “contribution pay” is intended to encompass any pay system which links the level of the individual employee’s pay to their level of skill, competence, capability or performance.

Developing a Pay Policy in a Local Authority: Quick Facts
  • Greater devolution of pay decisions under the national pay bargaining system has enabled local authorities to develop a local pay policy which supports their HR and corporate strategies and their organisational culture. Local Authorities and Pay Policies

  • The Localism Act 2011 requires local authorities to prepare and publish a statutory pay policy statement for every financial year relating to certain aspects of how they remunerate chief officers and other employees. Transparency and Affordability.

  • To meet their general and specific equality duties and to minimise the risk of discrimination claims, local authorities should seek to ensure that all elements of remuneration comply with National Minimum Wage (NMW), the National Living Wage (NLW), equal pay and discrimination laws/codes of practice. Pay and Equalities

  • The design of the grading structure (eg numbers and widths of grades, differentials, rules on pay progression, use of contribution pay) will convey powerful messages to current and prospective employees about the nature of the organisation and the kind of culture it is trying to create. The Design of the Grading Structure

  • Local authorities need to make sure that their remuneration systems are designed to enable them to retain and recruit the employees with the skills and capabilities they need, by ensuring that the pay levels they offer align appropriately with the relevant pay markets.

  • Local authorities need to ensure that other elements of their remuneration and benefits package are attractive to current and potential employees, eg benefits, flexible benefit systems, career grades, etc. Benefits

  • Local authorities need to ensure that their remuneration systems are and remain affordable. Employees are the largest element of cost in any authority’s budget, and it is vital that remuneration systems are designed to achieve value for money. Affordability

  • In this context it is important that, where pay is linked to employee contribution, local authorities have systems in place to monitor managerial decisions to ensure both consistent treatment of employees and that performance improves measurably as a result of the linkage. Contribution pay

  • Where authorities implement changes to their pay or benefits systems, it is important to ensure that doing so does not damage the commitment and morale of the workforce. Implementing Changes to Remuneration

  • It is important that local authorities communicate their pay policy, the values which underpin it, and the full range of benefits it offers to employees. Communicating the Policy

  • Local authorities must prepare and publish a pay policy statement relating to certain aspects of how they remunerate chief officers and other employees. Transparency and Affordability