The government has pledged to create a new public sector code of practice to set pay and rewards for senior executives earning more than £100,000.
In documents accompanying yesterday’s Budget announcement, the government revealed it has accepted a recommendation by the Senior Salaries Review Body (SSRB) that a new code of conduct be created to wipe out the “lack of transparency” in public sector pay.
A report by the SSRB found many public sector organisations did not have a clear pay structure for senior staff.
The report said: “There seems to us to be insufficient transparency on top-level reward in the public sector.”
It added: “Not all organisations publish information and for those that do it is not always clear what elements of remuneration are included. There is also a lack of transparency on remuneration policy, on the reasons for exceptional remuneration decisions in individual cases, and on the justification for performance-related awards.”
The body urged the government to establish a public sector code of practice to create a framework for setting pay, and published a draft code within its report.
The draft recommended that pay benchmarks should be drawn from the public sector rather than the private sector, and remuneration for a position must be reconsidered at each appointment, and should not be automatically continued at the same level for a new employee.
It added: “Contractually guaranteed bonuses are rarely appropriate in the public sector. Exceptions will require the approval of the sponsor or equivalent.”
The government has also accepted SSRB recommendations for greater use of independent remuneration committees, comprised of non-executive directors, and the escalation of decisions to ministers, or audit and regulatory bodies, when pay plans exceeded the agreed benchmarks.
All public sector organisations will now be asked to explain publicly how they will comply with the code by the end of the year, and will work with the SSRB to consult on the implementation of the code.
The code could be enforced through legislative and non-statutory means, the government added.