Market Supplement Policy
Index:
Introduction
The University of Glasgow is committed to the principles of equal pay for work of equal value and operates a single job evaluation scheme to measure the relative value of all jobs below Level 10 in its pay and grading structure.
Nonetheless, it is acknowledged that on occasion the total reward package determined by the University's pay and grading system may not be consistent with reward packages offered for comparable posts in the wider labour market, and that this may lead to recruitment and retention difficulties. In such circumstances, where there is a clear business need supported by objective market data, and other approaches have proved ineffective, the University will consider offering a market supplement payment in addition to the normal reward package for the post.
It is the University's policy to make such payments only in exceptional circumstances and to follow a clear and consistent framework for the determination of any market supplement payment which:
- ensures the University meets its obligations under equal pay legislation and maintains the overall integrity of its pay and grading structure;
- allows market supplements to be considered only where a clear and demonstrable business need exists;
- ensures that other non-pay issues are fully explored before a market supplement payment is considered;
- permits market supplement payments where an objective assessment of appropriate evidence supports this approach and a rationale is recorded;
- sets out the process by which cases are considered, and the conditions that will be applied;
- requires all market supplement payments to be reviewed on a regular basis and varied or removed where necessary;
- includes a process for all payments to be monitored and also ensures that they are included in equal pay audits.
The accompanying procedure has been agreed with the recognised trade unions and will be followed whenever a case for a market supplement payment is considered.
Scope
This policy and procedure covers all prospective and existing staff up to and including Grade 9 of the University's pay and grading structure (pay for staff within Grade 10 is determined under separate arrangements).
As well as additional payments covered by this policy, individuals may also be appointed above the minimum of a pay range (the normal starting point at appointment), if they have relevant skills and experience equivalent to a member of staff who has been in post for some time, or once in post may receive accelerated incremental progression or contribution pay to recognise exceptional performance. These are part of the normal appointment and reward and recognition policies and are not covered by this policy. Similarly, relocation packages would not be considered under this policy.
Definitions
What is a market supplement payment?
A market supplement payment is an addition to salary and other benefits for a specific individual post, or group or sub-group of posts. It is paid where higher pay rates offered by other employers (the market rate) prevent the University from being able to recruit or retain staff on the salary indicated for their role by job matching/evaluation alone. The total reward package (basic salary plus all other benefits e.g. pension, annual leave) will be considered when making comparisons.
Such payments apply to posts on a temporary basis and are subject to regular review. Where there ceases to be an organisational need or market justification for a supplement, the post holder(s) will be given notice that the payment will be withdrawn.
Market supplements can be considered using this policy and procedure for any post up to and including Grade 9 and may also be applied to both open ended and fixed term contracts.
Types of market related payment
The University operates two types of market supplement payments, which may be considered if they present a reasonable and proportionate means overcoming recruitment and retention issues:
- Lump sum payments made as either a one-off payment or in several stages to aid the initial attraction of staff to a particular role or to help retain staff.
- An ongoing market supplement payment paid in addition to the individual's basic salary in order to bring the total annual salary for the role up to the market rate. These will be paid for a specific fixed term, normally one year, and be subject to review thereafter.
Normally only one form of market supplement will be used.
General provisions
Market supplement payments may be granted on a fixed term or lump sum basis where there is clear evidence that recruitment and retention difficulties are caused by the pay rate being low, relative to that offered by other employers for comparable posts. Heads of Schools/RI's/Services must adequately consider and implement non-pay solutions to recruit and retain staff before a market supplement will be considered.
Market supplements will be calculated as a fixed cash amount, the value of which will normally be reviewed annually and may result in the supplement being varied or withdrawn. The appropriate level of a supplement will be determined by calculating the difference between the University's pay rate (including the value of any allowances and other benefits) and the market rate, as determined by evidence from appropriate sources. The median market rate will normally be used when calculating supplement payments.
Market supplements are paid in relation to specific posts. Therefore, where it is agreed that the payment of a market supplement is appropriate, it will apply to all identical posts and will be paid pro-rata for part-time staff.
Where an employee who is in receipt of a supplement moves to another role within the University that does not attract such a payment, the supplement will cease from the date they take up their new post.
There is no right of appeal under this policy regarding decisions taken to offer, refuse, vary or withdraw a market supplement (although this does not affect any statutory rights).
Procedure
Where significant difficulties are experienced in recruiting or retaining staff in a role, or there is evidence that this will be the case, the following procedure can be used to assess whether a market supplement payment is justified for a role.
A key requirement of this procedure is that market supplements will only be considered once other ways of improving recruitment and retention have been exhausted and market pay is shown to be the main issue.
Stage 1: Investigating recruitment and/or retention problems
Where recruitment and/or retention problems have been experienced, or there is significant evidence that this will be the case, the relevant Head of School/RI/Service should consult with their territorial HR Manager and investigate the cause(s) of the problem, recording the findings using the form provided at Appendix 1.
Where as a result of this investigation it is established that:
- no problems with the advertising or recruitment process can be identified, or
- evidence suggests that the main reason for staff leaving is for more pay (other than as part of the normal career/personal development process), or
- strong evidence exists to suggest that such problems are likely to arise,
The Head of School/RI/Service and their territorial HR Manager should discuss whether any improvements can be obtained by offering or making applicants more aware of non-pay benefits (e.g. final salary pension scheme, training and career development opportunities, facilities, access to a range of policies that support work-life balance, the opportunity to engage in leading edge research).
If non-pay approaches have proved ineffective and the evidence suggests that the normal reward package offered may be uncompetitive, the Head of School/RI/Service, in discussion with their territorial HR Manager, should compile relevant evidence using the 'Stage 1' section of Appendix 1 and submit this to the HR Service. Investigation and analysis of relevant external pay data will then be undertaken in order to determine whether a market supplement might be appropriate.
Stage 2: Analysing the market data
The HR Service is responsible for identifying and analysing an appropriate and relevant sample of labour market pay data in order to establish whether justification exists for the payment of a market supplement. The sources from which this data is gathered will vary depending on what is relevant for the particular post under examination, however data from a minimum of two reliable sources will usually be required. The results of these investigations will be recorded using the 'Stage 2' section of Appendix 1.
If the evidence established indicates that the market rate is equal to or lower than the value of the total reward package offered by the University, a market supplement will not be appropriate and the territorial HR Manager will work with the Head of School/RI/Service to identify other underlying recruitment or retention problems and the most appropriate ways of overcoming these.
Where market pay investigations have established evidence to suggest that the market pay rate is significantly higher than the reward package offered by the University, the HR Service may recommend the use of a market supplement. Recommendations will be made using the 'Stage 2' section of Appendix 1.
Stage 3: Formal consideration of the case
Where evidence established at stages 1 and 2 of this procedure indicates that a market supplement payment may be a reasonable and proportionate response to recruitment and retention difficulties, the resulting recommendations will be formally considered by the Director of Human Resources and the relevant Head of College or the Secretary of Court, and their decision will be recorded using the 'Stage 3' section of Appendix 1.
The HR Service will retain a record of all cases that have been considered including a rationale of why applications have been approved or refused.
Should a recommendation be approved, a market supplement payment will be established, taking the form of:
- A lump sum, non-superannuable, payment or
- An ongoing payment in addition to salary for a specified period of time, normally one year. Such a payment will be superannuable.
Normally only one form of market supplement will be used and payment will not normally exceed 20% of basic salary.
All employees entitled to a market supplement will be provided with a written statement detailing the amount of supplement, its duration and the review periods that apply.
Further particulars and contracts of employment will identify market supplements as a distinct and separate element of pay, specifying the duration of the supplement. Supplements will be paid through the normal salary system, but will be identified separately from the base salary in documentation and records, including payslips.
Market supplements will be subject to National Insurance, PAYE income tax and in the case of ongoing payments, superannuation deductions. Market supplements will be taken into consideration in the calculation of all statutory entitlements such as sickness, maternity support, adoption leave and redundancy. Similarly, any occupational entitlements to sickness, maternity support, adoption and redundancy will also take account of market supplements; however for the calculation of all other payments, such as overtime, market supplements will not be included.
Employees in receipt of a market supplement will continue to progress incrementally up the normal pay scale for their grade and receive relevant inflationary pay awards on that scale. Pay increases under the standard pay and grading arrangements will be taken into consideration whenever the market supplement is reviewed.
Review stage
The review process follows a three stage procedure similar to that detailed above. The form contained within Appendix 2 will be followed each time the supplement is due for review.
Market supplement payments will normally be formally reviewed on an annual basis (unless they were paid as a one-off lump sum and no continuing entitlement exists) by the Director of Human Resources and relevant Head of College or the Secretary of Court at which time a further assessment of the market conditions and organisational requirements will take place to determine whether the payment should be preserved, varied or withdrawn. Payments will be withdrawn after a defined notice period where there ceases to be an organisational need or market justification for a supplement.
Post holders will receive written confirmation of the outcome of the review.
Where the outcome of the annual review is that the supplement will be preserved at its current level or increased to reflect the current market conditions, this will take effect in the month following the review date.
Where the outcome of an annual review is that the supplement is to be reduced or withdrawn, the employee(s) concerned will be given three months written notice of the variation, after which time the reduction/withdrawal will take effect.
Any continuation of the market supplement payment will be for a fixed time period, normally one year, and any further extension will be considered at the next review date.
Monitoring
Data on all market supplement payments (including lump sum payments) will be compiled and reviewed annually by the HR Service for equal opportunities monitoring purposes. Supplements will also be included in any equal pay audits that the University undertakes.
Information compiled for monitoring purposes will be shared annually with the recognised trade unions and consultation will take place to enable the effectiveness of this policy to be reviewed.
Approved by Court, December 2006
