Victorian Public Service Executive Remuneration Guidelines

1.1 In accordance with section 36(6) of the Victorian Independent Remuneration Tribunal and Improving Parliamentary Standards Act 2019 (Vic), the Victorian Independent Remuneration Tribunal (the Tribunal) has made guidelines with respect to the placement of executives employed in Victorian Public Service (VPS) bodies within the remuneration bands set by the Tribunal.

1.2 The Guidelines should be read together with the Determination of remuneration bands for executives employed in public service bodies in effect at the time.

2.1 The Guidelines apply when setting remuneration for executives employed within VPS bodies where there is a new appointment, reappointment, remuneration adjustment within the term of a contract or a temporary appointment.

2.2 The Guidelines aim to assist VPS employers in placing executives within the VPS executive remuneration bands.

2.3 Ultimately, these are guidelines and judgement will need to be applied by each VPS employer when weighing up the various factors in determining the appropriate remuneration for an executive.

2.4 The Guidelines do not require employers to remunerate an executive at the bottom of the remuneration band.

The following overarching principles have been drawn from matters considered by the Tribunal in making the Determination:

3.1 Executive remuneration should be fair and reasonable
Executives in the VPS should receive fair and reasonable recompense for performing their public duties.

3.2 Executive remuneration should be competitive
Remuneration should be set at a competitive level to attract and retain talented people.

3.3 Executive remuneration arrangements should be robust and transparent
Remuneration decisions should be robust and based on a consideration of all relevant factors and the basis for decisions should be clearly understood (for example, through reference to a departmental executive remuneration framework or strategy).

3.4 Executive remuneration should take into account Government policies

Employers should take relevant Government policies into account when setting remuneration — for example, to improve gender equality and promote diversity and inclusion.

3.5 Executive remuneration should be regularly reviewed

Employers should regularly review executive remuneration at an individual and workforce level, including consideration of relativities and performance.

In applying the guiding principles, VPS employers should consider the following factors when setting the remuneration of individual executives within the relevant remuneration band:

4.1 The functions and responsibilities of the position embedded in the work value assessment score under the Victorian Public Sector Commission’s Victorian Public Service Executive Classification Framework

• The Classification Framework is designed to enable VPS bodies to classify executive positions using a work value assessment tool, which produces an assessment score for each position.
• This score can provide a starting point for considering the remuneration for an executive position. Consideration of contextual circumstances such as contributing to a major reform initiative or emergency response should also occur.
• It should be noted, however, that work value scores should not interpreted as equating to a fixed dollar value or increment within a remuneration band. But, generally, the higher the score, the more highly the position may be remunerated within the relevant band.

4.2 The experience, knowledge and capability of the person

• For an executive with no prior or little executive experience, remuneration at the base or in the lower half of the remuneration band may be appropriate.
• For a relatively experienced executive with developed skills and capabilities, remuneration around the middle of the remuneration band may be suitable.
• For a highly experienced executive, with specialised skills and capabilities and evidence of high performance, remuneration above the middle of the band may be appropriate.
• An executive may also undertake further work , in addition to the specific functions and responsibilities of an executive position, which should be considered in setting remuneration. For example, a First Nations’ executive may provide broader cultural leadership within the organisation.

4.3 Labour market pressures on the position

• Skills shortages in particular geographic areas or occupational categories or niche skills required for the role may require a more competitive remuneration offering to attract or retain the executive and compete effectively in the market.

4.4 The remuneration relativities of other executives within the organisation

• Comparable roles within the organisation should attract similar remuneration in order to maintain relativities within a peer group.
• Particular consideration may be required to achieve gender pay equity and reduce the gender pay gap, and to promote diversity and inclusion.

4.5 Intra band reporting

• Where an executive reports to another executive and both are remunerated within the same band, the more senior role in the reporting relationship should receive a higher level of remuneration.
• An exception may occur for specialist roles, where a higher level of remuneration is offered to attract a candidate with the particular knowledge and capability required of the role, despite the specialist reporting to a more senior executive.

4.6 The current remuneration of the person

• People recruited from a comparable role may warrant a higher level of remuneration to secure the candidate.

Where executive remuneration is not regularly reviewed this can result in arrangements that:

• do not support the recruitment or retention of executives with the requisite skills, capabilities and experience
• are unfair and inequitable for executives in comparable positions.

Issues can arise where, for example, an executive’s remuneration remains at the bottom of the remuneration band for an extended period or where there is a compression of executive remuneration relativities over time.

The following scenarios illustrate how the Guidelines can be applied to set and review executive remuneration.

Scenario one: reappointment of an executive

An executive’s contract is expiring at the end of a five-year term and it is intended to reappoint them for a further five-year term. The remuneration on appointment was approximately 10 per cent above the bottom of the remuneration band and has been adjusted only by the annual adjustment guideline rate each year.

The following factors were considered to derive a remuneration increase of 7.5 per cent:

• changes in the functions and responsibilities of the position, including delivery of a new, high priority program, which resulted in a new work value assessment with a score close to the top of the classification band
• compression of the executive’s remuneration relative to other executives within the VPS body over time
• current remuneration relativities across the executive cohort, including the gender inequity applying to the executive.

Scenario two: remuneration review during a contract term

An executive has requested a remuneration review during their current contract (as provided for in the VPS Executive Employment Handbook and standard executive contract). The remuneration on appointment was at the bottom of the remuneration band and has been adjusted to remain within the remuneration band set by the Tribunal.

The following factors were considered to derive a remuneration increase of 10 per cent:

• the performance of the executive in successfully delivering government and departmental priorities
• compression of the executive’s remuneration relative to other executives within the VPS body over time
• current remuneration relativities with executives with similar responsibilities, skills and experience, including those who have recently joined the department
• the attractiveness of the executive to other employers (including outside the public service) reflected in documented approaches from other organisations.