Fair Pay in the Public Sector

Ways HR Consulting has responded to the Hutton Review welcoming its call for more openness in setting senior pay.

More detailed work may be required on the proposals. This includes examining performance linked payments, earn back and how pay multiples will work in practice. Concurrently, organisations need to start work now to avoid press and public criticism.

The goals of transparency, fairness and accountability are shared by those overseeing Senior and Executive Pay arrangements in the public sector. In many areas Hutton’s recommendations confirm established best practice.

Hutton’s recommendation to establish a universal standard in executive pay disclosures rather than formally capping earnings is welcomed. The press and public’s tendency to overestimate how much public sector executives are paid suggests that the public sector has little to fear from greater openness and transparency.

It is hoped that the publication of annual fair pay reports will encourage a more realistic approach to pay. This would be preferable to na├»ve sound bite comparisons with the Prime Minister’s pay which the review discourages.

There is a requirement for all organisations delivering public services to disclose the full remuneration of all executives. This impacts beyond the public sector to affect private sector suppliers of public services. Under the proposals all organisations providing public services will be required to submit executive pay data through an online template. Many public sector organisations already publish this information and the proposal will ensure comparative consistency.

Existing contractual arrangements may make proposals for performance pay and earn back difficult to implement except on a short term opt-in basis. Hutton states that high performing executives are unlikely to be fazed by such arrangements. However, there is unlikely to be a rush to implement this.

The proposal that all public service organisations should adopt the Fair Pay Code would greatly help to embed principles of fairness and ensure fair process in executive remuneration. The associated recommendation that these proposals should extend to all areas of the public services industry may be more difficult to implement but is equally welcome.