Order reissuing the Victorian government public entity executive remuneration policy

Order reissuing the Victorian government public entity executive remuneration policy (PDF)

Public Administration Act 2004

ORDER REISSUING THE VICTORIAN GOVERNMENT PUBLIC ENTITY EXECUTIVE REMUNERATION POLICY

Order in Council

The Governor in Council, under section 92 of the Public Administration Act 2004 and on the recommendation of the Special Minister of State, repeals the Order in Council made on 25 July
2019 under section 92 of the Public Administration Act 2004 and makes a new Order requiring specified public entities in the Schedule to the new Order to comply with the updated Victorian
Government Public Entity Executive Remuneration Policy (PEER Policy). The updated PEER Policy is contained in the Schedule to this Order.

This Order comes into effect on the date it is published in the Government Gazette.

Dated 25 July 2019

Responsible Minister:
GAVIN JENNINGS MLC
Special Minister of State

PIETA TAVROU
Clerk of the Executive Council

Public Administration Act 2004

VICTORIAN GOVERNMENT PUBLIC ENTITY EXECUTIVE REMUNERATION POLICY
SCHEDULE TO THE ORDER IN COUNCIL

1. Objective
1.1 The Victorian Government Public Entity Executive Remuneration Policy (PEER policy) details the Victorian Government’s approach to executive remuneration in specified public entities, and the role of the Victorian Independent Remuneration Tribunal (Tribunal) in
administering the policy.

2. Commencement
2.1 PEER policy comes into operation on the date it is published in the Government Gazette, as it is the Schedule to an Order made by the Governor in Council under section 92 of the Public Administration Act 2004 (PAA) to specify public entities to comply with PEER policy.

3. Revocation
3.1 From 25 July 2019, the Tribunal assumed responsibility for oversight of executive remuneration in public entities. If the Minister withdraws his request to the Tribunal, the PEER policy may need to be reissued stating who will replace the Tribunal in administering the policy.

4. Scope
4.1 PEER policy sets out a framework of five guiding principles for setting executive remuneration and the procedure for making a submission to the Tribunal for the approval of remuneration arrangements for certain executives in specified public entities. PEER policy also sets out the mandatory contract terms and conditions for executives in the specified public entities.

4.2 Specified public entities are listed under paragraph 9.1.

4.3 In accordance with section 6(1)(f) of the Victorian Independent Remuneration Tribunal and Improving Parliament Standards Act 2019 (VIRTIPS Act), the Minister has requested that the Tribunal determine the Total Remuneration Packages (TRP) of CEOs (however titled) of specified public entities. The Tribunal can only carry out these functions under the PEER Policy relating to CEO remuneration so long as the Minister’s request under s 6(1)(f) remains current. If the request is later retracted, the PEER Policy may need to be reissued stating who will replace the Tribunal in administering the policy. To enable the Tribunal to exercise this function, prior to appointing a CEO, specified public entities are
required to make a submission to the Tribunal in the following circumstances:

  • an incoming CEO in a newly established or existing entity
  • the reappointment of an incumbent CEO, where an increase in TRP is proposed
  • any proposed mid-contract adjustment to a CEO’s TRP that is greater than the Premier’s annual adjustment (see paragraph 6.1 of PEER policy).

4.4 In addition, under PEER policy, the remuneration of a subordinate executive in specified public entities should not:

  • exceed 80 per cent of the approved TRP for the CEO of the same public entity
  • result in the average TRP of all the CEO’s direct reports exceeding 70 per cent of the CEO’s TRP.

If the proposed remuneration of a subordinate executive will exceed either of the above thresholds, the public entity is required to first make a submission to the Tribunal to seek its advice in relation to this matter.

4.5 For the purpose of PEER policy, an executive includes an employee of a public entity who:

  • receives a TRP equal to or greater than the base of the Victorian Public Service (VPS) executive officer remuneration range; and
  • has significant management responsibility, that is, the primary role of the employee is to provide leadership and strategic direction for other staff members.

For the avoidance of doubt, the following are not executives for the purpose of PEER Policy:

  • staff whose remuneration rates are specified by an award or enterprise agreement
  • technical specialists who meet the remuneration criteria outlined above, but do not have a people management function
  • statutory or prerogative office holders appointed to public entities
  • VPS executives employed under Part 3 of the PAA, including by virtue of a specific legislative reference or an order/instrument made under legislation.

5. Principles for public entity executive remuneration

5.1 The following principles are to guide public entity boards in preparing submissions for the Tribunal.
Principle 1: Executive remuneration should be fair and reasonable
Executives in public entities should receive fair and reasonable recompense for performing their public duties.
Principle 2: Executive remuneration decisions should have regard to Victoria’s fiscal and economic conditions.
Executive remuneration decisions should consider the fiscal and economic conditions of the state, reflected in the Victorian Government’s wages policy, as updated from time to time.
Principle 3: Executive remuneration should be competitive
Remuneration should be set at a competitive level for the relevant market and sector, so as to attract and retain talented people.
Principle 4: Executive remuneration should reflect the non-financial benefits of public sector employment
Remuneration should not be the overriding factor in attracting and retaining executives, in recognition of the fact that there are a variety of non-financial benefits of public sector employment.
Principle 5: Executive remuneration arrangements should be robust and transparent
The methodology underpinning remuneration decisions should be robust, transparent and
based on rigorous analysis of all relevant factors.

6. Overview of the submission process
6.1 A diagram describing the process for making a submission to the Tribunal appears on the following page.
6.2 More information on the submission process and the online form for making a submission are available on the Tribunal’s website.