Victorian Government Public Entity Executive Remuneration Policy

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 Minister for Government Services, repeals the Order in Council made on 4 February 2020 under section 92 of the Public Administration Act 2004 and makes a new Order requiring specified public entities (as set out in Clause 3 of the new Order) 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 that it is published in the Victorian Government Gazette.

Dated 15 December 2020

Responsible Minister:
THE HON DANNY PEARSON MP
Minister for Government Services

CLAIRE CHISHOLM
Clerk of the Executive Council

Public Administration Act 2004

VICTORIAN GOVERNMENT PUBLIC ENTITY EXECUTIVE REMUNERATION POLICYSCHEDULE 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 employment, classification and remuneration in specified public entities

2. Commencement

2.1 The PEER Policy comes into operation on the day that the Victorian Independent Remuneration Tribunal (Tribunal) makes the first determination of remuneration bands for executives employed in prescribed public entities under section 19 of the Victorian Independent Remuneration Tribunal and Improving Parliamentary Standards Act 2019 (VIRTIPS Act) (Determination).

3. Scope

3.1 All public entities (as defined in section 4(1) of the Public Administration Act 2004 (PAA) that are prescribed public entities for the purposes of the VIRTIPS Act, under regulations made pursuant to section 44 of the VIRTIPS Act (VIRTIPS Regulations), are required to comply with the PEER Policy.

4. Application to executives

4.1 The PEER Policy applies to executives in a public entity prescribed under the VIRTIPS Regulations that are:

  • a CEO (or similar role if not titled as such); or
  • in a role that has been classified under the Public Entity Executive Classification Framework (PEECF) with a work value score of at least 21; or
  • in a role that has not yet been classified under the PEECF that has a Total Remuneration Package (TRP) on or after 1 July 2019 of at least $185,711.

but does not include:

  • staff whose remuneration rates are specified by an award or enterprise agreement; or
  • technical specialists who meet one of the criteria outlined above, but do not have a people management function; or
  • statutory or prerogative office holders appointed to public entities.

4.2 The PEER Policy also applies to executives in a public entity prescribed under the VIRTIPS Regulations that are employed as an executive under Part 3 of the PAA, including by virtue of a specific legislative reference or an order/instrument made under legislation.

5. Determinations of remuneration bands

5.1 Prescribed public entities must ensure that the remuneration of each executive to which the PEER Policy applies is within the relevant remuneration band of the applicable determination made by the Tribunal under sections 19 and 20 of the VIRTIPS Act.

5.2 Despite clause 5.1, the remuneration of an executive to which the PEER Policy applies may exceed the maximum of the relevant remuneration band, only if the employer of the executive has obtained advice from the Tribunal under section 37 of the VIRTIPSAct.

5.3 Prescribed public entities must comply with any Guidelines made by the Tribunal under section 36(6)(a) of the VIRTIPS Act.

6. Classification under the PEECF or VPSC

6.1 Public entities must facilitate the Victorian Public Sector Commission (VPSC) to undertake and moderate, on a fee-for-service basis, the classification of all executive positions within the meaning of paragraph 4.1 and 4.2 against the work value assessment methodology set out in the PEECF or, in the case of executives employed under Part 3 of the PAA, the Victorian Public Service Classification Framework(VPSCF). The PEECF and the VPSCF can be found on the VPSC website. The relevant classification and work value assessments must occur within 12 months of the Determination or by 31 December 2021 (whichever is later).

6.2 Delay to VPSC scheduled work value assessments of public entity executives beyond the timeline in paragraph 6.1 may only be undertaken in exceptional circumstances, with the written consent of the relevant department Secretary (i.e. Department Head, determined in accordance with section 13A(1) of the PAA) and in consultation with the Department of Premier and Cabinet and VPSC.

6.3 Prior to taking any of the following actions, a current work value assessment under the PEECF or VPSCF (as applicable) must be undertaken and the relevant position must be classified accordingly:

  • creating a new position; or
  • renewing an expiring contract; or
  • making a remuneration adjustment (other than as a result of an annual adjustment determined by the Tribunal or government).For the purposes of this paragraph, a work value assessment is considered current if it is completed within the 12 months preceding any of the actions listed above.

7. Other remuneration and contractual matters: mandatory contract terms and bonus opportunities

7.1 Executive contracts for executives employed in public entities subject to the PEER Policy, including executives employed under Part 3 of the PAA, are required to include the following mandatory contractual terms and conditions:

  • contract of employment to be offered for a maximum term of up to five years
  • TRP includes base salary, superannuation contributions, employment benefits (i.e. non-salary) and the annual cost to the employer of providing the non-monetary benefits, including any fringe benefits tax payable
  • termination of contract provisions – the employer may terminate a contract by providing the executive with four months’ notice in writing
  • no compensation for termination of a contract beyond payment in lieu of notice and accrued leave
  • an unexpired portion of a contract may only be paid out in exceptional circumstances, with the written consent of the relevant department Secretary
  • capped bonus opportunity for executives employed on or before 3 February 2020 (see below).

7.2 The mandatory terms and conditions outlined above are reflected in the template standard contract for public entity executives available from the VPSC website. Boards of public entities are encouraged to use the standard contract for public entity executives.

7.3 Subject to paragraph 8.4, all new or renewed executive contracts entered into from 4 February 2020 onwards must not include a bonus opportunity.

8. Ongoing bonus opportunities

8.1 The maximum bonus opportunity available to public entity executives employed on or before 3 February 2020 and who did not accept a bonus buy-out offer, is either 17 per cent or 20 per cent.

8.2 Bonuses should only be paid when an executive’s performance exceeds planned targets. The total cost of bonuses in a public entity where a 17 per cent maximum opportunity currently applies cannot exceed 6 per cent of the pro rata aggregate of TRPs of those executives who are assessed for a bonus. Executives or public entities that have opted to retain the 20 per cent bonus opportunity are not subject to the 6 per cent total bonus average provisions.

8.3 Paragraphs 8.1 and 8.2 cease to apply from 3 February 2025. This is in recognition of 3 February 2020 being the final date on which a new public entity executive contract could have been created with a bonus opportunity and that the maximum contract term being five years.

8.4 Specific roles at the Treasury Corporation of Victoria and the Victorian Funds Management Corporation will continue to be eligible for bonus opportunities. These roles will be determined by the Premier and the responsible Minister.

9. Contact

9.1 For further information regarding PEER Policy, please contact the Department of Premier and Cabinet, via this email address: publicsectorworkforce@dpc.vic.gov.au