Transparency requirements relating to local authority pay

This article looks at the various requirements on local authorities to publish information about their pay policies and structures.

Pay policy statements under the Localism Act 2011

The Localism Act 2011 came into force on 15 January 2012. As part of a wide-ranging series of measures to devolve responsibility and accountability from central to local government, the Act contains provisions relating to "pay accountability" in local government. The provisions (ss.38-43 of the Act) require each local authority for each financial year from 2012-13 to approve by resolution (and not by delegated executive function), publish, and comply with a "pay policy statement".

The pay policy statement must set out the authority's policies for the financial year relating to:

  • the remuneration of its chief officers;
  • the remuneration of its lowest-paid employees; and
  • the relationship between the remuneration of its chief officers and its employees who are not chief officers.

Chief officers are:

  • heads of paid service (under s.4 of the Local Government and Housing Act 1989);
  • monitoring officers (s.5(1) of that Act);
  • statutory chief officers (s.2(6) of that Act);
  • non-statutory chief officers (s.2(7) of that Act); and
  • deputy chief officers (s.2(8) of that Act).

The statement must set out the definition of "lowest-paid employees" that the authority has adopted for these purposes, and the reasons for adopting that definition.

The statement must include the authority's policies relating to:

  • the level and elements of remuneration for each chief officer;
  • remuneration of chief officers on recruitment;
  • increases and additions to remuneration for each chief officer;
  • the use of performance-related pay for chief officers;
  • the use of bonuses for chief officers;
  • the approach to the payment of chief officers on their ceasing to hold office under or to be employed by the authority; and
  • the publication of and access to information relating to remuneration of chief officers.

The local authority must have regard to the Government guidance Openness and accountability in local pay: Guidance under s.40 of the Localism Act. The guidance suggests that authorities consider expressing the relationship between the pay of chief officers and others as a ratio between higher and median salaries (the "pay multiple") and that full council should vote on salary packages in excess of £100,000. Local authorities are now required under the "Local government transparency code 2015" to publish their pay multiple.

Employees whose remuneration is above £50,000

The Accounts and Audit Regulations 2015 (SI 2015/234) require the statement of accounts of local authorities to be accompanied by a note of the number of employees, in the year to which the accounts relate, whose remuneration is above £50,000 per annum. The information must be shown in the form of the number of employees in successive bands of £5,000 above £50,000. Remuneration for this purpose includes "expenses allowances" chargeable to UK income tax and the estimated money value of any benefits received by an employee. The information to be published will, in the case of police authorities, include the number of police officers above the rank of superintendent whose total remuneration is more than £50,000 per annum.

The remuneration of senior employees and relevant police officers must be listed individually. The individual should be identified by role only, except employees whose salary is more than £150,000 per annum, who must also be identified by name.

The information disclosed under the Regulations must be under the categories of:

  • salary, fees and allowances;
  • bonuses;
  • expenses allowance;
  • compensation for loss of employment;
  • pension contribution (of the employer to the relevant pension scheme);
  • any other emoluments; and
  • in the case of relevant police officers, any other payments made to them.

Senior employees are those whose salary is £150,000 or more and employees whose salary is at least £50,000 per year (to be calculated pro rata for part-time employees) who are:

  • the designated head of paid service, a statutory chief officer or a non-statutory chief officer of a relevant body (those terms having the meaning given by the Local Government and Housing Act 1989);
  • the head of staff for a relevant body that does not have a designated head of paid service; or
  • any person having responsibility for the management of the relevant body.

A "relevant police officer" is a chief constable, the Commissioners of the Metropolitan Police and the City of London Police, and any other police officer above the rank of superintendent whose salary is £150,000 or more per year.

The "Local government transparency code 2015" requires local authorities to publish the data required under the Regulations, or a link to the data, on their website. The code also requires local authorities to publish, in relation to all employees whose salary exceeds £50,000:

  • a list of their responsibilities (for example, the services and functions, budget and staff for which they are responsible); and
  • details of bonuses and benefits in kind.

Local government transparency code 2015

The Local government transparency code 2015 was published by the Department for Communities and Local Government in February 2015, superseding the previous version.

Part 2.2 of the code requires local authorities to publish specified data on an annual basis, with the aim of increasing local accountability and transparency, including some data that is relevant to local authorites as employers. Local authorities must publish:

  • an organisation chart covering staff in the top three levels of the organisation;
  • information on trade union facility time (see below);
  • information about employees whose salary is above £50,000, in addition to that information already required under the Accounts and Audit (England) Regulations 2015 (SI 2015/234) (see Employees whose remuneration is above £50,000); and
  • their pay multiple, ie the ratio between the highest earnings and the median earnings in their workforce.

In relation to all staff in the top three levels of the organisation, excluding those whose salary does not exceed £50,000, the organisation chart required under the code must state:

  • grade;
  • job title;
  • local authority department and team;
  • whether permanent or temporary;
  • contact details;
  • salary in £5,000 brackets; and
  • the maximum salary for the grade.

The Department for Communities and Local Government published a frequently asked questions document on the previous version of the code. This acknowledges that the roles and grades involved in the top three tiers may differ from one authority to another, but states that "it is important that the public are able to see and compare the roles of the highest three tiers in their local authority with those in neighbouring or similar type of authority". This guidance remains valid, as the relevant sections of the code were unchanged when the latest version was published in February 2015.

When calculating their pay multiple, the code states that local authorities must:

  • include all elements of remuneration that can be valued (for example all taxable earnings for the given year, including base salary, variable pay, bonuses, allowances and the cash value of any benefits in kind);
  • use the median earnings figure as the denominator, which should be that of all employees of the local authority on a fixed date each year, coinciding with reporting at the end of the financial year, and;
  • exclude changes in pension benefits, which due to their variety and complexity cannot be included accurately in a pay multiple disclosure.

In relation to trade union facility time, under para.45 of the code, local authorities must publish:

  • the total number (absolute number and full-time equivalent) of staff who are union representatives (including general, learning and health and safety representatives);
  • the total number (absolute number and full-time equivalent) of union representatives who devote at least 50% of their time to union duties;
  • names of all trade unions represented in the local authority;
  • a basic estimate of spending on unions (calculated as the number of full-time equivalent days spent on union duties by authority staff who spent the majority of their time on union duties multiplied by the average salary); and
  • a basic estimate of spending on unions as a percentage of the total pay bill (calculated as the number of full-time equivalent days spent on union duties by authority staff who spent the majority of their time on union duties multiplied by the average salary divided by the total pay bill).

Local authorities must publish the data required under part 2.2 of the code on at least an annual basis, no later than one month after the year to which it relates.

Part 3 of the code sets out data that the Government recommends local authorities publish, in addition to the data that is required under the code. This includes further detail in relation to the organisation chart required under part 2.2. It is recommended that local authorities publish:

  • charts including all employees of the local authority whose salary exceeds £50,000;
  • the salary band for each employee included in the chart(s); and
  • information about current vacant posts, or vacancies that are going to be advertised in the future.

The Local Government Association has published guidance for practitioners on publishing information in accordance with the code.