1.0 Policy Statement
Circadian Trust is committed to a Remuneration policy which offers fair pay to attract and keep appropriately qualified staff to lead, manage, support and deliver services in line with the charity’s mission and vision.
In determining pay for all staff, Circadian Trust will fully implement the recommendations and principles of NCVO guidance and adhere to the five principles of ACEVO guidance on good pay:
- Transparency: being open about how pay is set
- Proportionality: being fair and consistent
- Performance: ensuring pay works both for the organisation and those for whom we provide services
- Recruitment and Retention: to attract and retain talented and committed staff
- Process: ensuring a clear process underpinned by appropriate procedures
2.0 Staff Salaries and Pay
Staff are paid in line with agreed pay structures set by trustees and management; and pay awards to those staff are guided by the company proposals for cost of living increases being brought to the Board following discussion and recommendations from the Human Resources and Remuneration Committee and the Audit and Finance Committee.
Circadian Trust will always ensure that all posts meet the requirements of the National Minimum Wage, which is reviewed and amended where required in April each year and aspire to pay younger staff at the National Living Wage (NLW) rather than National Minimum Wage (NMW) where this is affordable and practicable.
3.0 Remuneration for Director Grades
No paid Director of the charity shall be involved in determining the grade of their own post; or discussions regarding requests for regrading their post. Furthermore, other than presenting the options for cost of living increases; no member of the management team will be involved in deciding the final quantum for these increases.
The CEO and Company Secretary salary grades will be determined by the Trustees who form the Human Resources and Remuneration Committee. These will be reviewed either when there is a vacancy or when Trustees or the Committee establish a need. The Committee may appoint an independent advisor if the HR team cannot establish comparative pay grades for any reason.
Others members of the Executive Management Team (Directors) salary grades along with the Executive Structure; shall be determined by the CEO who will be expected to present any changes to structure or remuneration to committee for discussion and ratification.
4.0 Remuneration Meetings
The composition and timing of the meetings is set out in the Terms of Reference but it is expected that the Human Resources and Remuneration Committee will discuss remuneration at least twice a year.
One of the discussions will be held after the end of the third quarter, usually around January when the draft budget is available to allow conversation and discussion to determine the quantum of any cost of living pay award and national minimum wage increase. This is to determine an award that will be implemented (if such an award is proposed) on 1st April.
The cost of living pay award mechanism is:
Inflation: The Board will consider the government’s preferred inflationary indicator (currently CPI) in the month prior to the discussion and including the governments forecast for the following 12 months.
Financial Performance of the Business: The Board will consider performance for the first 9 months of the current Financial Year and the effect of applying any increase to the next financial year’s business plan.
The Human Resources and Remuneration Committee may recommend a figure to Board for ratification but only after this has been considered in context of the next twelve months business case which is considered by the Audit and Finance Committee will a final recommendation be made to full Board.
Any proposal presented will always show, for information, the cost of applying increases to the NLW to lower pay rates.
This will enable any pay award made to be built into the Budgets that are submitted to the Board for approval in the same cycle.
Any cost of living pay awards to staff (outside those required to meet statutory NMW / NLW increases) must be affordable and sustainable to the Charity.
5.0 Remuneration Committee Responsibilities
The main responsibilities of the Committee are to:
- Determine and recommend remuneration policy to full Board.
- Determine and recommend the remuneration package of the Chief Executive and Company Secretary to full Board.
- Consider and comment upon any proposals for remuneration for other executive directors presented by the Chief Executive before these are implemented.
- Recommend any consolidated pay award increases for staff outside of the Annual Review process as recommended from time to time by the Chief Executive to cover exceptional circumstances to full Board.
- Determine and recommend pension arrangements and other benefits for staff to full Board.
- Ensure that terms agreed on termination (for Board appointments) are fair to the individual and the charity.
- Ensure that good governance is delivered in the area of remuneration.
In deciding the executive levels of pay, the Remuneration Committee will therefore consider:
- The purpose aims, and values of CT and its charitable objects.
- How this impacts on overall pay policy for all employees, and for the senior executive staff in particular, including whether a “discount” or indeed “enhancement” is appropriate, in order to attract people into a sector where the total package may not be as attractive as other similar sectors.
- The types of skills, experiences and competencies that CT needs from its senior executive staff, the specific scope of these roles and the link to pay.
- CT’s current business plan and how the implementation of this plan may affect the number of senior executive staff it needs to employ or recruit and the nature of these roles.
- CT’s ability to pay this includes the cost of raising pay, whether it is sustainable, and how appropriate the level of pay and any pay increase is in the context of CT, as measured against the needs of our charitable purposes and benefit.
- An assessment of CT’ performance and the senior executive staff’ performance against expectations, in both the short and long term.
- Appropriate available information on pay policies and practices in other organisations that can help make the decisions on whether a level of pay is fair and reasonable.
- The nature of the wider “employment offer” that can be made to potential employees, where pay is one part of a package that includes personal development, personal fulfilment and association with the public benefit delivered.
- CT’s track record in attracting and retaining committed and motivated employees.
- The likely impact on and views of beneficiaries, volunteers and stakeholders.
- The relationship between the policy and practice for the pay of senior executive staff and that of the whole workforce.
6.0 Pay Ratio
The ratio between median FTE pay and the highest FTE pay should not exceed 6:1. This is an aspiration and how close we get to achieving that ratio will be reviewed on an ongoing basis (at the same time the policy is reviewed). Furthermore, that ratio will be considered / reviewed in relation to the wider charitable and leisure trust sectors.
The ratio at the time of the adoption of this policy is 5.5:1.
7.0 Performance Related Pay (PRP) / Bonuses
CT does not operate a formal bonus or PRP system. Any bonus payment made to staff will be discretionary and must be affordable to the Charity.
The circumstances leading to any bonus payment and the rationale for arriving at the payment quantum recommended will be considered by the Human Resources and Remuneration Committee and Audit and Finance Committees before presentation to full Board.
Although Directors can expect to be on comparable pay levels to one another, this will be balanced during a review by either by the Remuneration Committee or CEO (for non Board appointed employees) based on bench-marking, performance, ability to pay and the other principles set out above in determining senior pay.
Chief Executive Pay:
The Remuneration Committee will consider the gap between directors and CEO pay during any review of the CEO’s grade. The Committee will consider how the CEO position is viewed internally and externally as part of the consideration of the CEO salary level.
The Remuneration Committee will consider the question of bench-marking as part of the discussions in pay awards review meeting. In particular, who do we compare ourselves to?
The Committee may decide to look at other charitable leisure trusts but with an awareness that some which are larger have greater ability to pay larger salaries, or smaller trusts with awareness that we are more complex. Charity / Social Enterprise Sector averages or Local Government averages may also be considered.
10.0 Determining performance
Both the report produced by the relevant line manager (Chair for the CEO) providing an overview of each individual’s performance and a separate assessment of the organisational performance will be considered in determining an individual’s pay grade. This will not apply in the case of cost of living rises (except where the pay ratio is breached).
The Remuneration Committee will approve the statement in the Annual Report that sets out how the senior salary is set and determined, on behalf of the board. This report will also be published on the company’s website.
The statement will be compliant with SORP 2013 and the NCVO Executive Pay Review 2014 and will publish the position and salary band of those in senior leadership positions in receipt of more than £60,000 per annum in bands of 10k. This statement can be agreed by e-mail and does not require a face to face meeting.
12.0 Review of Policy
The appropriateness and relevance of the Remuneration Policy, including benchmarking will be reviewed triennially.
The next review will be due in January 2022.