Saturday, 24 October 2015

'Fat Cats' and Cream (23/12/14)

I was intrigued by the comments from North Lanarkshire Council in response to this article in The Cumbernauld News and Kilsyth Chronicle which criticised council bosses over their big bonus payments.

Now I've studied North Lanarkshire's 'Performance Management Scheme' under which the bonus payments for 'good' performance have been paid to its senior officials since 2002/03 and as a former Secretary to the Joint Negotiating Committee (JNC) for Chief Officials in Scotland, I have to say I find a number of things very troubling.

First of all, the North Lanarkshire scheme for 'other' chief officials (30 or so) is built around a big pay rise for the Council's chief executive, whose salary increased from £105,777 to £119,480 on 1 April 2002,  as a result of a Scotland-wide review of chief executives' salaries.

So North Lanarkshire's chief executive received a pay rise of £13,703 - a 13% increase on his old salary, ironically on the original date (1 April 2002) when Scotland's 1999 Single Status (Equal Pay) Agreement should have been implemented in full, thereby ending years of blatant pay discrimination against thousands of low paid women's jobs. 

Soon afterwards (30 May 2002), a report from the chief executive was submitted to the Council's Policy and Resources (Personnel) Sub-Committee which recommended new pay arrangements for the 'other' chief officers in North Lanarkshire Council.

The report recommended that other chief officers within the Council should be linked directly to the chief executive's new salary. For example, Council directors were to receive 80% of their CEO's pay taking their salaries from £86,973 to £95,394 (+ £8,421) on 1 April 2002.  

The report also contained a further uprating of salaries from 1 April 2003 (for reasons that are not immediately obvious) which further raised the CEO's salary from £119, 480 to £128,173 (+ £8,963) and directors' salaries from £95,394 to £103,008 (+ £7,614). 

So in the space of one year and a day North Lanarkshire's chief executive saw his salary increase from £105,777 to £128,173 - a pay rise of £22,396 or an eye watering 21.2%.

Council directors also benefited hugely from being tied to the financial coat tails of their CEO and during the same period their pay rose dramatically from ££86,973 to £103,008 - another whopping increase of £16,035 or 18.44% 

Yet, incredibly, the duties and responsibilities of the 'other' chief officers were never independently reviewed or assessed and of course these new, improved salaries were subject to further uprating as a result of annual 'cost of living' pay awards.

Meanwhile half of the combined 2002/03 pay increase for chief officers was subject to performance pay and in the case of Council directors, for example, 50% of £16,035 or £8,018 was subject to a performance review in April/May 2003 - with a performance bonus paid as a lump sum in June 2003.

The CEO's report to Policy and Resources set out total estimated costs of the exercise at £390,000 over two years, but as regular readers know the practice continued for 12 years and was finally abandoned in 2013/14 at a cost to the public purse of £2 million, although I suspect that figure does not include 'overheads' including higher pension payments which are normally set at 20% - so the final bill may be nearer £2.4 million.

A further point about NLC's Performance Management Scheme that troubles me is that I've never come across a scheme where performance pay is restricted to only a small part of someone's salary. That sounds contrived and highly artificial, if you ask me.    

The latest salary for North Lanarkshire's chief executive shows a figure of £136,578.03 plus performance-related pay of £11,395.26 = £147,973.29 - compared to the First Minister's salary of £140,847 for running the Scottish Government.

Clearly North Lanarkshire Council's chief officials did extremely well for themselves  throughout this long 12 year period.

But the evidence from the ongoing Employment Tribunal and the responses to my recent FoI requests suggests that while the Council's highest paid looked after their own interests really well, they failed miserably to protect the interests of thousands of low paid women - which is why so many of them are still fighting for equal pay today.

What the Papers Say (11 December 2014)

The local papers in North Lanarkshire are beginning to turn the spotlight on the Council if this report from The Motherwell Times is anything to go by. 

Council bosses slammed over ‘bonus’ pay

Gavin Whitefield

Council bosses have been accused of awarding themselves £2m in bonuses while low-paid staff were being short-changed.

The council’s response to a Freedom of Information Act request shows that between 2003/04 and 2014/2015 senior officials were given just under £2m on top of their salaries.

In 2013/2014 Chief Executive Gavin Whitefield earned over £136,500 with an additional payment of £11,000 in performance related pay - totalling more than Prime Minister David Cameron’s £142,000 salary.

Mark Irvine, of Action4Equality Scotland which is pursuing pay claims on behalf of low-paid council workers, said: “2006/07 was a ‘bumper’ year with £223,509 being paid in bonuses despite the fact that this was the same year in which North Lanarkshire implemented new local pay arrangements reinforcing the historical pay discrimination against female dominated council jobs.

“2013/14 was the year in which the chickens finally came home to roost and the council’s defence of its actions began to fall apart at the Glasgow Employment Tribunal, yet still its chief officials were paid a whopping £191,932 in bonuses for ‘good’ performance.

“Now I happen to think that the practice of paying these bonuses is a highly questionable use of public money. Because in any well-run organisation the leadership figures are required to show ‘selflessness’ and integrity’, yet these additional payments continued to be made while the rest of the council’s workforce had to put up with a policy of public sector pay restraint.”

Mr Irvine is also reviewing other information from the council and has contacted First Minister Nicola Sturgeon about the pay practices at NLC.

However North Lanarkshire Council firmly denies that the monies being discussed are bonus payments.

A spokesman said: “To refer to the former performance related pay scheme as a bonus is simply wrong and any attempt to portray the scheme as a bonus is a gross misrepresentation of the facts. When this scheme was in operation, chief officers’ salaries were reduced at the start of the year with the opportunity to earn back the reduction based on specific and very challenging performance targets.

“Effectively this meant that chief officers had a reduction in salary compared to their peers in other local authorities. The scheme came to an end last year.”

As far as the equal pay issues go the council has already paid out £36m in settling more than 6,500 claims but is currently dealing with “second wave” applicants. There is currently a disagreement over the amount of interest that is payable on these settlements which is being discussed by a tribunal.

Trade unions have expressed anger at the length of time this process has been taking, and called for members to stage protests at councillors’ surgeries.

June Murray, the council’s Executive Director of Corporate Services, recently insisted that negotiations are still ongoing and advised against taking part in the boycott due to council representatives having no involvement in the talks.

Although councillors agreed to the opening of negotiations the actual talks are being led by lawyers. Councillors will be asked to agree on any proposed settlement.