The Office of Public Sector Executive Remuneration (OPSER) supports better decision making about public sector executive remuneration.
OPSER oversees the Victorian Government's Public Entity Executive Remuneration Policy (policy). The policy replaces the former Government Sector Executive Remuneration Panel (GSERP) Policy, administered by the Victorian Public Sector Commission (VPSC).
The Special Adviser, Public Sector Executive Remuneration is Warren McCann.
Victorian Government Public Entity Executive Remuneration Policy
The Victorian Government Public Entity Executive Remuneration Policy details the Victorian Government’s approach to executive remuneration in specified public entities, and the role of OPSER in administering the policy.
The policy requires specified public entities to make a submission to OPSER for the approval of executive remuneration in certain circumstances.
This policy sets out the procedures, and a framework of five guiding principles for specified public entities and departments.
This policy applies to the following senior executive appointments and reappointments in the specified public entities:
- CEOs (however titled) of public entities; or
- an employee of a public entity who:
- receives a total remuneration package (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.
The policy also applies to subordinate executives in the specified public entities, where the TRP of the individual executive proposed:
- exceeds 80% of the TRP approved by the OPSER for the CEO of the same public entity; or
- will result in the average TRP of all the CEO’s direct reports exceeding 70% of the CEO’s TRP.
For the avoidance of doubt, this policy does not apply to:
- 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.
A specified public entity must make a submission to OPSER seeking approval for an executive’s remuneration in the following circumstances:
- incoming CEO in a newly established or existing entity
- reappointment of an incumbent CEO, where an increase in TRP is proposed
- any proposed adjustment to a CEO’s TRP that is greater than the Premier’s annual adjustment (see Annual Adjustment)
- subordinate executives, as outlined above.
The policy should be read in conjunction with the information for making submission provided below.
The maximum bonus opportunity available to public entity executives in 2018-19 will be either 17% or 20%.
Since 1 July 2005, existing public entity executives with a total bonus opportunity of 20% have had the option to increase their TRP by 3% through a reduction in the bonus opportunity from 20% to 17%. This option may be applied only once. If applied, it would involve a change in contract terms, which would require the relevant executive to acknowledge and accept the variation in writing. If an executive does not wish to accept the change, the existing terms of their contract shall be preserved. The adjustment to bonus opportunity applies prospectively and relates to the first performance year commencing on or after 1 July 2005.
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% maximum opportunity currently applies cannot exceed 6% 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% bonus opportunity are not subject to the 6% total bonus average provisions.
In certain circumstances the bonus arrangements may cause difficulty, such as in smaller public entities with few executives, and more generally in situations when business performance has been outstanding and warrants executive bonus payments in excess of the 6% average. In these circumstances, boards must seek approval in writing from the portfolio department Secretary to exceed this guideline.
Mandatory contractual terms and conditions
The mandatory contractual terms and conditions for public entity executives applicable under the former GSERP policy framework which continue under this policy are:
- contract of employment to be offered for a period of up to five years
- TRP includes salary, superannuation, the cost of a motor vehicle to an employer and the cost of other employment benefits and associated fringe benefits tax, but excludes general business expenses such as laptop computers, mobile phones or study leave
- 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 (see above).
The mandatory terms and conditions outlined above are reflected in the template public entity executive contract available from the. Public entities are encouraged to use the standard executive contract template (although all the other provisions in the template contract are not compulsory).
Step 1: board identifies a preferred candidate and prepares a submission
In consultation with its portfolio department, the board runs a recruitment process to appoint an executive.
Using the policy and guidance material, the board prepares an online submission for a:
- new CEO appointment
- re-appointment of an existing CEO, where an increase is proposed
- proposal to increase a CEO's remuneration above the Premier's annual adjustment guideline rate.
If a public entity proposes to remunerate a subordinate executive that will trigger the 70/80% rule, please contact OPSER for further advice.
Boards may provide a draft submission to OPSER for advice before making a formal submission.
Once complete, the submission is forwarded to the public entity's portfolio department for review.
Step 2: portfolio department reviews the submission and provides comment
The portfolio department reviews the public entity’s submission. It will add relevant information and comment on:
- whether there are any particular challenges or opportunities facing the public entity
- the entity's performance
- the performance of the executive, if the board is proposing a reappointment or mid-term increase
OPSER provides the department with data for comparable entities to assist it to comment on submissions.
Once the department completes its review, the submission is forwarded to OPSER for consideration.
Step 3: OPSER considers the submission and advises the outcome
OPSER reviews the final submission, including the department’s comments.
With reference to the guiding principles, the information in the submission and other relevant data, OPSER determines whether the proposed remuneration:
- will promote competitive and reasonable remuneration outcomes for executives in public entities; and
- is in line with community expectations.
OPSER advises the public entity and the department of its decision by email.
Step 4: board appoints the executive
Board appoints the executive at the approved rate of remuneration.
Boards must comply with the six mandatory terms and conditions for public entity executive contracts. Boards are encouraged to use the template executive contract maintained by the VPSC.
Some appointments also require Ministerial approval. Public entity boards should liaise with their portfolio department in this instance. This process is separate from OPSER approval.
Boards may also choose to increase a CEO’s TRP by the Premier’s annual adjustment.
For 2018-19, the Premier has determined the annual adjustment to be 2%.
The annual adjustment to TRP may be made at any time during the 12 month period to 30 June 2019, but not backdated prior to 1 July 2018.
A specified public entity must make a submission to OPSER for any proposed adjustment to a CEO’s TRP that is greater than the Premier’s annual adjustment.
The following principles are to guide public entity boards in preparing submissions for OPSER.
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 should have regard to Victoria's fiscal and economic conditions
Executive remuneration decisions should take into account 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.
The public entities listed are subject to this policy. This has been determined in consultation with departments.
Department of Premier and Cabinet
- Queen Victoria Women's Centre Trust
- Shrine of Remembrance Trust
- Victorian Veterans Council
- VITS LanguageLoop
Department of Treasury and Finance
- Old Treasury Building Reserve Committee of Management
- State Electricity Commission of Victoria
- State Trustees Limited
- Transport Accident Commission
- Treasury Corporation of Victoria
- Victorian Funds Management Corporation
- Victorian Managed Insurance Authority
Department of Jobs, Precincts and Resources
- Agriculture Victoria Services Pty Ltd
- Australian Grand Prix Corporation
- Dairy Food Safety Victoria
- Development Victoria
- Docklands Studios Melbourne
- Emerald Tourist Railway Board
- Federation Square Pty Ltd
- Game Management Authority
- Geelong Performing Arts Centre Trust
- Greater Sunraysia Pest Free Area Industry Development Committee
- Greyhound Racing Victoria
- Harness Racing Victoria
- Kardinia Park Stadium Trust
- Melbourne and Olympic Parks Trust
- Melbourne Convention and Exhibition Trust
- Melbourne Convention Bureau
- Melbourne Market Authority
- Melbourne Recital Centre
- The Wheeler Centre
- Veterinary Practitioners Registration Board of Victoria
- Victorian Arts Centre Trust
- Victorian Institute of Sport
- Visit Victoria
Department of Transport
- Gippsland Ports Committee of Management
- Port of Hastings Development Authority
- Public Transport Victoria
- V/Line Corporation
- Victorian Ports Corporation (Melbourne)
- Victorian Rail Track Corporation (VicTrack)
- Victorian Regional Channels Authority
Department of Education and Training
- AMES Australia
- Bendigo Kangan Institute
- Box Hill Institute (including the Centre for Adult Education)
- Chisholm Institute
- Federation Training Institute
- Gordon Institute of TAFE
- Goulburn Ovens Institute of TAFE
- Holmesglen Institute
- Melbourne Polytechnic
- South West Institute of TAFE
- Sunraysia Institute of TAFE
- VET Development Centre
- Victorian Institute of Teaching
- William Angliss Institute of TAFE
- Wodonga Institute of TAFE
Department of Justice and Community Safety
- Accident Compensation Conciliation Service
- Consumer Policy Research Centre
- Country Fire Authority
- Emergency Services Telecommunications Authority
- Legal Practitioners' Liability Committee
- Metropolitan Fire and Emergency Services Board
- Victoria State Emergency Service
- Victorian Asbestos Eradication Agency
- Victorian Equal Opportunity and Human Rights Commission
- Victorian Responsible Gambling Foundation
Department of Environment, Land, Water and Planning
- Architects Registration Board of Victoria
- Barwon Coast Committee of Management
- Barwon Region Water Corporation
- Barwon South West Waste and Resource Recovery Group
- Bellarine Bayside Foreshore Committee of Management (Inc)
- Capel Sound Foreshore Committee of Management Inc
- Central Highlands Region Water Corporation
- City West Water Corporation
- Coliban Region Water Corporation
- Corangamite Catchment Management Authority
- East Gippsland Catchment Management Authority
- East Gippsland Region Water Corporation
- Energy Safe Victoria
- Environment Protection Authority
- Falls Creek Alpine Resort Management Board
- Gippsland Waste and Resource Recovery Group
- Gippsland Water Corporation
- Glenelg Hopkins Catchment Management Authority
- Goulburn Broken Catchment Management Authority
- Goulburn Murray Rural Water Corporation
- Goulburn Valley Region Water Corporation
- Goulburn Valley Waste and Resource Recovery Group
- Grampians Central West Waste and Resource Recovery Group
- Grampians Wimmera Mallee Water Corporation
- Great Ocean Road Coast Committee Inc
- Loddon Mallee Waste and Resource Recovery Group
- Lower Murray Urban and Rural Water Corporation
- Mallee Catchment Management Authority
- Melbourne Water Corporation
- Metropolitan Waste and Resource Recovery Group
- Mount Buller and Mount Stirling Alpine Resort Management Board
- Mount Hotham Resort Management Board
- North Central Catchment Management Authority
- North East Catchment Management Authority
- North East Region Water Corporation
- North East Waste and Resource Recovery Group
- Parks Victoria
- Phillip Island Nature Park Board of Management
- Port Phillip and Westernport Catchment Management Authority
- Royal Botanic Gardens Board
- South East Water Corporation
- South Gippsland Region Water Corporation
- Southern Alpine Resort Management Board
- Southern Rural Water
- Sustainability Victoria (CEO Only)
- Trust for Nature (Victoria)
- Victorian Building Authority
- Victorian Planning Authority
- Wannon Region Water Corporation
- West Gippsland Catchment Management Authority
- Western Region Water Corporation
- Westernport Region Water Corporation
- Wimmera Catchment Management Authority
- Winton Wetlands Committee of Management
- Working Heritage
- Yarra Valley Water Corporation
- Zoological Parks and Gardens Board
Department of Health and Human Services
- Ballarat General Cemeteries Trust
- BreastScreen Victoria
- Geelong Cemeteries Trust
- Greater Metropolitan Cemeteries Trust
- Health Purchasing Victoria
- Remembrance Park Central Victoria
- Respect Victoria
- Southern Metropolitan Cemeteries Trust
- State Sport Centres Trust
- Victorian Assisted Reproductive Treatment Authority
- Victorian Health Promotion Foundation
- Victorian Pharmacy Authority
Guide to making a submission
This guide helps specified public entities and their portfolio department comply with the Victorian Government Public Entity Executive Remuneration Policy.
A specified public entity should liaise with its portfolio department as early as possible when:
- it would like to propose an increase to the remuneration of an existing executive
- when it anticipates an upcoming vacancy in an executive role.
The department can provide help with issues such as:
- whether Ministerial approval is required for the appointment (this is separate to OPSER's submission process)
- advertising requirements (including advice on the level to ‘pitch’ the remuneration offer)
- how the executive role compares to others in the department’s portfolio
- contractual terms and conditions
- general corporate governance, human resource or employer related queries.
Early engagement with OPSER about a prospective appointment can also be useful. OPSER can provide contact details for the department and advice on the submission process.
When is a submission required?
The policy requires specified public entities to make a submission to OPSER for approval of remuneration arrangements for certain executives.
A submission must be made to OPSER for approval of proposed remuneration for:
- the appointment of a new CEO in a newly established, or existing public entity
- the re-appointment of an incumbent CEO, where an increase in the TRP is proposed
- any proposed adjustment to a CEO’s TRP that is greater than the Premier’s annual adjustment.
In cases where a subordinate executive's remuneration:
- exceeds 80% of the CEO's TRP, or
- the proposed TRP will result in the average TRP of all of the CEO’s direct reports exceeding 70% of the CEO’s TRP
specified public entities must contact OPSER for further advice.
Preparing a submission
After identifying a preferred candidate, the specified public entity must prepare a submission for OPSER. This submission should outline the rationale used to arrive at the proposed remuneration.
OPSER will not consider submissions before the selection of a preferred candidate.
Submissions to OPSER must be made using the online form available below. This form collects the minimum information necessary for OPSER to assess a submission. All mandatory fields must be completed.
It is not necessary for submissions to be lengthy or complex. Submissions should contain clear, logical and concise analysis and explain how the evidence provided by the public entity supports the case for the proposed remuneration.
The submission should:
- be expressed in plain English
- avoid industry or technical jargon and
- avoid assumed prior expert subject knowledge of the public entity’s core business.
When discussing executive remuneration, all parties are responsible for avoiding conflicts of interest. For instance, the CEO should not be present at board discussions, or involved in preparing an OPSER submission, if his/her remuneration is being considered.
Questions considered by OPSER
The following key questions will help specified public entities collect the information necessary to complete a submission. The questions relate to:
- proposed remuneration
- rationale for the proposed remuneration
- key data and information used to arrive at the proposed remuneration.
The guiding principles should inform the specified public entity’s response to these questions, and the development of the submission overall.
OPSER will be able to asses submissions more quickly if accurate and relevant information is provided. OPSER will contact a public entity when it believes additional information is needed to support a submission.
OPSER may be contacted for additional guidance or help in answering these questions.
What is the proposed TRP?
TRP is defined as the total package of benefits paid to an executive. This comprises:
- cash salary (annual value)
- employer superannuation contributions
- the cost of a motor vehicle to an employer and the cost of other employment benefits and associated fringe benefits tax
TRP does not include eligibility for any performance bonuses.
TRP also does not include the cost of items such as:
- laptop computers
- study leave or
- re-location allowances
as these are considered general business expenses.
What is the current (or previous) CEO’s TRP (if applicable)?
Where applicable, please state the current remuneration paid to the individual performing this role.
What are the key functions of the public entity, including how it contributes to achieving the government’s objectives?
Please briefly summarise the key purpose, roles and functions of the public entity in the context of delivering the government’s priorities.
For a proposed adjustment to TRP that is greater than the Premier’s annual adjustment, please provide evidence of changes in the entity’s functions or responsibilities. Relevant changes may include delivery of a previously unanticipated major infrastructure project, or new government strategy.
What are the specific responsibilities of the executive in this public entity?
Please summarise the duties and responsibilities of the executive with regard to key metrics such as:
- number of employees
- size of budget
- number of sites and
- with regard to factors including relevant ‘business’ stage (e.g. start-up/infancy, growth, mature/business as usual, expansion in functions).
For a proposed mid-contract increase to the remuneration of an existing executive, please also provide evidence that demonstrates an expansion in the executive’s role and responsibilities.
What future challenges are expected to affect the duties of the executive?
If there are anticipated forthcoming challenges for the public entity, and/or the sector, that will affect the responsibilities of the executive, please indicate the expected nature of these.
Please also indicate how this has been factored into the level of remuneration proposed in the submission.
If a re-appointment, or increase in the TRP, of an existing executive is proposed, how has the incumbent performed in the role with reference to performance targets?
Please provide a summary assessment of the executive’s prior performance in the role.
Please include general comments, as well as specific references to key outcomes as measured against agreed performance measures and key performance indicators.
What benchmarks and/or comparators have been used to support the remuneration proposed in the submission?
Please indicate the rationale used to arrive at the remuneration proposed in the submission.
Please identify the data, information and benchmarks that have been used to support the level of remuneration proposed in the submission. Relevant information may include:
- remuneration paid for similar executive positions in similar public entities, and/or
- remuneration reports, and/or
- work value assessments
What unique skills, and specific experience, does the executive bring to the role to deliver the public entity’s objectives?
Please indicate the ‘uniqueness’ of the preferred candidate’s skills and experience relative to other potentially suitable candidates.
If the proposed remuneration reflects a premium to ‘attract or retain talent’, please explain how this particular role differs to other executive roles.
Were there specific pressures in the market, including any particular difficulties in finding a candidate with suitable skills and experience?
Please indicate how the preferred candidate was selected, including the recruitment process followed. Also advise if there were particular challenges in finding suitable candidates and the nature of those challenges.
For a proposed mid-contract increase please provide evidence of market pressures affecting the board’s ability to retain the executive.
Does the proposed remuneration include provision for a bonus opportunity and, if so, what is the maximum bonus opportunity?
Bonus opportunities may be offered to a preferred candidate in addition to the TRP. If the public entity intends to offer a bonus opportunity, please provide the maximum bonus opportunity available to the candidate in percentage terms (e.g. 17%).
In addition to answering these questions, public entities must upload a copy of the relevant executive's position description. This allows OPSER to better understand the requirements of the role.
Public entities are also invited to upload any other documentation (such as remuneration reports, work value assessment etc). A maximum of three files may be uploaded via the online form, however, public entities may email OPSER additional documents.
Nominated department contacts are responsible for coordinating the department's response to a submission.
The department process
The public entity’s portfolio department must review and provide comments on the submission. The Secretary, or relevant Deputy Secretary, of department must be briefed on the public entity's submission and department's response. OPSER will not formally review the submission until the department's comments have been approved by the appropriate authority.
Completing a review
When completing a review departments should consider and comment on the three factors below:
- Any particular challenges or opportunities facing the public entity in the near future. These factors should be relevant for determining the appropriate remuneration of the candidate
- The recent general performance of the public entity relative to its objectives and expected outcomes. Relativities to similar public entities in the department’s portfolio may also be included
- If a re-appointment or TRP increase that is greater than the Premier’s annual adjustment, on the recent performance of the executive. Where applicable, departments should include relativities to similar executives in the portfolio.
Departments should also include any other comments considered relevant for determining the appropriate remuneration level for the role and candidate.
Once the department has completed its review, the submission will be forwarded to OPSER for assessment.
Make a submission - form
Once the board has gathered all of the information necessary, the chair (or chair's representative) should make a submission below.
Help with your submission
Other queries about executive employment
Questions about specific roles or contractual conditions in public entities should be directed to each board’s portfolio department in the first instance.
requests for the Victorian Public Service Executive Employment Handbook or
- the template public entity executive contract
Victorian Public Service Executive Officers
Victorian Public Service (VPS) executives are employed under Part 3, Division 5 of the Public Administration Act 2004.
VPS executive remuneration bands apply to all VPS executives. As at 1 July 2018, the remuneration bands are as follows:
Band Minimum Maximum EO-3 $182,070 $236,068 EO-2 $210,670 $337,194 EO-1 $306,151 $448,119
On 4 August 2016, the Secretary of the Department of Premier and Cabinet, announced the Premier’s decision to remove performance related incentive payments (bonuses) from the VPS Executive Officer employment and remuneration policies. The message below outlines the decision and its implementation.
Message from the Secretary to Victorian Public Service (VPS) executives - changes to remuneration arrangements
The VPS Executive Officer (EO) cohort is critical to leading our public institutions and supporting the delivery of high quality services for Victorians. It is therefore important that employment arrangements for VPS EOs reflect best practice and enable EOs to continue the high quality work and leadership for which Victoria is renowned.
The Victorian Public Sector Commission (VPSC) has recently conducted a review of current executive workforce arrangements and found that VPS EO bonuses are generally not effective in driving performance and that the global provision of bonuses to public service executives is unique to Victoria amongst the Australian jurisdictions.
Consistent with the VPSC's review, the Premier has approved the removal of bonuses from the VPS EO employment and remuneration policies. This will affect both existing and new VPS EOs.
The change will not immediately affect EOs in Victoria's broader public sector and it is intended that employment and remuneration arrangements, including bonus arrangements, in the broader public sector will be further reviewed on a sector by sector basis over the coming 12 months.
For existing EOs, the change means that human resources representatives will be in contact to agree the removal of bonus provisions from existing employment contracts.
Eligible VPS EOs will receive a uniform increase to their Total Remuneration Packages (TRP) of four per cent, effective 1 July 2015, for the removal of bonus provisions from their contracts. This increase is in addition to:
- two and a half per cent discretionary annual TRP adjustments already approved by Government for the 2015-16 and 2016-17 years; and
- two per cent discretionary annual TRP adjustments for which EOs will be eligible to be considered in 2017-18 and 2018-19.
This amounts to TRP increases of potentially up to 13 per cent over four years from 1 July 2015. This is consistent with wage increases for the VPS non-EO workforce, agreed as part of the 2016 VPS Enterprise Agreement.
Secretaries of Victoria's seven departments, the Chief Commissioner of Victoria Police and the Victorian Public Sector Commissioner will implement the policy change for their EO cohorts and Secretaries will support other VPS employers in their portfolios to implement the change in policy as well.
The VPS EO employment handbook and standard VPS EO contract have been amended to reflect the removal of bonus provisions and are available on the Victorian Public Sector Commission's (VPSC's) website. New VPS EO contracts will not include bonus provisions.
The VPS EO remuneration bands, which are published on the VPSC's website and set minimum and maximum VPS EO remuneration for each level, will be adjusted annually in line with the 13 per cent increase over four years that may be offered to existing EOs.
Secretaries, the Chief Commissioner of Victoria Police and the Victorian Public Sector Commissioner have been provided with detailed information to assist them in implementing the policy change by the end of 2016 and human resources representatives will be in touch with affected EOs shortly about how this change will impact their remuneration arrangements.
Reviewed 01 April 2019