The Victorian Independent Remuneration Tribunal (Tribunal) oversees the Victorian Government's Public Entity Executive Remuneration Policy (PEER policy).
The Tribunal has assumed responsibility for the policy from the former Office of Public Sector Executive Remuneration (OPSER).
Victorian Government Public Entity Executive Remuneration Policy
The policy requires specified public entities to make a submission to the Tribunal for the approval of executive remuneration in certain circumstances.
The following principles are to guide public entity boards in preparing submissions for the Tribunal.
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.
Specified public entities are required to make a submission to the Tribunal in the following circumstances:
- an incoming Chief Executive Officer (CEO) in a newly established or existing entity
- the reappointment of an incumbent CEO, where an increase in Total Remuneration Package (TRP) is proposed
- any proposed mid-contract adjustment to a CEO's TRP that is greater than the Premier's annual adjustment (see below).
In addition, under the policy, the TRP of a subordinate executive in specified public entities should not:
- exceed 80% of the approved TRP for the CEO of the same public entity
- result in the average TRP of all the CEO’s direct reports exceeding 70% of the CEO’s TRP
If the proposed TRP of a subordinate executive will exceed either of the above thresholds, the public entity is required to first make a submission to the Tribunal to seek its advice in relation to this matter.
For the purpose of the policy, an executive includes an employee of a public entity who:
- receives a TRP equal to or greater than the base of the Victorian Public Service (VPS) executive officer remuneration range
- has significant management responsibility, that is, the primary role of the employee is to provide leadership and strategic direction for other staff members
For the avoidance of doubt, the following are not executives for the purpose of the policy:
- 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 Public Administration Act 2004 (Vic), including by virtue of a specific legislative reference or an order/instrument made under legislation
The policy should be read in conjunction with the information for making a submission provided below.
Mandatory contractual terms and conditions
The mandatory contractual terms and conditions for public entity executives applicable 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.
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).
The maximum bonus opportunity available to public entity executives is 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.
Step 1: board prepares a submission
- an incoming CEO in a newly established or existing entity
- the reappointment of an incumbent CEO, where an increase in TRP is proposed or
- any proposed mid-contract adjustment to a CEO's TRP that is greater than the Premier's annual adjustment
In the case of a new CEO appointment, and sometimes in the case of a re-appointment of an existing CEO, the board will first run a recruitment process in consultation with its portfolio department.
If the proposed TRP of a subordinate executive will exceed either of the 70% or 80% thresholds outlined in the policy, the public entity is required to first make a submission to the Tribunal to seek its advice in relation to this matter.
Boards may provide a draft submission to the Tribunal for advice before making a formal submission.
Once complete, the submission is forwarded by the Tribunal 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 within 10 business days of receipt of the entity's online 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-contract increase
During the comment period, the Tribunal provides the department with remuneration and other data to assist it to comment on submissions.
Step 3: Tribunal considers the submission and advises the outcome
The Tribunal reviews the final submission, including the department’s comments, against the requirements of the PEER policy.
Where relevant, entities have an opportunity to respond to department comments.
The Tribunal advises the public entity and the department of its decision by email.
Step 4: board gives effect to Tribunal's decision
Should the Tribunal approve the TRP proposal, it is the board's role to prepare or amend an executive contract to give effect to the Tribunal's decision.
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 the Tribunal's remuneration approval process.
Boards may choose to adjust a CEO’s TRP by an amount up to the Premier’s annual guideline rate. A specified public entity must make a submission to the Tribunal for any proposed adjustment to a CEO’s TRP that is greater than the Premier’s guideline rate.
Annual adjustments are to be applied in the financial year for which the Premier has approved the guideline rate.
For 2019-20 the Premier has determined the annual guideline rate to be 2%. A CEO's TRP may be adjusted up to 2% at any time during the 12 month period to 30 June 2020, but not backdated prior to 1 July 2019.
Subject to any board approval requirements, the CEO may in turn pass on the Premier’s approved annual adjustment to TRP up to the guideline rate to subordinate executives within their organisation.
Annual adjustments for subordinate executives should also comply with the subordinate executive rules (70/80 rules) outlined in the policy.
Annual adjustments are to be applied in the financial year for which the Premier has approved the guideline rate.
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
- State Trustees Limited
- Transport Accident Commission
- Treasury Corporation of Victoria
- Victorian Funds Management Corporation
- Victorian Managed Insurance Authority
Department of Jobs, Precincts and Regions
- Agriculture Victoria Services Pty Ltd
- Australian Grand Prix Corporation
- Centre for Books, Writing and Ideas
- Dairy Food Safety Victoria
- Development Victoria
- Docklands Studios Melbourne
- Emerald Tourist Railway Board
- Fed Square Pty Ltd
- Game Management Authority
- Geelong Performing Arts Centre Trust
- Greyhound Racing Victoria
- Harness Racing Victoria
- Kardinia Park Stadium Trust
- Launch Victoria
- Melbourne and Olympic Parks Trust
- Melbourne Convention and Exhibition Trust
- Melbourne Convention Bureau
- Melbourne Market Authority
- Melbourne Recital Centre
- State Sport Centres Trust
- 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
- V/Line Corporation
- Victorian Ports Corporation (Melbourne)
- Victorian Rail Track Corporation
- 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 Gippsland Region Water Corporation
- 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 and Southern Rural Water Corporation
- Gippsland Waste and Resource Recovery Group
- 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
- 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
- Bendigo Cemeteries Trust
- BreastScreen Victoria
- Geelong Cemeteries Trust
- Greater Metropolitan Cemeteries Trust
- Health Purchasing Victoria
- Office of the Convenor of Medical Panels
- Southern Metropolitan Cemeteries 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 TRP 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 the Tribunal’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 the Tribunal about a prospective appointment can also be useful. The Tribunal 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 the Tribunal for TRP approval for certain executives.
A submission must be made to the Tribunal for approval of proposed TRP 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 proposed TRP will:
- exceed 80% of the CEO's TRP, or
- result in the average TRP of all of the CEO’s direct reports exceeding 70% of the CEO’s TRP
specified public entities are required to contact the Tribunal to seek advice on the proposed remuneration arrangements.
Preparing a submission
For new appointments, the Tribunal will not consider submissions before the selection of a preferred candidate.
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 TRP.
The submission should:
- be expressed in plain English
- avoid industry or technical jargon and
- avoid assumed expert 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 a PEER submission, if their TRP is being considered.
Questions considered by the Tribunal
The following key questions will help specified public entities collect the information necessary to complete a submission.
The guiding principles should also inform the specified public entity’s response to these questions, and the development of the submission overall.
The Tribunal will contact a public entity when it believes additional information is needed to support a submission.
The Tribunal 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:
- base salary
- employer superannuation contributions
- employment benefits (i.e. non-salary benefits such as the cost of a motor vehicle to an employer)
- the annual cost to the employer of providing the non-monetary benefits, including any fringe benefits tax payable
TRP does not include eligibility for any performance bonuses.
TRP also does not include the cost of items such as:
- laptop computers
- study leave
- relocation 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 TRP paid to the individual performing this role.
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
- relevant ‘business’ stage (e.g. start-up/infancy, growth, mature/business as usual, expansion in functions)
- any future challenges expected to affect the duties of the executive
Please identify the data, information and benchmarks that have been used to support the level of remuneration proposed in the submission.
For a proposed mid-contract increase to the TRP of an existing executive, please also provide strong evidence that demonstrates an expansion in the executive’s role and responsibilities.
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 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 TRP reflects a premium to ‘attract or retain talent’, please explain how this particular role differs to other executive roles.
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.
Are 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 TRP include provision for a bonus opportunity and, if so, what is the maximum bonus opportunity?
Bonus opportunities may be offered to an executive in addition to their TRP. If the public entity intends to offer a bonus opportunity, please provide the maximum bonus opportunity available to the executive in percentage terms (e.g. 17%).
Additional attachments required
In addition to answering these questions, public entities must upload a copy of the relevant executive's position description. This allows the Tribunal to better understand the requirements of the role.
For reappointments, or a proposed mid-contract increase, please upload a copy of the existing contract.
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 the Tribunal additional documents to .
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 the department must approve the department's response. The Tribunal will not formally review the submission until the department's comments have been approved by the appropriate authority.
Departments have 10 business days to provide comments on a submission. Departments are encouraged to contact the Tribunal if they require more time to provide comments.
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
- The performance of the executive, if the board is proposing a reappointment or mid-contract increase. Where applicable, departments should include relativities to similar executive roles 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 the Tribunal for assessment. For procedural fairness reasons, should a department express concerns about a submission, the entity will be given five business days to consider and respond to comments.
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 using the form.
Please note that the form is currently being updated to remove references to the former Office of Public Sector Executive Remuneration. Until the updated form is available, the current form is appropriate for making submissions to the Tribunal.
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.
- salary packaging
- requests for the Victorian Public Service Executive Employment Handbook
- 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 (Vic).
VPS executive remuneration bands apply to VPS executives. As at 1 July 2019, the remuneration bands are as follows:
Band Minimum Maximum EO-3 $185,711 $240,789 EO-2 $214,883 $343,938 EO-1 $313,274 $457,081
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) for VPS Executive Officers. 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
- 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 08 October 2019