Under the Victorian Independent Remuneration Tribunal and Improving Parliamentary Standards Act 2019 (Vic) (VIRTIPS Act), the Tribunal has made a Determination setting the values of remuneration bands for executives employed in prescribed public entities.
This Determination sets the framework for an executive’s remuneration based on their relevant band.
Employers of executives retain the power to set an individual executive's remuneration within the relevant band. The Tribunal has issued Guidelines about the placement of executives within the bands, which employers are required by to follow.
An executive may only be paid above the relevant band, if the Tribunal’s advice has been obtained and considered under section 37 of the VIRTIPS Act. For further information see below — Requesting advice on a proposal to pay above the bands.
Remuneration bands for executives employed in prescribed public entities (Victoria) Determination No. 01/2020
Pursuant to section 19 of the VIRTIPS Act, the Tribunal has made a Determination setting the values of the remuneration bands for executives employed in prescribed public entities. This Determination was made on 18 December 2020.
This Determination applies to the entities prescribed in the Victorian Independent Remuneration Tribunal and Improving Parliamentary Standards (Prescribed Public Entities) Regulations 2019 (Vic).
The full Determination and Statement of Reasons is available here
Remuneration bands for executives in prescribed public entities
The new remuneration framework for executives employed in prescribed public entities consists of three distinct and contiguous bands aligned to the PEECF.
As specified in the Remuneration bands for executives employed in prescribed public entities (Victoria) Determination No. 01/2020, the values of the remuneration bands are as follows:
Base of TRP(a)
$ per annum
Top of band TRP
$ per annum
|Public Entity Senior Executive Service-3||360,001||479,900|
|Public Entity Senior Executive Service-2||249,701||360,000|
|Public Entity Senior Executive Service-1(b)||135,000||249,700|
Notes: (a) The above values are for executives employed on a 1.0 Full Time Equivalent (FTE) basis, and apply pro rata to executives employed on a part-time basis. (b) When the work value of an executive’s position has been assessed using the PEECF and the position has a work value score of at least 21 points, the executive’s total remuneration package (TRP) must be no lower than $192,800 per annum (based on 1.0 FTE). Once the work value of executive roles in prescribed public entities has been obtained using the PEECF, the only executives in prescribed public entities with a TRP between $135,000 and $192,799 per annum (based on 1.0 FTE) may be Chief Executive Officers (or equivalent roles) whose position does not meet the minimum work value score required for their classification to be determined under that framework (21 points).
Executives currently employed in prescribed public entities will be initially assigned to remuneration bands based on their TRP prior to this Determination.
The relevant remuneration band for an executive employed in a prescribed public entity under Part 3 of the Public Administration Act 2004 (Vic) corresponds to that which applies to an executive with the same Senior Executive Service or Executive Officer classification, under the latest Determination made by the Tribunal under section 21 or 22 of the VIRTIPS Act.
In accordance with section 20 of the VIRTIPS Act, the Tribunal must make a Determination providing for the annual adjustment to the values set in the Remuneration bands for executives employed in prescribed public entities (Victoria) Determination No. 01/2020. A Determination under section 20 is expected to be made in the second half of 2021.
Prescribed Public Entity Executive Remuneration Guidelines
Effective date 18 December 2020
1.1. In accordance with section 36(6) of the Victorian Independent Remuneration Tribunal and Improving Parliamentary Standards Act 2019 (Vic), the Victorian Independent Remuneration Tribunal (the Tribunal) makes these guidelines with respect to the placement of executives employed in prescribed public entities within the remuneration bands set by the Determination.
1.2. These Guidelines should be read together with the Determination in effect at the time.
2.1 A prescribed public entity employer must apply these Guidelines when setting the remuneration for an executive when:
a) appointing a new executive;
b) renewing an expiring contract; or
c) making a remuneration adjustment in the employment contract (for example, when a position is re-structured or re-classified).
2.2 The Guidelines aim to assist public entity employers in placing executives within the relevant remuneration bands.
2.3 Ultimately, judgement will need to be exercised by a public entity employer when weighing up the various factors to determine the appropriate remuneration for the individual executive.
The following overarching principles have been drawn from matters considered by the Tribunal in making the Determination:
3.1 Executive remuneration should be fair and reasonable
Executives in public entities should receive fair and reasonable recompense for performing their public duties.
3.2 Executive remuneration should be competitive
Remuneration should be set at a competitive level, so as to attract and retain talented people.
3.3 Executive remunerations arrangements should be robust
Remuneration decisions should be robust and based on a consideration of all relevant factors as outlined in section 4.
Together with the Guiding Principles, public entity employers must apply the work value score for the position under the Public Entity Executive Classification Framework (PEECF), together with some, or all, of the other factors outlined below when setting the remuneration of executives within the relevant remuneration band.
If the executive position has not been assessed under the PEECF, employers must first contact the Victorian Public Sector Commission (VPSC) to arrange a work value assessment prior to advertising the position (for a new appointment) or making an adjustment to the employment contract if it relates to an existing executive.
a) The PEECF enables public entity employers to classify executive positions using a work value assessment tool, which produces a work value score for each position. Generally, the higher the score, the more highly the position may be remunerated within the relevant band.
b) It should be noted, however, that work value scores should not be interpreted as equating to a fixed dollar value or increment within a relevant band. The only exception, in line with paragraph 7.2 of the Determination, is when the executive position has a work value score of at least 21 points, then the executive’s TRP must no lower than $192,800 per annum (based on 1.0 FTE).
c) Where a CEO position has a work value score of less than 21, the factors listed at paragraphs 4.3 to 4.7 below will assist in setting the executive’s remuneration.
4.2 The experience, knowledge and capability of the individual
a) For an executive with no prior or little executive experience, remuneration at the base or in the lower half of the remuneration band may be appropriate.
b) For a relatively experienced executive, remuneration around the middle of the remuneration band may be appropriate.
c) For a highly experienced executive, with evidence of high performance, remuneration above the middle of the band may be required to retain or attract the executive and compete effectively in the market.
4.3 The current remuneration of the individual
Individuals recruited from a comparable position may warrant a higher level of remuneration to secure the candidate which may be a reason for increasing the executive’s remuneration within the relevant remuneration band.
4.4 Labour market pressures on the position
Skills shortages in particular geographic areas or occupational categories, or niche skills required for the position may require a more competitive remuneration offering within the remuneration band.
4.5 The remuneration relativities of other executives within the organisation
a) Comparable position within the organisation should attract similar remuneration in order to maintain relativity within a peer group (recognising that some public entities have very few or only one executive). This may result in an adjustment to the remuneration within the relevant band to more accurately reflect the remuneration of executives with comparable positions.
b) Particular consideration may also be required to achieve gender pay equity and reduce the gender pay gap for comparable executive positions across the organisation.
4.6 Intra band reporting
a) When an executive reports to another executive and both are remunerated within the same band, the more senior position in the reporting relationship should receive a higher level of remuneration.
b) An exception may occur for specialist positions, where a higher level of remuneration is offered to attract a candidate with the particular knowledge and capability required for the position, despite the specialist reporting to a more senior executive.
4.7 Transitional considerations
a) Where an executive has been assigned to a remuneration band based on TRP, but the position is subsequently classified by the employer following a PEECF assessment, an employer should consider the factors set out in paragraphs 4.1 to 4.6 if the employer determines that changes to the executive’s remuneration within the band are warranted.
b) In line with paragraph 7.2 of the Determination, if an executive is paid below $192,800, but the position has a score of 21, the executive’s remuneration must be uplifted to a minimum of $192,800.
Requesting advice on a proposal to pay above the bands
An employer must request the Tribunal’s advice whenever it proposes to pay an executive above the maximum of the remuneration band set by the . This may occur with a new appointment, a reappointment, or as a result of a mid-contract remuneration adjustment.
For a new appointment, where possible employers are encouraged to seek the Tribunal’s advice before the recruitment process commences in relation to the executive position, to enable the employer to advertise the position.
Requests for advice on proposals to pay above the relevant band are expected only in exceptional circumstances.
The Tribunal has developed and approved the following forms for employers to request its advice. The forms require employers and executives to provide certain information to the Tribunal about the proposal to remunerate above the band. Further information is available in the Tribunal’s accompanying Guide.
To request the Tribunal’s advice on a proposal to pay an executive above the maximum of the relevant remuneration band, an employer must complete and submit the appropriate form:
Form A - New executive positions, where the executive is not known
Form B - New executive appointments, re-appointments and mid-contract adjustments, where the executive is known
This Guide explains the process for seeking the Tribunal’s advice and how to complete the Request for Advice forms.
The Guide details a set of Guiding Principles and core information against which employers are requested to provide statements and evidence to support the proposal. The Tribunal will assess a proposal against these Guiding Principles. The Tribunal may also consider relevant benchmarking data held by the Tribunal’s secretariat or seek further information from independent experts.
To support greater transparency, accountability and evidence-based decision-making in relation to remuneration arrangements, the Tribunal intends to publish the advice provided to employers on its website. Periodic summaries of the advice may also be published elsewhere (such as in the Tribunal’s annual report).
The Tribunal’s approach to the publication of advice in relation to Form A and Form B requests is detailed in the Guide.
The Tribunal considers that where an employer increases an executive’s superannuation benefits to comply with the , and this results in the executive being paid above the maximum of the relevant remuneration band in the Determination, the employer is not required to seek the Tribunal’s advice under section 37 of the Victorian Independent Remuneration and Improving Parliamentary Standards Act 2019 (Vic).
The Tribunal considers that this does not constitute a “proposal” to pay above the remuneration band given the employer is giving effect to statutory provisions regarding superannuation benefits.
Reviewed 05 February 2021