Policy on payment of market supplements
- Introduction
- Purpose of the policy
- Definition
- Eligibility
- Calculation of the supplement
- Review of the supplement
- Accessing the policy
1. Introduction
In general, salary at the University is determined by grade, which is in turn based upon the size of the job. The Framework Agreement for the Modernisation of Pay Structures does make provision for the payment of Recruitment and Retention Premia where labour market conditions dictate.
Whilst recognising that such premia (also known as market supplements) may be necessary to recruit or retain high quality staff in some positions, the University expects such payments to be made only in exceptional circumstances. Every effort should be made to recruit or retain staff on salaries within the range of the grade of that job, before any market supplement is considered. Also, when considering the need for a supplement, account should be taken of terms and conditions and other work-related factors.
2. Purpose of the policy
The Equal Pay Act 1970 and other regulations require that there should be objective justification for payment of market supplements, as these mean that potentially two jobs of equal value could be paid differently. This policy is in place to ensure that the University is able to account for market forces in cases where it is exceptionally difficult to recruit or retain staff, but still stay within the principles of equal pay and the University of Sheffield Grading Scheme.
3. Definition
A market supplement, or recruitment and retention premium, is an addition to the salary for a specific individual post, or group of posts, where labour market pressures increase market pay rates, such that they would prevent the University from being able to recruit and retain staff at the salary of the grade for the post.
Supplements apply to posts on a temporary basis. Where an employee moves to a different post that does not attract a market supplement, their entitlement to a supplement will cease on moving to the new post. Supplements will also be reviewed periodically to determine if they are still required; the period of the review depends on the circumstances of the case.
As supplements are paid separately to basic salary, they are not considered as part of the hourly rate for overtime or premium hours calculations. Supplements are not superannuable.
4. Eligibility
Staff on a University contract are eligible to be considered for market supplements. There should be a demonstrable recruitment or retention problem before a vacant post or staff in post can be considered for a supplement; supplements are only considered where all reasonable methods to improve recruitment or retention have been exhausted. If there is insufficient evidence that market pay is above the salary range for the grade of the post, no market supplement will be paid.
5. Calculation of the supplement
To compare the position of the grade salary to the external market, independently verified sources of external salary data will be sought. It needs to be established that the external data is for a role that closely matches the University post being considered. A supplement is then calculated to reflect the difference between the median salary for the external market and the top of the normal range of the grade for the post.
The payment of a supplement has to be agreed with the Director or Deputy Director of Human Resource Management, or the Assistant Director of Human Resource Management (Reward & Benefits).
The agreed supplement is payable monthly for an agreed period, which is based upon the circumstances of the case. The data used to determine this figure is recorded, so it can be reused to reassess if the supplement is still justified and whether the value needs adjustment.
If, after reasonable investigation, no data can be found to assess the market level of the post in question, then no supplement is payable.
6. Review of the supplement
Where a supplement has been payable, it is reviewed at the end of the agreed period. As the eligibility for a supplement states that not only must there be a higher market salary externally for the job than the grade salary, but that there must also be a demonstrable difficulty in recruiting or retaining staff, an assessment should be made as to whether this difficulty still exists before the supplement is renewed.
If the supplement is to be renewed, then the same comparison should be made as was originally used to determine the value of the supplement, but with updated data. If the new difference is found to be less or zero, then notice of three months should be given to the staff that the supplement is to be reduced or removed. If the difference is found to be bigger, the value is only increased if there is evidence that the payment of the supplement at the existing level has not eliminated the recruitment or retention problems.
7. Accessing the policy
Where Heads of Department consider that they have a recruitment or retention issue, in their department, that warrants consideration for a market supplement, they should, in the first instance, contact their customary HR Adviser.