PERFORMANCE AND REWARD

Pay Policy

1 Pay Policy June 2004 V3.0

 Contents

Chapter TITLE Page

1 INTRODUCTION
1.1 Overview
1.2 Delegated authorities
2 THE LSC REWARD STRATEGY
2.1 Purpose of the reward strategy
2.2 Structure
2.3 Principles
3 THE NEW PAY SYSTEM
3.1 Background
3.2 Principles of the new pay system
3.3 Market related pay and pay zones
3.4 Broad Bands
3.5 Job families and job levels
3.6 Position in pay range
3.7 Performance related salary progression
3.8 Annual salary review strategy
4 TERMINOLOGY
4.1 Comparative ratio and the Normal Maximum
4.2 Role Description
4.3 Business Case
5 SAFEGUARDS
5.1 Purpose
5.2 Principles
5.3 The need for safeguards
6 PROCESSES FOR NEW POSTS/RESTRUCTURES
6.1 Replacing an existing role holder at the same level or a
lower level
6.2 Establishing a new role within the LSC
6.3 Restructures
6.4 Changing an existing role to a higher Band and/or level
7 APPLYING THE PAY RANGES
7.1 Internal promotions and/or external recruits
7.2 Special considerations for contractors/fixed term
employees
7.3 Promotions of internal candidates to permanent posts
8 EFFECTS ON SALARY OF INTERNAL CHANGES
8.1 Changes to pay - principles
8.2 Promotions
8.3 Transferring between pay zones
8.4 Promoting employees who currently receive more than
100% of the new role
8.5 Employees with TUPE transfer provisions

2 Pay Policy June 2004 V3.0

 Contents (continued)

Chapter TITLE Page

9 TEMPORARY PROMOTIONS/ADDITIONAL
RESPONSIBILITY ALLOWANCES/HONOURARIUMS
9.1 Principles
9.2 Additional responsibilities
9.3 Temporary promotions
9.4 Calculating the Temporary Promotions Allowance
10 RESPONSIBILITES
10.1 To employees
10.2 Pay Budget
10.3 Audit trails
Annex 1 Pay ranges by zone

3 Pay Policy June 2004 V3.0

1. INTRODUCTION

1.1 Overview

This document provides the detail about the pay system of the Learning + Skills
Council (LSC) and is structured to assist all staff in understanding the pay process
and their areas of responsibility. It also provides information about the various
processes linked to pay.

1.2 Delegated authorities

Regional Directors (RDs) Executive Directors (EDs) and National Directors (NDs)
operate under delegated authorities in respect of appointing staff and changing their
terms and conditions. Each item stipulates that the authority is delegated within
National HR policies. This document sets out the detail of the pay policy.

If an RD, ED or ND wishes to appoint staff or change the pay of staff outside this
policy then the prior approval of the National Director of Corporate Services is
required.

2. THE LSC REWARD STRATEGY

2.1 Purpose of the reward strategy

Pay is an important part of the LSC reward strategy however, before looking at the
details of the pay system, it might be useful to say a few words about the overall
strategy. Our reward system has been designed to enable us to recruit, develop,
reward, motivate and retain high quality people capable of delivering our wide-
ranging remit.

2.2 Structure

The LSC has introduced an integrated Performance and Reward Strategy, which is
intended to be competitive with the external market. The aim is to offer a fair and
transparent structure so everyone can see how individual rewards are determined.

2.3 Principles

In order to achieve our purpose the reward system must be manageable,

competitive, equitable, legal, affordable, flexible, offer value for money and link pay to
performance.

3. THE NEW PAY SYSTEM

3.1 Background

4 Pay Policy June 2004 V3.0

When the LSC was established in April 2001, it brought together a large number of
organisations, all with their own structures, terms and conditions. During the period of
July to September 2002 all employees were offered new contracts during the
Harmonisation exercise. As a result nearly all staff are now on the same terms and
conditions.

3.2 Principles of the new pay System

The new pay system is based on a series of principles for deciding how each part of
the structure should be organised. The key components of the system are:

Market related pay

- backed by a system of pay zones

Broad Bands
- groups of roles with similar levels of contribution to the business

Job families
- groups of roles with similar characteristics but different levels of responsibility
and pay

Pay Ranges
- determined by job function and location

Performance-Related Salary Progression

- relating pay to personal contribution

3.3 Market related pay and pay zones

The market-related pay system relates pay in each LSC location to the market
conditions prevailing in different parts of the country. Pay is set for each job level at
each LSC location. This type of pay system gives us flexibility to recruit, retain and
offer competitive pay in the areas where the LSC operates.

As different rates of pay apply in different parts of the country, depending on a wide
range of factors, pay in some locations will be higher than in others. To establish
geographic differences that take account of local conditions, offices that share similar
local pay market characteristics are grouped together into a Pay Zone. Some
organisations reflect variations in regional costs – such as London Weighting
Allowances. The LSC pay zone information is given in Annex 1.

3.4 Broad Bands

Five broad ‘bands’ have been created that reflect the structure of our organisation.
The bands group together job roles requiring similar levels of responsibility,
knowledge and accountability.

5 Pay Policy June 2004 V3.0

The bands are:
Band 5 – Regional, National and Executive Directors
Band 4 – Directors
Band 3 – Senior Specialists and Managers
Band 2 – Specialists and Managers
Band 1 – Support Staff

The band structure minimises the number of hierarchies across the organisational
structure, assisting the LSC to function effectively

3.5 Job families and job levels

Job families complement the five broad bands outlined earlier. While the broad bands
deal with groupings of similar roles, job families go further taking account of similar
roles, but where the job content involves different levels of skills, knowledge and
experience. For example Marketing and Communications and Finance would be in
separate job families because of the different nature of their work and the skills
required.

Eight job families have been created

Core Functions These are sub-divided. The structure

is currently being reviewed, to ensure
Finance consistency with the New LSC.

Communications and Marketing

Human Resources

General Management

Specialists

Secretarial

Administrators and Technicians

Job levels reflect the magnitude of the differences between jobs, a process that
allows us to define jobs by what we describe as their ‘size’. We have identified that
there are 13 distinct ‘sizes’ of job between the bottom of Band 1 and the top of Band
4. Each level is measurably different to the one above and the one below. These
generic job levels are shown below:

6 Pay Policy June 2004 V3.0

Band Level Administrator/ Supervisory/ General Specialist
Technician First Management
Line
management
4 C Manager 5
B Manager 4
A Manager 3
3 B Manager 2 Special. 4
A Manager 1 Special. 3
2 C Special. 2
B Admin/Tech 7 Supervisor 2 Special 1
A Admin/Tech 6 Supervisor 1
1 E Admin/Tech 5
D Admin/Tech 4
C Admin/Tech 3
B Admin/Tech 2
A Admin/Tech 1

The structure enables a view to be taken on where jobs fit within a job family
structure. This then allows for a clear career progression path to be established. Not
all job families have all these levels. For example the Finance family starts at 1E.
People working in Finance below this level may be in the Admin/Tech family for
instance, because of the nature of their role.

3.6 Position in pay range

Salary scales have been introduced which offer a spread of salaries representing the
minimum (80%) and the normal maximum (100%) that the LSC will pay for a
particular job in a particular pay zone. The normal maximum for the basic ranges by
zone are given in Annex 1.

As a guide people who are completely new to a role and do not have previous
experience may be brought in at 80% of the range. Somebody who is fully competent
in all aspects of a role would be expected to be at between 95 to 100% of the range.
In some cases we do pay more than 100% for people exceeding expectations year
after year up to a maximum of 120%.

3.7 Performance related salary progression

Pay related to performance has been introduced to encourage everyone to focus on

their contribution to the achievement of the LSC goals.

To manage the performance-related pay arrangements, we have created a

performance management system to identify effective working practices. Clarifying
what needs to be done, evaluating progress, overcoming obstacles, supporting each

7 Pay Policy June 2004 V3.0

other with encouragement and coaching, promoting innovation and making
continuous improvements in skills and knowledge are just some of the attributes that
constitute effective working.

Our performance management system ensures that such qualities will be recognised
and form part of the annual salary review. In this way, people can see how they can
move up the pay range if their performance warrants it. The performance
management system runs from 1 April-31 March which allows time for performance
issues to be incorporated into the annual pay review, which is effective from 1 July
each year

If an employee joins the organisation more than two months prior to the end of the
performance year (that is before 1 February), their performance will be formally
reviewed. If they join the organisation after 1 February, it would not be practical to
judge their performance on less than two months in a role and they will not need to
have a formal review. They will however be subject to the normal probationary review
process.

3.8 Annual salary review strategy

The annual review date for all salaries is 1 July. This gives employees a right to a
review of their pay, it does not mean that pay will automatically be increased.

Salary review decisions are made locally under delegated authorities within each
LSC or directorate, governed by LSC pay management guidelines and budgets and
moderated by the national HR team to ensure consistent application of criteria and
compliance with budget allocations.

Individual salary reviews are related to three main factors:

• the current salary level in the salary range

• the amount of money available
• performance.

As mentioned above, staff joining after the 1 February will not have a performance
assessment rating so will not get a performance related increase but may be eligible
for a pay positioning increase. Staff who join after 1 May should be recruited to the
new pay ranges so will not be eligible for an increase until July of the following year.

Individual reviews are applied according to a grid. The effect of applying this grid is
that the pay position of staff who are lower in the range than they should be is
accelerated. The pay of those that are higher in the range is slowed, mainly due to
the use of non-consolidated pay increases. This grid is established as part of the
negotiated settlement with the union and must, therefore, be followed. Detailed
guidance is circulated every year.

4. TERMINOLOGY

8 Pay Policy June 2004 V3.0

 4.1 Comparative ratio and the Normal Maximum

In the following sections we will be using the expressions compa-ratio and Normal
Max. In this context the Normal Max is the 100% position for a level in a zone. So, for
example, if you look at the table in Annex 1 you will see that a 1A role in Zone 1 has
a Normal Max of £15,450

The compa-ratio represents the position of actual pay to the Normal Max for the role.
So, if we continue the above example, if the person undertaking this 1A role in Zone
1 is actually paid £13,132 their compa-ratio would be 85%.

4.2 Role description

A role description provides a systematic, clear, objective and current account of the
role. It shows why the role exists. It should describe what is done, to what and what
is achieved. It fleshes out the main characteristics and features of the role. It must
describe the purpose of the role and the underlying contribution of the role to the
organisation.

The role description serves several purposes

- It acts as the job specification in the recruitment process

- It provides information about what the role holder needs to achieve in order to
be successful in their role

- It gives HRMs and the decision makers information in order that they can
determine the ‘size’ of the role so that it can be allocated to the correct band
and level

The role description describes the role not the person undertaking the role. It will
contain some details about the skills necessary to undertake the role successfully.

Detailed information about how to complete Role Descriptions is available in the LSC
Recruitment and Selection Policy.

4.3 Business case

Except in the case of a like for like replacement, a business case will be required, to
provide the decision makers (RDs/EDs/NDs, Compensation & Benefits team) with all
the information necessary to agree that:

- the post is required

- the indicated bands and levels are consistent with both the job family
descriptors and the local environment

9 Pay Policy June 2004 V3.0

 - any cost/benefit analysis is reasonable

In the cases of band level reviews and restructures it is preferable to include new and
old organisation charts which should show the band and levels of adjoining roles. In
the case of band 3 & 4 roles it should also indicate how this role fits with its local peer
group.

5. SAFEGUARDS

5.1 Purpose

In section 6 the change processes are explained in detail. For each type of change
there are different levels of safeguard. In this section the rationale for these
safeguards is given.

5.2 Principles

The main principle behind the safeguards is to try and ensure consistency of
application of the Reward Strategy principles. This should be achieved at a local level
by peer group review, backed up by a review at national level.

5.3 The need for safeguards

There are three main reasons why safeguards are required, equal pay issues, cost
and consistency. If an organisation lacks sufficiently rigourous safeguards the
following issues can arise:

• Pay drift/grade drift

• Inequity between offices

• Equal pay cases

• Pay rates too high for jobs against the standard benchmarks

• Current affordability issues for the organisation and, more importantly, future
affordability risk

• A system that has so many inconsistencies it is no longer sustainable

• Individuals paid too high and so ending up ‘trapped’ in the organisation,

restricting flexibility both from the individual’s and the organisation’s
perspective

6. PROCESSES FOR NEW POSTS/RESTRUCTURES

10 Pay Policy June 2004 V3.0

 6.1 Replacing an existing role holder at the same level or a lower level

An Authority to Recruit form (ATR) should be completed showing the name and level
of the incumbent. The ATR should be agreed by the Office/Directorate Senior
Management Team (SMT) to ensure consistency within the Office/Directorate, then
signed by the RD/ED/ND. The ATR should then be sent to the Compensation &
Benefits team.

6.2 Establishing a new role within the LSC

When a business need arises to establish a new role or to fill a vacancy that has
been left for six months or more within either a local office or national office group,
the process detailed below should be followed.

6.2.1 Process

- The local line manager to draft the role description, business case and
organisation chart in conjunction with the appropriate HR representative in
accordance with the guidelines and by reference to the job family structure

- If it’s an entirely new role, it may be worth talking to the C&B team as there
may be a generic role description covering the role available.

- The completed role description must include the relevant job family with a
recommended pay band and level.

- The band and level must be agreed by the relevant peer group. An ATR must
be completed, signed by the RD/ED/ND (or their delegated representative)
and then sent to the Compensation & Benefits Team.

- For the time being posts in Bands 1, 2 and 3 the ATR will be reviewed by the
Compensation & Benefits team. For posts in Band 4 and 5 the ATR will be
reviewed by the Director of Performance and Reward.

6.2.2 ATR reviews

- The purpose of the internal reviews is to obtain consistency within the

Office/Directorate. The purpose of the National Office review is to obtain
consistency across Offices/Directorates, as far as possible

- In the case of a disagreement the role can be reviewed by a National Review

Panel, which will meet when necessary.

6.3 Restructures

6.3.1 Definition of restructure

11 Pay Policy June 2004 V3.0

A restructure will involve more than one role and should be forwarded to the Director
of Performance and Reward in the first instance. The same process as above will
need to be followed. Clearly the business case and the organisation charts will be
more complex, and it would seem advisable for the local manager to discuss the
issue with the Director of Performance and Reward before making a formal
submission.

When undertaking a restructure offices/Directorates must take into account the effect
the restructure will have on the potential Normal Max of all the changes, to ensure
overall costs are not increased which may compromise future affordability.

6.3.2 Support available

When thinking about organisational change there are a great many factors which
need to be taken into consideration, such as:

• Ensuring appropriate job design, that responsibilities are not sliced too thinly,
jobs are not too big for one person

• Structures are appropriate and workable, chains of command are clear,

workflow is organised logically

• Cost structures are appropriate

• There is Union consultation on organisational changes

• There is awareness of obligations and/or legal requirements e.g. if posts are

being made redundant

• Changes made are not later open to challenge if incorrect procedures have
been followed

These are all areas where the Specialist teams have specific expertise and issues
can be avoided if advice is sought beforehand.

6.4 Changing an existing role to a higher Band and/or level

Where business needs determine that a role should be amended to reflect changed
duties and responsibilities the same process as outlined above for establishing a new
role should be adopted. There must be a justified business case for changing a band
and/or level.

7. APPLYING THE PAY RANGES

7.1 Internal promotions and/or external recruits

12 Pay Policy June 2004 V3.0

When promoting an internal employee or offering a role to an external employee you
will need to estimate where the individual will sit within the pay range. This will take
into account:

- Background. What type of culture are they used to operating in? Are there
any issues about working with the LSC values?

- Experience. Is previous experience relevant to the new role? Is their

experience transferable?

- Knowledge. Do they have the knowledge necessary for the role? Can it be
learned? Do they apply the knowledge they already have?

- Competencies. What skills are necessary?

- Development needs. Can any identified training needs be accommodated? Is

further training required?

By assessing the individual against all relevant factors you will form a judgement of
how proficient he/she will be in the initial performance of the role and therefore how
much salary should be paid.

The initial target rate for both new recruits and promotees is 80%-90%, although
there can be exceptions. Account should be taken of any market premiums that have
been added into the pay ranges for certain sectors. However In seeking to recruit
from outside the LSC, it is likely that candidates are seeking a significant rise on their
current salary to compensate for moving into a new environment. In addition it is
likely that new external candidates, particularly at the higher job band levels have a
greater level of relevant experience. Consequently a greater level of flexibility may
be required when appointing employees in such circumstances.

There will be cases where potential new employees have been seemingly overpaid
or underpaid by their current/previous employers relative to the LSC job families and
pay bands. Managers in conjunction with their HR colleagues are expected to make
a judgement as to the relevant experience and worth of potential new recruits against
their current employees, job descriptions and pay ranges.

New recruits who commence after 1st May in any year must be advised that their
salary will not be reviewed until 1st July of the following year.

7.2 Special considerations for contractors/fixed term employees

With the recent changes in legislation we are obliged to offer contractors and fixed
term employees similar terms and conditions as permanent staff so there should be
no significant difference in treatment.

7.3 Promotions of internal candidates to permanent posts

13 Pay Policy June 2004 V3.0

Promotion is defined as a move to a role at a higher Band level. With the integrated
job banding structure and job families the steps between each of the levels is
significant and reflects significant increases in duties and responsibilities. The steps
are bigger as employees progress up the structure and consequently account should
be taken of the greater increases in duties and responsibilities between steps as
employees progress.

It is normal for the vast majority of promotions to be either an increase of 1, 2, or

exceptionally 3 steps, up to and including promotion to 2C, and 1 or 2 steps up to
and including promotion to 4C. There may be cases which fall outside of this
guideline and they will require additional justification.

8. EFFECTS ON SALARY OF INTERNAL CHANGES

8.1 Changes to pay - principles

Before looking at the details of increases, there are some important principles that
should be applied. The rationale behind these principles is that the LSC needs to
introduce greater flexibility into its work practices, in order to deliver
the demanding targets it has been set.

The first principle is that an individual’s pay should not normally be increased outside
of the annual pay review as this may raise issues about equal pay, inequity,
affordability and consistency. There should be no mid year pay increases.

The second principle is that an employee’s pay should not be increased simply
because they are excelling at their role. Pay and bonus are linked to the Performance
Management System and this system should be used in order to recognise the
additional effort/responsibility.

The third principle is that employees should not automatically receive an allowance
for covering the whole or part of another role. Again the performance management
system should be used to reward the additional effort. Paying an additional allowance
may be, in fact, duplicating payment.

8.2 Promotions

The following are guidelines as to the practical application of the pay ranges for
promoting internal employees.

Where there is a 1-step change, you should give the total percentage required to
bring the employee to the normal minimum of the range, i.e. 80%. If the employee’s
salary is above the normal band range minimum and not above the normal band
range maximum, an increase of up to 10% could be considered.

14 Pay Policy June 2004 V3.0

Where there is a 2 step change and where an increase to the minimum of the
band/level requires greater than 10% but less than 20% a phased increase should be
actioned in 2 stages: 50% of the amount immediately and 50% 6 months later.

e.g. Employee appointed to grade 2A in zone 5 post with effect from 1st August.
Current salary = £14,000
New salary = £16,648 (80% of range)
Increase of £2,648 (18.91%)
Therefore 50% of increase on 1st August of £1,324, making salary £15,324
Further payment on 1st February of £1,324 bringing salary to £16,648

Where an increase to the minimum of the grade requires between 20% and 40%, a
phased increase should be actioned in three stages: 33.33 % immediately from the
date of promotion, 33 .33% after 6 months in the role and 33.33% after 12 months.

e.g. Employee appointed to grade 2A in a zone 4 post with effect from 1st December
Current salary = £13,500
New salary = £17,304 (80% of range)
Increase of £3,804 (28.18%)
Therefore 33.33% on 1st December making salary £14,768
Further payment of £1,268 on 1st May making salary £16,036
Final payment of £1,268 on 1st November making salary £17,304
Pay awards will still apply, see below.

Phased payments are to be fixed at the outset and added to basic salary on the set
dates, subject to satisfactory performance. Where there are 3 fixed payments, these
will most likely span the 1st July (Annual Pay Review Date) and the normal pay
review processes will apply. If an employee’s salary turns out to be below the
normal pay band minimum on the date of the final payment, due to an increase the
pay ranges, then the salary should be increased to the appropriate level.

Phased increases are being retained to bridge the significant gap that occurs not only
in pay, but the increased duties and responsibilities as a result of the significant step
change in roles. A further rationale behind this approach is to manage employees’
future salary increase expectations with more realistic values.

If you wish to go above a comparatio of 80% and the resulting salary increase is
above 10%, a business case for this level of increase should be submitted to the
Director of Performance and Reward.

You should not normally offer more than 90% of the normal market maximum as you
will restrict salary progression

No moves beyond 100% can be authorised.

If a promotion is awarded on or after 1st May in any year the employee should be
advised that their next review will not be until 1st July of the following year.

15 Pay Policy June 2004 V3.0

No probationary periods will apply to internal promotions, only to new recruits. If
individual performance is not meeting expectations, however, where a phased
increase is being progressed, this should be withheld subject to appropriate
consultation with the employee.

8.3 Transferring Between pay zones

Where an employee applies for and is successful in gaining a post in a location which
is in a different pay zone to the one the employee is currently in, the following
principle should be applied:

The comparatio that the employee is currently paid should be replicated in the same
grade in the new Pay Zone and the same principles applied.

Example 1. Moving to a higher Pay Zone. If an employee is paid £31,500 at Band 3A

in Pay Zone 5, their comparatio is 91.01%. If they are transferring to a post in Pay
Zone 2, the equivalent comparatio in Pay Zone 2 should be taken into consideration.
In this example 91.01% of the 3A Pay Band in Pay Zone 2 equals £33,746 so the
increase would be (£33,746 - £31,500) = £2,246.

Example 2. Moving to a lower Pay Zone. If we use the above example but say that
the employee is moving from Pay Zone 2 to Pay Zone 5 their salary would decrease
by £2,246 (from £33,746 down to £31,500).

If there is a promotion involved, the principles in section 7.1 above will need to be
applied.

8.4 Promoting employees who currently receive more than 100% of the new
role

Where employees seek a change of role to a post where they are currently paid more
than the normal job banding maximum (100%) no increase should be awarded. The
employee concerned will have already benefited from receiving a higher level of pay
relative to the value of the role they have been undertaking and is being given an
opportunity to undertake a more substantive and rewarding role.

8.5 Employees with TUPE Transfer Provisions

Where employees have retained their TUPE entitlement to additional benefits, for
example, Private Medical Insurance, Permanent Health Insurance, Dental Insurance,
a car or contractual Car Parking this must be excluded from any revised contract
following promotion. This is the same principle that applied to promotions prior to
harmonisation.

The Reward Strategy is aimed at ensuring that all employees are treated fairly,
equitably and positioned within the LSC salary structures. If TUPE contractual
benefits were retained, this would effectively distort their relative position in the new
salary ranges when compared against their peers.

16 Pay Policy June 2004 V3.0

It is essential to adopt the process outlined below when comparing the situations of
employees with retained contractual benefits against their colleagues on LSC terms.

With a basic salary of £14,000 in Band 1, under LSC terms they will receive:
Basic Pay £14,000
Flex allowance £ 600
Bonus £ 450
Total £15,050

Basic Pay £14,000

PMI £ 350
Car (cost to LSC) £ 3,600
Car Parking £ 750
Total £18,700
The total package represents 124% when compared to their peer.

An assessment has to be made of where the individual fits within the pay range as to
the level of pay increase to be granted on promotion, not the value of their package.

9. TEMPORARY PROMOTIONS/ADDITIONAL RESPONSIBILITY

ALLOWANCE ETC

9.1 Principles

As mentioned previously the LSC is aiming to increase the flexibility and adaptability
of employees. Part of this means that the payment of any of these types of
allowances should be regarded as the exception rather than the rule. It should be
remembered that the Performance Management System is performance related.
Continued exceptional contribution can be acknowledged by an EE rating, which will
mean not only a potentially higher salary increase but also a higher level of bonus.
Any temporary promotion allowances should be agreed at the outset and cover the
whole period of the temporary promotion, so the allowance will not be changed if
there is a pay review during the period of cover.

9.2 Additional responsibilities

Additional responsibility allowances are when an employee undertakes a proportion

of a higher banded role without undertaking the full range of duties and
responsibilities. A judgement will need to be made as to the percentage of the
increased role the employee is undertaking.

Where employees are undertaking additional responsibilities it is envisaged that up

to 80% of the temporary promotion allowance for the difference should be paid.

17 Pay Policy June 2004 V3.0

As a guide, at Band Level 3B and above it is not envisaged that employees will be
undertaking the full duties and responsibilities of the post owing to the potentially
limited timescale involved in undertaking the role.

9.3 Temporary promotions

Temporary promotions are when an employee undertakes the full range of additional
duties and responsibilities of a higher banded role within the same office for a period
in excess of 3 months, to a maximum of twelve months. Special consideration must
be given if a period in excess of 12 months is being envisaged, which should be
discussed with the Director of Performance and Reward.

Where an individual is undertaking a role in an office that is not their normal place of
work, the Secondment policy applies.

9.4 Calculating the Temporary Promotions Allowance

The matrix below represents the maximum that should be paid to employees
undertaking temporary promotions, even though this may not reach the band level
minimum. This reflects the fact that there are potentially significant step changes
involved.

The same principles apply to temporary promotions as permanent promotions, in

that the maximum increase to be paid is limited to 10% on appointment with a further
increase if appropriate after 6 months of undertaking the increased duties and
responsibilities. As for permanent appointments, a special case can be made to the
Director of Performance and Reward where it is considered appropriate.

Maximum Percentage Increases on Temporary Promotion

Temporary Up to 1E Up to 2C Up to 3B Up to 4C
Promotion

1 Step 10% 10% 10% N/A

2 steps 15% 15% 20% N/A

3 steps 20% 20% N/A N/A

4 steps N/A N/A N/A N/A

The normal temporary promotion will be to 80% of the rate for the role being covered
by the employee or the salary at which the employee would be appointed if he/she is
beyond the 80% grade minimum. Employees should not be offered the salary level
of the employee for whom they are acting.

18 Pay Policy June 2004 V3.0

The beginning and end dates for the temporary promotion/additional responsibilities
must be clear even if provisional.

There will be no temporary allowances for Bands 4. Individuals at this level are
expected to be flexible and cover for each other as necessary.

It is not envisaged that any temporary promotions/ additional responsibilities

allowances will be paid to employees if the grade differential is more than 2 steps at
Band 3A or 3B.

All allowances are paid monthly and are subject to tax, national insurance, but are
non-pensionable.

10. RESPONSIBILITIES

10.1 To employess

Employees should not be advised or sent any documentation regarding any

increases until it has been approved as this could lead to an unfair raising of
expectations and could also put unnecessary pressure on other staff involved in the
process.

10.2 Pay budget

The day to day operational management of pay rests with the 47 local LSC units and
each National Office group. Each National or Executive Director has accountability
for his/her budget. It is, therefore, each Director’s responsibility to manage the
budget allocated to his/her unit and to ensure that all individual pay decisions are
equitable, reasonable, affordable, within the existing budget and within these LSC
management guidelines.

However it must be remembered that a decision in one office may have broader
implications, particularly regarding equal pay legislation. The role of the
Compensation and Benefits team is to try and ensure consistency across the whole
organisation.

Against this background however, in making appointments due account must be

taken of the long term consequences of decisions, as what may be affordable in the
short term may not be in the longer term with the potential for all salaries to reach
100% of the pay band.

10.3 Audit Trails

There are processes and procedures in place to ensure that necessary budget
controls, financial guidelines and audit requirements are met and that pay is
managed locally throughout the LSC on a fair, economic and consistent basis.

19 Pay Policy June 2004 V3.0

These include the sign off for increases over 10% by the Head of Performance and
Reward Management, Authorisation to Recruit form, the budget setting process, etc.
Below is a link to the current LSC salary scales.

LSC Salary Scales

20 Pay Policy June 2004 V3.0

2004- 2005 Salary Scales

Zone 2 Zone 3 Zone 4 Zone 5 Zone 6

Band/Level Normal Normal Normal Normal Normal Normal Normal Normal Normal Normal Normal Normal
minimum Maximum minimum Maximum minimum Maximum minimum Maximum minimum Maximum minimum Maximum
M1
£7,888 £9,860 £7,888 £9,860 £7,888 £9,860 £7,888 £9,860 £7,888 £9,860 £7,888 £9,860
M2
£9,331 £11,664 £9,331 £11,664 £9,331 £11,664 £9,331 £11,664 £9,331 £11,664 £9,331 £11,664
1B
£14,008 £17,510 £12,608 £15,760 £11,712 £14,640 £11,032 £13,790 £10,400 £13,000 £10,250 £12,410
1C
£15,488 £19,360 £14,128 £17,660 £13,280 £16,600 £12,520 £15,650 £11,880 £14,850 £11,416 £14,270
1D
£16,976 £21,220 £15,576 £19,470 £14,856 £18,570 £14,008 £17,510 £13,304 £16,630 £12,904 £16,130
1E
£18,848 £23,560 £17,272 £21,590 £16,336 £20,420 £15,704 £19,630 £15,064 £18,830 £14,600 £18,250
2A
£20,960 £26,200 £19,344 £24,180 £18,552 £23,190 £17,824 £22,280 £17,144 £21,430 £16,640 £20,800
2B
£23,936 £29,920 £22,320 £27,900 £21,648 £27,060 £20,800 £26,000 £20,112 £25,140 £19,520 £24,400
2C
£27,160 £33,950 £25,720 £32,150 £25,168 £31,460 £24,192 £30,240 £23,464 £29,330 £23,000 £28,750
3A
£32,040 £40,050 £30,552 £38,190 £29,960 £37,450 £29,072 £36,340 £28,520 £35,650 £27,928 £34,910
3B
£38,488 £48,110 £36,752 £45,940 £36,072 £45,090 £35,008 £43,760 £34,288 £42,860 £33,608 £42,010
4A
£46,680 £58,350 £44,560 £55,700 £43,496 £54,370 £42,440 £53,050 £41,584 £51,980 £40,736 £50,920
4B
£56,864 £71,080 £54,144 £67,680 £52,832 £66,040 £51,560 £64,450 £50,504 £63,130 £49,560 £61,950
4C
£62,552 £78,190 £59,704 £74,630 £58,224 £72,780 £56,864 £71,080 £55,680 £69,600 £54,656 £68,320

Berkshire Essex Bedfordshire Bournemouth/Dorset/Poole Cumbria

London - East Hertfordshire Birmingham & Solihull Cheshire Devon & Cornwall

London - North Kent/Medway Cambridgeshire Derbyshire Durham County

London - South MKOB Coventry & Warwickshire Gloucestershire Humberside

London - West Greater Manchester Hereford/Worcestershire Lincolnshire/Rutland

Surrey Hampshire/IOW/Portsmouth Lancashire Norfolk

Northamptonshire Leicestershire North Yorkshire

Sussex Merseyside/Halton Northumberland

West of England Nottinghamshire Shropshire

Wiltshire/Swindon The Black Country Somerset

National Office Tyne & Wear South Yorkshire

Staffordshire

Suffolk

Tees Valley

West Yorkshire