Page 3279 - Week 10 - Thursday, 25 August 2005

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The second set of changes provide for notice of or compensation for non-renewal of contracts. As members may be aware, on expiry an executive contract either can be renewed or a decision can be made not to renew and to advertise the position. Currently, executives are not entitled to notice that their contract will not be renewed; nor are they entitled to any compensation for non-renewal. The effect is that senior officers who move into executive positions under a five-year contract must forgo the benefits of tenure. For these executives there is no payment to reflect long service, other than their accrued leave, when their executive contract expires.

The new provisions provide for a three-month notice period or equivalent payment if notice of non-renewal is not given before a contract expires. This change provides a sensible and reasonable entitlement to staff. A consequential change is also made to section 248 of the act to apply the existing prohibition on re-engaging executives during the period covered by a redundancy payment to the three-month period.

The third main change to the act provides for short-term contract arrangements of up to two years. The current act limits short-term executive contracts to nine months, which means that the only way to deploy key staff to project teams for more than nine months is to provide a longer-term contract. Under the law presently, a contract for more than nine months will override any other employment arrangements where there is a pre-existing five-year executive contract or tenure as a senior officer, with the result that persons who accept such contracts face uncertainty when those contracts expire.

Another effect of the current law is that projects over nine months in duration cannot reasonably be sustained by either a short-term contract or a long-term contract. The amendments overcome these problems without undermining the merit principle. It should be noted that a merit process is still required for all executive contracts longer than nine months.

The fourth change to the act provides for increases in remuneration through contract variations where such an increase is prescribed by the public sector management standards. This amendment modifies an existing prohibition in the act that contract variations cannot be used to increase executive pay. The current prohibition reflects the current 12-point executive pay framework in which a job evaluation methodology sets job levels which, in turn, link to remuneration tribunal determination of matching pay levels. The existing arrangements do not reflect the reality that executive jobs often increase in size and responsibility, whether through organisational changes or the reality that, as executives develop in positions, they often attract new functions.

The new arrangement balances the importance of maintaining a consistent, service-wide pay structure for executives with the need to reflect increased responsibilities with pay increases. Clearly, there should be brakes on such increases. Limits on permissible increases will be provided through the public sector management standards. The standards will make sure pay increases are supported by a job evaluation and will place ceilings on pay progressions that are not the result of a merit process. Instead, they will permit a form of incremental advancement within the first two executive pay zones and a maximum increase of two pay points in the upper pay zone. This approach balances sensible and fair management arrangements with the need to maintain a merit-based executive service with a consistent service-wide pay framework.

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