REMUNERATION POLICY FOR PERMANENT EMPLOYEES

548

TABLE OF CONTENTS 1. PURPOSE AND SCOPE 2. DEFINITIONS 3. LEGISLATIVE MANDATE 4. STRATEGIC INTENT OF THE REMUNERATION POLICY 5. JOB EVALUATION 6. LINKING PAY TO JOB LEVELS 7. REMUNERATION MIX

7.1 Guaranteed pay

7.2 Variable pay 8. APPOINTMENT AND PROMOTION OF STAFF ON APPLICABLE SALARY SCALES

AS PER JOB LEVEL (COMMENCING SALARIES).

8.1 Appointment of external candidates

8.2 Appointment /promotion of internal candidates:

Categories of appointment (4) 9. ADJUSTMENT OF SALARIES DUE TO JOB EVALUATION 10. SPECIAL PROGRESSION ON THE SALARY SCALE 11. REMUNERATION FOR SCARCE SKILLS

11.1 Scarce skills allowances 11.2 Retention bonus

12. ANNUAL COST OF LIVING ADJUSTMENTS (COLA)

13. TAX IMPLICATIONS

14. SALARY DEDUCTIONS 15. TECHNICAL REMUNERATION COMMITTEE 16. REVIEW

17. NON-COMPLIANCE WITH THIS POLICY, INCLUDING MISREPRESENTATION

18. REPEAL OF POLICIES

549

1. PURPOSE AND SCOPE

The purpose of the Remuneration Policy for Permanent Employees of the City of Tshwane (CoT) is to guide the determining and managing of remuneration. The scope of the policy will be the Bargaining Unit employees. Non-bargaining Unit employees are thus excluded.

2. DEFINITIONS Basic salary refers to the fixed guaranteed monthly payment made to an employee, meaning pay excluding any benefits. The basic pay is in the form of notches as per the approved salary scale for a post. CoT refers to the City of Tshwane Employee refers in context of this policy as a person appointed permanently by the CoT and as per definition of the Basic Conditions of Service Act Employer refers to the City of Tshwane Job evaluation refers to the process to determine the applicable job level per position. Job level refers to the level of a post’s responsibilities, impact and scope as determined by a job evaluation system. The job evaluation system makes provision for an amount of levels into which posts are categorized (TASK has 26 levels). The job levels are linked to the salary structure (also known as the wage curve). Notch increase (also known as notch increment) refers to the annual notch progression from the minimum notch of a post’s salary scale towards the maximum notch. Recruitment is the process of attracting, selecting, and appointment of an qualified person in a position. Remuneration refers to the compensation which an employee receives in return for work or services rendered. It includes basic pay, allowances as well as benefits. Retention refers to the efforts or mechanisms to ensure that highly skilled staff prefers to stay employed by the CoT. Salary scale refers to the minimum and a maximum notch coupled to a post and is derived from the official salary structure (wage curve). The salary scale is determined by the job level and also includes the notches between the minimum and maximum notch.

550

SALGA is the South African Local Government Association

TASK (Tuned Assessment of Skills and Knowledge) is the official Job evaluation system as prescribed by SALGA’s directives.

3. LEGISLATIVE MANDATE

3.1 The Municipal Systems Act, Act 32 of 2000 (as amended) determines as follows:

“66. Staff establishment

(1) A municipal manager, within a policy framework determined by the

municipal council and subject to any applicable legislation, must-

(a) Develop a staff establishment for the municipality, and submit the staff establishment to the municipal council for approval;

(b) provide a job description for each post on the staff establishment;

(c) attach to those posts the remuneration and other conditions of

service as may be determined in accordance with any applicable labour legislation; and

(d) establish a process or mechanism to regularly evaluate the staff

establishment and, if necessary, review the staff establishment and the remuneration and conditions of service.

(2) Subsection (1) (c) and (d) do not apply to remuneration and

conditions of service regulated by employment contracts referred to in section 57.”

3.1 The Remuneration Policy is also subject to the following:

Basic Conditions of Service Act Employment Equity Act Municipal Finance Management Act Regulations promulgated in terms of Acts National Conditions of Service for Local Government Conditions of Service of the CoT

3.3 The Remuneration Policy is also subject to any new remuneration related

legislation/Conditions of Service and/ or future amendments of existing legislation/Conditions of Service.

551

4. STRATEGIC INTENT OF THE REMUNERATION POLICY.

As with any Municipality, the CoT has obligations in terms of service delivery to its communities. Such obligations are captured in the strategic objectives of the City. In order for the CoT to deliver on its mandate to the community, the CoT needs skilled and competent staff. Remuneration is, amongst others, a key factor in the recruitment, retention and motivation of such staff. The Remuneration Policy is thus supportive of the strategic objectives of the CoT as it guides the CoT:

To compete in the Labour Market to attract and retain high calibre staff;

To compensate its staff in a fair and equitable manner for the tasks they need to execute in terms of their job descriptions, thus ensuring a balance between affordability and quality of life for employees.

To support organisational strategies by linking job content to the

performance management system

To recognise employee contributions in achieving the CoT objectives and to motivate performance excellence.

To ensure non- discriminatory and transparent remuneration principles.

To establish accountability of the remuneration process with Line

Management, the Human Resources Division and Finance.

To be legislatively compliant in terms of remuneration.

The Remuneration Policy is also based on the following key principles:

Remuneration should support the CoT strategies and be consistent with the organisation’s culture of fairness and equity.

Remuneration should support the CoT’s vision to be the most admired

branded City by attracting and retaining the right talent.

Remuneration should have a direct correlation with the growth objectives and financial performance targets and actual achievements of the service deliverable outcome of the CoT.

Remuneration should be reviewed and benchmarked with regular

intervals through independent external professional service providers to ensure that the CoT remains competitive in the diverse markets in which it operates, not applying percentiles rigidly but taking into account industry type, skills scarcity, performance and legislative structures and requirements.

552

Remuneration should motivate and allow for differentiation (i.e. reward

high performers).

Individual contribution based on the role and responsibilities should have a direct bearing on the levels of remuneration.

5. JOB EVALUATION

Job Evaluation is the foundation for basic salary structures. The CoT adopted organisational structures with relevant posts in order to physically achieve its strategic objectives in terms of service delivery. The tasks which are needed to be executed by the incumbents of the various posts on the structure are captured in job profiles (also known as job descriptions). In order to determine appropriate and fair remuneration for each post, the contents of the posts will be evaluated by means of a job evaluation system. The job evaluation system will take the relative worth of each post into account to ensure internal parity between posts and between/within job families. The CoT will use the TASK job evaluation system as it is the national approved system to be used by all municipalities. The CoT is therefore subject to the SALGA job evaluation policy and procedures and any collective agreements or national/provincial directives pertaining to job evaluation. The job evaluation results are also subject to an audit as per the job evaluation policy processes. Once the audited job levels are received by a municipality, it can be communicated to the staff and implemented.

6. LINKING PAY TO JOB LEVELS

A basic salary scale is coupled to each job level. The salary scale thus indicates the minimum and maximum notch that will be applicable to the incumbent occupying a post on the given job level. Apart from the minimum and maximum notch, the salary scale is also indicative of the notches in-between the minimum and maximum notch. The salary scales per job level will be derived from the National Wage Curve, also known as a salary structure. No employee may be remunerated outside the parameters of the minimum and maximum notches applicable to his/her post.

553

The CoT will be subject to the stipulations of the National Wage Curve Collective Agreement and any other national/provincial directives. The incumbent of the post will progress on the salary scale by means a notch increase on his/her annual incremental date. Any progression on a salary scale is subject to a performance appraisal. Progression on the salary can therefore be declined in the event of poor performance, but subject to remedial actions in terms of the CoT performance management policies. The current CoT job levels, salary structure and scales will be applicable up to the point where a collective agreement on a new National TASK Wage Curve is signed and made available for implementation by SALGA.

7. REMUNERATION MIX A remuneration package can be made up of myriad elements – basic pay, cash allowances, variable pay, and all kinds of benefits and terms and conditions of service.

Permanent employees of the CoT are appointed on the principle of “basic pay plus add-on benefits”.

The remuneration mix is made up of guaranteed pay (Total guaranteed package -TGP) and variable pay.

7.1 GUARANTEED PAY (TGP)

Guaranteed pay includes:

(a) All guaranteed direct remuneration namely –

Basic salary (basic pay as the primary indicator of the remuneration

value) Transport allowance (perk) Guaranteed allowances (legislative and non-legislative). 13th cheque

(b) All guaranteed indirect remuneration namely-

Employer contributions to approved CoT pension/retirement funds Employer contributions to approved CoT medical funds (No employer

contribution will be applicable if the employee is not a member of a national approved medical fund for local government or if the employee is already registered as an dependant on a medical fund of a spouse or other person.

Employer contributions to the approved CoT Group Life Scheme

554

Legislative employer contributions, e.g. Unemployment Insurance Fund (UIF).

Guaranteed pay for an employee will be based on their level of responsibility and job content as reflected by the job level which was determined by the job evaluation process.

Benefits will be provided in terms of national collective agreements, the CoT Conditions of Service and applicable Human Resources policies. In terms of medical funds the following must be noted:

Medical schemes for local government are being accredited annually by the South African Local Government Bargaining Council (SALGBC). Thus employees will only receive an employer subsidy (employer contribution) if they belong to the accredited schemes.

Employees are annually granted permission to move from one medical scheme to another in a window period during November.

The management of medical scheme contributions is done in accordance with the Main Collective Agreement of 18 June 2007 between SALGA and Organised Labour.

7.2 VARIABLE PAY 7.2.1 Variable pay covers a wide range of different schemes and plans designed to

differentiate rewards on the basis of productivity, contribution and business results. Variable pay includes the following: (a) Non-guaranteed allowances as determined from time to time to address

remuneration for temporary situations (short or longer term), e.g. overtime, ad-hoc travel allowances and remunerative travel allowances. Said allowances are governed by legislation or national collective agreements or CoT collective agreements.

(b) Short term incentives (STI’s) that refers to performance incentives

addressing recognition and rewards for employees who have excelled in service delivery internally as well as externally to the community. The aspect of rewarding employees for outstanding performance will be addressed in a separate detailed Staff Recognition and Reward Policy and will be linked to the performance management system of the CoT.

(c) Long term incentives (LTI’s): Refers mainly to incentives to attract and

retain staff, i.e. scarce skills allowances in terms of the CoT Scarce Skills Allowance Policy

7.2.2 In practice, employees should not have a high dependence on variable pay-

outs to cover the daily living expenses, as the fixed component of guaranteed remuneration should provide this. Employees should therefore also be careful

555

not to utilize variable pay to engage on personal long term financial commitments (like excessive home loans).

8. APPOINTMENT AND PROMOTION OF STAFF ON APPLICABLE SALARY

SCALES AS PER JOB LEVEL (COMMENCING SALARIES). 8.1 Appointment of external candidates

(a) Salary scale and notch The new person will be appointed on the minimum notch of the advertised basic salary scale. Benefits as applicable in terms of National/Local Conditions of Service and relevant Human Resources policies will be added to the basic salary. Appointment on higher notches of the applicable basic salary scale will only be applicable in the following instances:

For scarce skills positions which are approved by the CoT as scarce skills positions.

On career scales where specified qualifications/experience are required for the higher levels of the scale and the applicant qualifies for appointment at such higher levels.

(b) Incremental date

The incremental date will annually fall in the same month as the original appointment date.

8.2 Appointment /promotion of internal candidates:

The following categories are applicable for salary administration:

CATEGORY 1: Overlapping levels Salary scales per job level overlaps on the approved salary structure of the

CoT, e.g. TASK (T) level 8 and T9. Category 1 refers to such cases.

It means the promotion of an employee to the advertised scale where the top notch of the employee’s current scale falls within the advertised scale. Thus the top notch of the advertised scale is higher than the top notch of the existing salary scale of the appointee. (a) Salary scale and notch:

If the employee’s current notch already falls within the overlapping part of his/her current and new salary scale, the employee is moved to the new scale and immediately receives one notch increase upon appointment.

556

No variable pay e.g. acting/overtime/standby/transport etc received in the existing post will be considered upon appointment in the new post. Qualification and experience requirements must at all times be adhered to.

(b) Incremental date:

The incremental date is adjusted to reflect the new appointment date.

CATEGORY 2: Corresponding level

Category 2 refers to the appointment of an employee on the advertised salary scale where the minimum and maximum notches of the employee’s existing salary scale correspond with the minimum and maximum of the advertised salary scale. In practise it means where an employee applies for another post on which is on the same job level as his/her existing post, e.g. T8 to T8 (a) Salary scale and notch

The employee transfers to the new post retaining his/her salary scale and current notch.

No variable pay e.g. acting/overtime/standby/transport etc received in the existing post will be considered upon appointment in the new post. Qualification and experience requirements must at all times be adhered to.

(b) Incremental date:

The incremental date remains unchanged.

CATEGORY 3: Appointment on a lower level

Although it does not commonly occurs, an employee may (for whatever reasons) decide to apply for a lower level post, e.g. T8 to T7.

It means the appointment of the appointee on the advertised salary scale

where the top notch of the advertise salary scale is lower than the top notch of the existing salary scale of the appointee.

(a) Salary scale and notch:

If the employee’s current notch is already higher than that of the lower post (also taking overlapping into account), the employee moves downwards to the maximum notch of the lower level post.

557

If the employee’s notch is (due to overlapping) still lower than the maximum notch of the new post, the employee will be allowed to progress only to the maximum of the new lower level post. No variable pay e.g. acting/overtime/standby/transport etc received in the existing post will be considered upon appointment in the new post. Qualification and experience requirements must at all times be adhered to.

(b) Incremental date:

If an incremental date is still applicable, it will remain the same as that of the previous higher level post.

CATEGORY 4: Appointment on a higher level It means the appointment of the person on the advertised salary scale where

both the minimum and maximum notches of the advertised scale are higher than that of the existing salary scale of the employee.

In practise it means where a person is appointed in a post of which the job

level does not overlaps with that of the employee’s existing post, e.g. T8 to T10.

(a) Salary Scale and notch:

The employee is appointed on the minimum notch of the said scale if the said minimum notch is higher than the existing top notch of the employee.

No variable pay e.g. acting/overtime/standby/transport etc received in the existing post will be considered upon appointment in the new post. Qualification and experience requirements must at all times be adhered to.

(b) Incremental date:

The incremental date is adjusted to reflect the new appointment date.

9. ADJUSTMENT OF SALARIES DUE TO JOB EVALUATION 9.1 Where a post has been re-evaluated on a higher level, the current incumbent’s

salary and salary scale must be matched to the salary scale of the new job level.

9.2 In the case of overlapping of the employee’s existing scale and new scale, the Category 1 principle will be followed but no immediate notch increment will be given as in the case of a promotion. The incremental date also remains the same

558

9.3 Where the scale of the revised job level does not overlap with that of the existing post, the Category 4 principles will apply.

9.4 In the event of a downgrade of a post, the incumbent will retain his/her salary scale Contractual to Incumbent (CTI) until he/she vacates the post.

9.5 Where the job evaluation results indicates that the job level stay the same, no salary adjustments will be made.

10. SPECIAL PROGRESSION ON THE SALARY SCALE

An employee is being appointed on a salary scale and progresses by means of annual notch increases from the minimum notch (or appointed notch) towards the maximum notch. The annual notch increment must be supported by a satisfactory performance assessment. Whilst progressing on the salary scale, the employee obtains experience and skills. It is however a fact that certain employees are able to obtain experience and skills very quick and make a sustained contribution at a higher standard than expected. It is therefore necessary to compensate such individuals for their continuous efforts. A mechanism to effect the latter is to allow special progression on the salary scale. The aim of special progression is threefold:

Firstly it provides internal employees an opportunity to move to higher levels (notches) on their salary scales if they have obtained the necessary skills and experience to function on that higher level.

Secondly, special progression is applied as enabling tool to ensure that professional, scarce and technical expertise is retained.

Thirdly, the appointment/progression requirements of some posts will

specify specific requirements before special progression can occur for example, the obtainment of a specific qualification to be able to execute the higher level functions. This is usually the case with certain entry level posts with longer career scales to motivate and reward employees to obtain the necessary qualifications to effectively function on the higher level of that particular post.

Special progression can be awarded on the following principles:

Departmental Heads will be allowed to approve more than one (1)

notch increment on an employee’s annual increment/anniversary date but will be limited to a maximum approval of three (3) notches. In other words, the Departmental Head has a choice of either approving progression of one, two, or three notches for implementation.

In highly exceptional cases and only for positions classified by the CoT

as scarce skills positions, the Departmental Head can approach the

559

Strategic Executive Director: Corporate and Shared Services (or his/her nominee) for approval of more than four (4) notches, e.g. to match a legitimate and formal external job offer, but subject to all of the conditions of the policy.

Progression outside a post’s allocated salary scale (maximum notch) will not be permitted.

Departments must adhere to the official appointment and progression

requirements of a post before considering any special progressions. It should be noted that in the case of some posts, specific qualifications will be specified for progression to certain notches of a post’s salary scale. This is usually the case where statutory qualifications for a post are needed or where a longer scale is provided to cater for the appointment and subsequent specific in-service career related training of the incumbent. These specific qualification requirements should be taken in account when special progression is considered to avoid paying the incumbents for higher level work of the post that they are still not able to execute.

However, excellent performance on the lower (entry) level of a post

does not necessary mean that a person has the ability (skills, experience etc) to function effectively on a higher level of the said post. The Department (by means of a Departmental Special Progression Panel) must therefore assess that the person do possess the necessary qualities to function effectively on the higher level. Based on latter assessment, the Panel should compile a motivation in writing in the form of minutes of the Panel. The minutes must also reflect the approved notch to which the person must progress.

The motivation must be reflective of specific performance areas relevant

to successes where the employee applied his/her own initiative to drive the process outcome. Evidentiary supporting documentation is required to indicate where the employee has excelled above the expected standard/norm.

The Departmental Special Progression Panel must consist at least of

the following members:

The Departmental Head or his/her nominee At least two members of the Departmental Senior Management The Director: Management Administrative Support A representative of the Departmental Human Resources Support

function

For purposes of a continuous consistent approach to the approval of special progression, it is important that the panel members be the same every time.

560

Departmental Heads must therefore ensure consistent allocation of notches to employees whose performance, experience, skills and competencies are more or less on the same level within the same/similar posts. Departmental Heads will be held accountable for any possible future conflict that may occur within their departments due to non-consistent, poorly motivated and unfair allocation of notches to their employees.

11. REMUNERATION FOR SCARCE SKILLS

The CoT must also, like other organisations, compete in the labour market to attract and retain staff with scarce skills. Said skills are necessary for the CoT to reach its strategic objectives.

11.1 Scarce Skills Allowance The CoT makes provision for the payment of a Scarce Skills Allowance in addition to the relevant post’s salary scale. Latter will enable the CoT to effectively compete in the labour market to attract and retain scarce skills staff. Scarce skills allowances are regulated by the CoT Scarce Skills Allowance Policy. It must be noted that skills which are currently scarce in the labour market will not necessarily be scarce anymore in a few years time (the supply and demand principle). The Scarce Skills Policy therefore also makes provision for a Scarcity Assessment Group (SAG) who regularly assess scarcity and recommending the payment (or continuous payment) of scarce skills allowances. The SAG will, amongst others, take the following information into account when assessing scarcity:

- The vacancy (turnover) rate of the said posts over a period - The specialized nature of the skill (special/technical trained or

professional employees) - The availability of such skills in the external labour market (strong

indications of supply and demand) - Recruitment history: vacancies are proved to be difficult to fill - Cyclical patterns - The possibility of using service providers instead. - Whether the CoT scarcity is actually caused by remuneration and not

other organisational issues, e.g. work place practises/frustrations, supervisor/employee conflict, etc.

- Whether the employee(s) can still be retained with counter offers within the approved salary scale.

- Whether other non-monetary measures can solve the problem Given the cyclical nature of the labour market (supply and demand), scarce skills payments will be classified as variable pay.

561

Scarce skills will reviewed on an annual basis. Where scarcity is due to demand outstripping supply, a plan (apart from the allowance) will be put in place to reduce the risk of the City of Tshwane. Where scarcity is due to a unique combination of skills and experience required, deliberate efforts are made to build a talent pool around the scarce individual to reduce the risk to the City. The addressing of scarcity will from part of the CoT Human Resources planning strategy.

11.2 Retention Bonus

In order to reduce the risk of losing employees with scarce specialized skills, it will be in the discretion of the City Manager to pay once-off annual non-pensionable retention bonuses. The total remuneration package applied to this category of people is targeted at the top end of the market (90th percentile) range and includes a specialised discretionary retention bonus (8% of annual base pay) which is payable at the end of every financial year provided the necessary performance criteria are met by the individual Should a post no longer be classified as scarce by the CoT, a retention bonus will not be applicable any more.

12. ANNUAL COST OF LIVING ADJUSTMENTS (COLA)

The basic salaries of employees will be adjusted annually by means of a cost-of-living (inflation based) adjustment. Where applicable, will benefits be adjusted according to policy or collective agreements. The COLA will be determined nationally by the collective Bargaining processes in the South African Local Government Bargaining Council (SALGBC). The implementation of COLA as determined by the SALGBC, is subject to CoT Council approval before implementation. After Council approval of the COLA, the salary structure and related remuneration documentation will also be updated. The Chief Financial Officer (CFO) will ensure that provision for annual COLA adjustments is made in the budget. The CFO will also from an affordability perspective advise Council in considering the approval of the nationally determined COLA.

13. TAX IMPLICATIONS

In terms of remuneration, employees will be bound to South African tax law and directives (as amended from time to time). The employer will deduct tax

562

from employees’ monthly CoT remuneration in accordance with said directives.

14. SALARY DEDUCTIONS

The CoT will, where applicable, deduct legislative employee contributions as well as other applicable employee contributions and pay it over to the relevant parties. The CoT will also pay over all legislative and other applicable employer contributions to the relevant parties.

15. TECHNICAL REMUNERATION COMMITTEE (TRC) The Technical Remuneration Committee takes an active role in reviewing the remuneration philosophy, policy, strategy and practices for alignment to best practices and strategic imperatives of the City of Tshwane. The remuneration structure for all employees who are not executives is determined and approved by the Council.

15.1 The City Manager will establish a Technical Remuneration Committee (TRC) to:

Ensure that national/provincial directives or collective agreements on job

evaluation and remuneration be implemented in the CoT. Give guidance and technical support on remuneration matters to CoT

management. Consider and make recommendations to the Mayoral Committee on

remuneration policy issues which have a strategic impact on the CoT. Facilitate budgetary planning for remunerative interventions in the CoT. Recommend the use of external remuneration specialist in the event of

sensitive remuneration issues and/or assistance with specialized remuneration issues.

Consider and recommending financial performance rewards.

15.2 The Technical Remuneration Committee should also annually review the benefits offered by the Council to determine:

whether they are appropriate and competitive given the industry, the City’s

financial position, legislative requirements, and market benchmarks and trends (This may include an assessment of how the benefits are perceived and understood by participants);

if the costs relating to the administration of the benefits / schemes are justified;

563

whether the benefits / schemes meet the needs of employees and are fair

towards all employees;

whether benefits that are offered to executives are similarly offered to employees and if not, what the justification is;

if the schemes / trusts are well governed (As benefit funds are

administered independently through boards of trustees, the Technical Remuneration Committee (or other relevant board committee such as the Audit Committee) would not ordinarily be required to review the audited financial statements. If the Committee however is concerned about the protection and management of employees’ interests, they may specifically request the Boards of Trustees of Benefit funds to present these statements);

15.3 The Technical Remuneration Committee will also in terms of pension funds

ensure that :

the Board members of the pension funds be duly elected by the employees as their representative every three years;

no pension board members should be serving more than five years

without mandated by the employees; annual feedback to the employees is given by the pension funds.

15.4 The Technical Remuneration Committee will comprise of the following members:

The Strategic Executive Director: Corporate and Shared Services (or

nominee) The Chief Financial Officer (or nominee) The Executive Director: Human Resources Management The Director: Human Resource Provisioning and Maintenance The Executive Director: Organisational Efficiency Improvement The Director: Organisational Design, Job Evaluation and Compensation Relevant Specialists (e.g. Pay roll, Budget office, Performance

Management, Job Evaluation & Compensation) External Consultant(s) as and when required. Departmental HR staff as and when required.

564

16. REVIEW

The Remuneration Policy will be reviewed every 3 years to ensure that it is still relevant and supports the City’s strategic objectives. However should circumstances in the remuneration field impacts on the stipulations of the policy, the policy will be updated as soon as possible to maintain its relevancy.

17. NON-COMPLIANCE WITH THIS POLICY, INCLUDING MISREPRESENTATION Non-compliance with this policy, and provisions contained herein, shall be dealt with through the prescribed disciplinary processes of the City.

18. REPEAL OF POLICIES

All policies relating to the regulation of employee remuneration within the employ of the City of Tshwane Metropolitan Municipality, including the former Metsweding District Municipality, Kungwini Local Municipality and Nokeng tsa Taemane Local Municipality are hereby repealed and substituted by this policy.

565

1

REMUNERATION POLICY FOR TOP MANAGEMENT

566

2

TABLE OF CONTENTS

1. PURPOSE AND SCOPE

2. DEFINITIONS

3. LEGISLATIVE FRAMEWORK

4. STRATEGIC INTENT OF THE REMUNERATION POLICY

5. JOB EVALUATION

6. LINKING PAY TO JOB LEVELS OF TOP MANAGEMENT

6.1 Remuneration by means of a Total Package

6.2 Upper limit of remuneration package

6.3 Offer of remuneration at appointment

6.4 Payment of a market premium allowance

7. PERFORMANCE BONUS

8. BENEFITS

8.1 Retirement or pension fund membership

8.2 Medical Scheme membership

8.3 Motor vehicle (Transport allowance)

8.4 Mobile phone and data card

9. OVERTIME

10. TAX IMPLICATIONS

11. DEDUCTIONS FROM SALARY

12. TRANSITIONAL ARRANGEMENTS

13. REVIEW

14. NON-COMPLIANCE WITH THIS POLICY, INCLUDING MISREPRESENTION

15. REPEAL OF POLICIES

567

3

1. PURPOSE AND SCOPE

The purpose of the Remuneration Policy for Top Management is to guide the determining and managing of remuneration for the Top Management of the CoT. The scope of the policy will be Top Management appointed on fixed term contracts, thus Non-bargaining unit employees.

2. DEFINITIONS

CoT refers to the City of Tshwane Metropolitan Municipality. Competency Framework refers to the Local Government: Competency Framework for Senior Managers as set out in annexure A of Government Notice 21 published in Government Gazette No. 37245 of 17 January 2014 Government Notice 21 of 2014 refers to the Local Government: Regulations on appointment and conditions of employment of senior managers as published in Government Gazette No. 37245 of 17 January 2014. Government Notice 225 of 2014 refers to the Local Government Regulations: Upper limit of total remuneration package payable to municipal managers and managers directly accountable to municipal managers (as published in Government Gazette of 29 March 2014. Government Notice 805 of 2006 refers to the Municipal Performance Regulations for Municipal Managers and Managers directly accountable to Municipal Managers as published in Government Gazette No. 29089 of 1 August 2006. Financial year refers to the financial year of a municipality commencing on 1 July each year and ending on 30 June of the following year. Senior manager refers to the City Manager or acting City Manager as appointed in terms of section 54A of the Municipal Systems Act, Act 32 of 2000 (as amended), and includes managers directly accountable to the City Manager as appointed in terms of section 56 of the said Municipal Systems Act. Top Management refers to the CoT Top management, meaning the City Manager and managers directly accountable to the City Manager. The City Manager and managers directly reporting to him/her, are the same as per the definition of “senior management” as used in Government Notice 21 of 2014.

568

4

3. LEGISLATIVE FRAMEWORK

3.1 The Municipal Systems Act, Act 32 of 2000 (as amended), Sections 54, 56 and 57

3.2 Municipal Performance Regulations for Municipal Managers and Managers

directly accountable to Municipal Managers (Government Notice No. 805 as published in Government Gazette No. 29089 of 1 August 2006).

3.3 Local Government: Regulations on appointment and conditions of employment of senior managers (Government Notice No.21 as published in Government Gazette No. 37245 of 17 January 2014).

3.4 Local Government: Upper limit of total remuneration package payable to municipal managers and managers directly accountable to municipal managers (Government Notice No. 225 as published in Government Gazette of 29 March 2014).

4. STRATEGIC INTENT

As with any Municipality, the CoT has obligations in terms of service delivery to its communities. Such obligations are captured in the strategic objectives of the City. In order for the CoT to deliver on its mandate to the community, the CoT needs skilled and competent top management. Remuneration is, amongst others, a key factor in the recruitment, retention and motivation of such managers. The Remuneration Policy is thus supportive of the strategic objectives of the CoT as it guides the CoT:

To compete in the Labour Market to attract and retain high calibre top management;

To compensate its staff in a fair and equitable manner for the tasks they

need to execute in terms of their job descriptions, thus ensuring a balance between affordability and quality of life for employees.

To support organisational strategies by linking job content to the

performance management system

To recognise employee contributions in achieving the CoT objectives and to motivate performance excellence.

To ensure non- discriminatory and transparent remuneration principles.

To guide the administration of Top management’s remuneration.

569

5

To be legislatively compliant in terms of remuneration.

5. DUTIES AND JOB PROFILES The staff establishment (organisational structure) of the CoT is developed taking into account the municipality’s strategic objectives, core and support functions. The tasks that need to be executed by the incumbents of the various posts on the staff establishment are captured in job profiles (also known as job descriptions). This includes the posts of Top Management. Government Notice 21 of 2014, regulation 4(6) states that when the staff establishment is finalised, a detailed report and recommendations need to be submitted to the municipal council for approval. Regulation 4 (7) specifically indicates that the report must include the following:

4(7)(d): job descriptions, duties, functions, competency requirements and responsibilities according to which one or more posts of the same grade are established, including the grading or relative size and value of a job; 4(7)(e): details of the financial implications of the changes including, but not limited to, the outcomes of the job evaluation processes, remuneration costs for senior managers, ............”

The CoT will therefore provide job profiles to incumbents of all posts on the organisational structures. Such job profiles will be updated should any structural amendments and/or other circumstances occur that necessitate changes in the job content.

6. LINKING PAY TO JOB LEVELS OF TOP MANAGEMENT

6.1 Remuneration by means of a Total package

When creating or filling a top management post, Government Notice 21 of 2014, regulation 5 states as follows:

“5(2) The municipal council must –

(a) Confirm that the municipality requires the post to meet it strategic objectives;

(b) Ensure that a job description has been developed for the post;

(c) Attach to that post the remuneration and other conditions of employment; and

570

6

(d) Ensure that sufficient budgeted funds, including funds for the reaming period of the medium – term expenditure framework, are available for filling the post.”

The CoT Top management will be remunerated by means of fixed all- inclusive annual total package amounts payable in equal monthly instalments. The value of said total package will be in accordance to the job level and/or national directives. The CoT all-inclusive annual remuneration package will consist of a 70 % basic salary and a 30% flexible portion. The flexible portion can be

structured to include the following:

a transport allowance

a non-pensionable allowance a medical employer contribution

a pension employer contribution

The above mentioned all-inclusive annual remuneration package must be

structured in accordance with the guidelines provided by the South African Revenue Service (SARS).

The above mentioned all-inclusive annual remuneration package can be re-structured for the following pay run periods each year:

January (Medical increases implementations)

March (Tax legislation changes) July (Annual inflation based package adjustment)

The annual inflation based adjustments will be calculated on the basic salary component (70%) of the remuneration package.

6.2 Upper limit of remuneration package

Government Notice 21 of 2014 also addresses upper limits of total remuneration packages of top management (referred to as “senior management” in the regulation). Latter is captured as follows in regulation 35: “35(1) The Minister must by notice in the Gazette annually determines the

upper limit of the total remuneration package of senior managers according to different categories of municipalities.

(2) The upper limit of the total remuneration package of senior managers

for a financial year, must be determined by the Minister before 31 March of the following financial year, after consultation with the Minister for Public Service and Administration, the Minister of Finance, the MEC’s for local government, and organised local government, by notice in the Gazette after taking into consideration –

(a) The classification of municipalities according to different grades;

571

7

(b) The respective duties, powers and functions and responsibilities of

the municipality;

(c) The affordability of different levels of remuneration, the number of municipal employees, and the salary and wage bill of the municipality;

(d) The population, operating budget and assets of the municipality;

(e) The current principles and levels of remuneration in society in general;

(f) The need for the promotion of equality and uniformity of salaries,

allowances and benefits for equal work performed;

(g) The provision of uniform norms and standards nationally to address disparities; and

(h) Inflationary increases.”

Given abovementioned content of regulation 35 (1) and (2), the CoT will in terms of regulation 5 (2) (c) attach appropriate remuneration packages to the various CoT top management positions according to the annual national package determinations. Should the CoT however experience problems with the value of the remuneration packages which are published annually, the CoT may apply for a waiver in terms of Regulation 11 (2) of Government Notice 225 of 2014 which provides for the following:

“11(2) A municipality may, in exceptional circumstances and on good cause

shown, and after consultation with the MEC for local Government, apply in writing to the Minister to waive any of the prescribed requirements set out in this Government Notice. The Minister will consider each application on merit, based on the circumstances and motivation that will be provided”

The CoT is subject to any future national circulars and guidelines/directives in terms of the waiving principle.

6.3 Offer of remuneration at appointment Upon appointment in a position, the CoT will negotiate a suitable remuneration

package with the successful candidate. The package will be determined in terms of Government Notice 225 of 29 March 2014 (regulation 9) which stipulates as follows:

“9. The offer of remuneration at appointment for a senior manager will be

determined by competence and current earnings, read together with the guidelines as set out below:

572

8

TOTAL REMUNERATION

PACKAGE

Criteria

MINIMUM TO MIDPOINT Relevant qualification Only meets the minimum qualification and experience

requirements Applicable to new appointments or promotions from

within the municipality, and who have demonstrated the potential to acquire competencies for the full scope of the job as measured against the competency framework

MIDPOINT Relevant qualification

5 to 10 years local government or related experience Considered competent as measured against the

competency framework MIDPOINT TO MAXIMUM Relevant qualification

More than 10 years local government or related experience

Demonstrated evidence of advanced competency as measured against the competency framework

6.4 Payment of a market premium allowance

The CoT recognises that the cyclical supply and demand factor in the labour market may cause difficulties to attract and to retain top managers in certain specialist areas. Such scenarios will be handled in accordance with Government Notice 225 of 29 March 2014 (regulation 10) which addresses scarce skills as follows: “10 (1) The payment of a market premium allowance is aimed at attracting and

retaining suitably qualified and competent senior managers into municipalities where the approved pay range is not sufficient to attract and retain such.

(2) Where a municipality finds it difficult to attract suitably qualified and

competent candidates to fill a position of a senior manager such municipality may offer and pay a market premium allowance to a suitably qualified and competent person.

(3) Market premium allowances may be paid to senior managers in the

following instances-

(i) Scarcity of skills in the local pay-market due to the geographical location of the position;

573

9

(ii) Scarcity of skills in the national pay-market with reference to the National Scarce Skills List as determined by the Minister of Higher Education and Training;

(iii) Turn-around strategy requirements where a specific person will enable the achievement of highly improved outputs;

(iv) Network requirements where the individual senior manager is employed specifically for the network brought into the municipality in terms of a specific event or purpose where such a network will enable the achievement of specific objectives:

(v) Equity where the municipality wants to achieve a specific equity objective and those skills are scarce in the local market in terms of the specific equity targets to be achieved.

(4) A market premium allowance of not more than 20% of the total annual

remuneration package attached to a specific senior management position may be offered and paid.

(5) The percentage of the market premium allowance must be determined

by the municipality through an assessment of the market, and the municipal Council must satisfy itself that the market assessment is reflective of a sufficient sample and that the various market factors are considered sufficiently.

(6) Any market premium allowance will be terminated if –

(i) The current term of the employment contract of the relevant senior manager ends. A market premium allowance is not automatically carried over should the incumbent of the position successfully be re-appointed for a further period in that position; and

(ii) The senior manager vacates the position for any reason before the date of expiry of the employment contract including, but not limited to transfer, promotion, dismissal for misconduct, incapacity, operational requirements and retirement.

(7) The market premium allowance is paid as a non-pensionable

allowance.”

7. PERFORMANCE BONUS CoT Top Management may qualify for annual performance bonuses in

addition to their approved total packages. Said performance bonuses are payable in terms of Government Notice 805 of 2006, regulations 8 and 32 which state as follows:

Regulation 8: “In accordance with regulation 32, a performance bonus, based on affordability, may be paid to the employee, after –

(a) the annual report for the financial year under review has been

tabled and adopted by the Municipal Council;

574

10

(b) an evaluation of performance in accordance with the provisions of regulation 23 of the Municipal Performance

Regulations;

(c) Approval of such evaluation by the municipal council as a

reward for outstanding performance.”

Regulation 32: “32(1) The evaluation of the employee’s performance will form the

basis for rewarding outstanding performance or correcting unacceptable performance.

(2) A performance bonus ranging from 5% to 14% of the all

inclusive remuneration package may be paid to an employee in recognition of outstanding performance. In determining the performance bonus the relevant percentage is based on

the overall rating, calculated by using the applicable assessment-rating calculator; provided that-

(a) A score of 130% to 149% is awarded a performance

bonus ranging from 5% to 9%; and

(b) A score of 150% and above is awarded a performance bonus ranging from 10% to 14%”

Note must be taken that all the performance management issues of CoT Top Management are regulated by a separate Performance Management

Policy for Top Management.

8. BENEFITS Chapter 5 of Government Notice 21 of 2014 allows for the following benefits for CoT Top Management (referred to as senior management in the Government Notice):

8.1 Retirement or pension fund membership

Regulation 37 stipulates as follows:

“37 (1) A senior manager must belong to a retirement or pension fund

registered in terms of the Pension Funds Act.

(2) A senior manager must annually submit proof of membership of the retirement fund to the municipality.

(3) A senior manager must be afforded an opportunity to make a once-

off choice in respect of a retirement or pension fund to which he or she wants to become a member, including a retirement or pension fund accredited by the bargaining council designated for municipalities: Provided that such fund must be registered in terms of the Pension Funds Act.”

575

11

The all-inclusive remuneration package will therefore include the applicable contribution to the retirement or pension fund.

8.2 Medical Scheme membership. Regulation 38 of Government Notice 21 of 2014 stipulates as follows:

“38 (1) A senior manager must belong to a medical aid registered in terms of the Medical Schemes Act.

(2) A senior manager must submit annually proof of membership of the

medical aid scheme to the municipality.

(3) A senior manager must annually be afforded an opportunity to make a once-off choice in respect of a medical scheme to which he or she wants to become a member, including a medical scheme accredited by the bargaining council designated for municipalities: Provided that such scheme must be registered in terms of the Medical Schemes Act.”

The all-inclusive remuneration package will therefore include the applicable contribution to the medical scheme of choice.

8.3 Motor Vehicle (Transport allowance) Regulation 39 of Government Notice 21 of 2014 stipulates as follows:

“39 (1) A senior manager must have a motor vehicle available for the proper performance of his or her functions. Provided that he or she must secure his or her own financing for the vehicle.

(2) In the event that a senior manager utilises his or her private vehicle to

carry out official duties, he or she must be compensated for the kilometres travelled in respect of the official trip in accordance with the relevant policy of the municipality.

(3) Official distances travelled may be claimed in accordance with the

relevant policy of the municipality, but may not exceed the applicable tariffs prescribed by the Department of Transport on a monthly basis for the use of privately-owned vehicles.

(4) For the purposes of claiming motor vehicle and maintenance

allowances, a senior manager must keep a logbook acceptable to the South African Revenue Service reflecting the official and private kilometres travelled per month.”

8.4 Mobile phone and data card Regulation 40 of Government Notice 21 of 2014 stipulates as follows:

576

12

“40 A senior manager is entitled to compensation for the use of a mobile phone and data card for official purposes in accordance with the relevant policy of the municipality.”

The CoT top management will be compensated by means of the approved allowance directives contained in the CoT Cell Phone policy.

9. OVERTIME Regulation 22 of Government Notice 21 of 2014 stipulates as follows:

“22 A senior manager may be required to work overtime without additional remuneration.”

In terms of abovementioned regulation, CoT top management will not receive additional payment for overtime over and above their total remuneration packages.

10. TAX IMPLICATIONS In terms of remuneration, employees will be bound to South African tax law and directives (as amended from time to time). The employer will deduct tax from employees’ monthly CoT remuneration in accordance with said directives. It is the responsibility of each member of Top management to seek tax advice and to ensure they understand the tax implications of any changes to the all-inclusive remuneration packages.

11. DEDUCTIONS FROM SALARY

The CoT will, where applicable, deduct legislative employee contributions as well as other applicable employee contributions and pay it over to the relevant parties. The CoT will also pay over all legislative and other applicable employer contributions to the relevant parties.

12. TRANSITIONAL ARRANGEMENTS Regulation 44 of Government Notice 21 of 2014 stipulates the following

transitional arrangements and is applicable to CoT Top Management employed before 1 July 2014:

“44 (1) Employment contracts for all senior managers entered into before

these regulations became operational, remain in full force until the contract lapses or is terminated.

577

13

(2) When an employment contract referred to in sub regulation (1) lapses or is terminated, the vacant post must be advertised in accordance with these regulations.”

13. REVIEW

The Remuneration Policy will be reviewed every 3 years to ensure that it is still relevant and supports the City’s strategic objectives. However should circumstances in the remuneration field impacts on the stipulations of the policy, the policy will be updated as soon as possible to maintain its relevancy. Any changes in legislation or national directives will however immediately be of effect from the stipulated date(s).

14. NON-COMPLIANCE WITH THIS POLICY, INCLUDING MISREPRESENTATION Non-compliance with this policy, and provisions contained herein, shall be dealt with through the prescribed disciplinary processes of the City.

15. REPEAL OF POLICIES

All policies relating to the regulation of Top management remuneration within the employ of the City of Tshwane Metropolitan Municipality, including the former Metsweding District Municipality, Kungwini Local Municipality and Nokeng tsa Taemane Local Municipality are hereby repealed and substituted by this policy.

578