The review of Employment Policies is necessary to achieve the objective of bringing all employees under single legal employer and ensure fairness and consistency across a range of policy areas – – pay, promotion, training and development.
Employment policy statements establish basic ground rules for decisions relating to the compensation and treatment of employees. The Policy framework allows the BoD to delegate decision making responsibility to the management team by determining appropriate action, providing guidance and defining limits.
The policy framework should be decided by the BoD, the following list is typical of the area’s that may need to be reviewed:
- Remuneration policy
- Internal selection & appointment
- Sick pay policy
- Retirement age
The policy should determine the appropriate pay rates and benefits for staff and should reflect the tasks and level of responsibility required in their job. It is the principal means of rewarding people for their hard work and commitment.
Staff rates of pay will be subject to annual review by the remuneration committee. The committee should comply with the governance and risk management regulations as specified in the ‘Credit Union Handbook’.
In determining future rates of pay and benefits the committee should consider:
- The credit unions ability to provide pay increase for staff
- Labour market survey to determine trends in pay increases in the Credit Union sector
- Projected cost of living increases as determined by the Consumer Price Index (CPI)
- CU dividend policy as determined by the BOD and ratified at the AGM.
Many Credit Unions continue to rely on pay scales linked to civil service rates which have a number of fundamental flaws:
- Scales do not reflect economic conditions and result in pay rates well above market levels
- Scales do not reflect the CU ‘ability to pay’
- Scales do not reward commitment and performance
- Scales eventually become obsolete
Internal Selection & Appointment
The C U should be committed to providing opportunity for internal candidates to develop their skills & qualifications and achieve promotion within the organization.
Selection and promotion decisions should be based on objective criteria – qualifications, experience, skills, personal traits needed for the job.
Staff members will be encouraged and supported to participate in training programmes and achieve Credit Union related qualifications.
If there are no suitable internal candidates vacant positions will be advertised in the external market.
The sick pay scheme is provided to alleviate financial hardship for staff members who are absent due to genuine illness.
It is normal to limit eligibility to sick based on length of service, eg. – 12 months continuous service.
Sick pay entitlement may also be related to length of service, e.g. – increasing to 12 weeks after 10 year’s service.
Sick pay benefit is made up of normal basic pay less social welfare entitlement. The eligible employee is paid normal basic pay through the payroll system and will be responsible for refunding to the CU the social welfare payments.
Retirement has become an increasingly complex issue and the question of whether an employer should be able to impose a mandatory retirement age is a controversial topic.
A surprisingly large number of employers do not have a clearly defined policy on retirement but rely on the States Pension age to determine the retirement age. The potential impact on public finances has led to recent changes in the State Pension age – the current retirement age is 66 rising to 67 by 2021 and 68 by 2028.
The Equality (Miscellaneous Provisions) Act 2015 provides that employers may only set a mandatory retirement age based on ‘reasonable and objectively justifiable’ grounds, for example:
- Creating labour market opportunities
- Updating skills and competencies by recruitment
- Balancing the age profile of the organisation by encouraging recruitment of young people
- motivating staff by creating promotional opportunities
- Health & Safety of employees and the public when filling safety critical jobs – train drivers, firefighters
The employer must be able to demonstrate that a normal retirement age does exist; that it had been communicated to the relevant employee; and that it has been consistently applied across the organisation.
The Employment Policy should outline how requests by employees to work beyond the normal retirement age will be handled.