MIDDLE MANAGEMENT SERVICE (Salary levels 11 and 12) Inclusive

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MIDDLE MANAGEMENT SERVICE (Salary levels 11 and 12) Inclusive Powered By Docstoc
					                    CONTENTS (1)

   Introduction
   Current remuneration system
   What is an inclusive remuneration package
    system and advantages?
   What does the new dispensation entail?
   Who is affected?
   Composition of the remuneration scale
   Structure of the package
   Allowances/benefits to structure the flexible
    portion


                                                    2
                   CONTENTS (2)


   Part-time/contract/casual/other members
   Calculation of allowances/payments
   Incentive Policy Framework
   Contract/casual members
   Translation to new dispensation
   Financing of new dispensation/communication
    with members
   Assistance to members to structure their packages


                                                   3
      OUTCOMES TO BE ACHIEVED WITH
            PRESENTATION

   To provide an overview of the new
    dispensation to HR managers and
    practitioners, and especially the important
    choices to be exercised and the implications
    thereof on the individual MMS members
   A separate workshop will be conducted per
    province/for national departments which will
    focus in detail on the new dispensation


                                                   4
           INTRODUCTION (1)


 DPSA conducted investigation into
  remuneration of members on salary levels 11
  and 12
 Proposals to convert current remuneration
  system to package system tabled in PSCBC
  (April 2003)
 Deadlock declared in PSCBC (September
  2003)
 Conciliation failed (February 2004)




                                                5
                INTRODUCTION (2)


   Subsequent bilateral discussions with unions
    failed
   MPSA decided to implement new dispensation
    unilaterally in terms of PSA (section 5(4)) –
    effective from 1 July 2005




                                                    6
           CURRENT REMUNERATION
                 SYSTEM (1)

   Current system comprises of the following
    elements:
      Basic salary (notch)

      Service bonus

      Employer’s contribution to GEPF

      Employer’s contribution to registered medical
       aid scheme
      HOA



                                                       7
      CURRENT REMUNERATION
           SYSTEM (2)

 Other allowances such as Danger allowance,
  employees working in EAs offices, acting
  allowance - payable depending on certain
  criteria
 Participation in the SMTS (A- and B- scheme)




                                                 8
         WHAT IS AN INCLUSIVE
    REMUNERATION PACKAGE SYSTEM &
           ADVANTAGES? (1)


   Single package
   Consists of two broad components
      Pension related (basic salary and Employer

       contribution to GEPF)
      Non-pensionable component (Flexible portion)

   Allows member to decide on the component mix
    (basic salary and flexible portion)

                                                  9
         WHAT IS AN INCLUSIVE
    REMUNERATION PACKAGE SYSTEM &
           ADVANTAGES? (2)

   Choice must be exercised on the basic
    (pensionable) salary (within certain parameters)
   Flexible portion may either be-
      An all cash flexible portion; or

      An all “benefit” portion; or

      A combination of both

   Allows member, therefore, to personalize the
    package

                                                       10
         WHAT IS AN INCLUSIVE
    REMUNERATION PACKAGE SYSTEM &
           ADVANTAGES? (3)

   Facilitates transparent budgeting and planning
   Allows greater flexibility in remunerating members
    with scarce skills
   Realizing principle of “EQUAL PAY FOR WORK
    OF EQUAL VALUE”




                                                    11
      WHAT DOES THE NEW
    DISPENSATION ENTAIL? (1)


Transforming of the current remuneration
system into an inclusive flexible
remuneration package system by including
all existing macro financial benefits into a
package, which provides flexibility to
employees to structure the package within
certain parameters



                                           12
             WHAT DOES THE NEW
           DISPENSATION ENTAIL? (2)

   Conversion of salary (notch) and following macro
    benefits/allowance into a total package:
      Salary notch (Salary levels 11 & 12)

      Employer’s contribution to GEPF – 15% (last
       offer in the PSCBC)
      Service bonus

      Employer’s maximum contribution to medical
       aid (R12 168 – annual amount)
      HOA (R8 508) – last offer in the PSCBC




                                                  13
             WHAT DOES THE NEW
           DISPENSATION ENTAIL? (3)

   Maximum amounts for medical and HOA –
    amounts contained in the employer’s last proposal
    tabled in PSCBC
   Provides a choice to set the pensionable basic
    salary in package at certain levels (within certain
    parameters) – 2 options per level
   Provides to structure package for certain
    allowances and/or benefits (within certain
    parameters)
   SMTS not included in new MMS dispensation
                                                    14
              WHO IS AFFECTED? (1)


   New dispensation applicable with effect from 1
    July 2005
   Apply to all members on salary levels 11 & 12 in
    service on 30 June 2005 as well as all new
    appointees (including promotion) to these levels
    on 1 July 2005 and thereafter
   Details contained in DPSA Circular 2 of 2005 –
    sent to departments and can be accessed from
    DPSA website
                                                   15
              WHO IS AFFECTED? (2)


   Members are not negatively affected on transition
    (translation) to the new dispensation – will be
    possible to structure package for same items (with
    at least same monetary values) that have
    prevailed in pre-revised dispensation
   All members are translated, irrespective of
    performance agreements and/or performance



                                                   16
             COMPOSITION OF THE
           REMUNERATION SCALE (1)

   Separate scales (Grades/Remuneration Bands)
    for-
          MMS Level 11
          MMS Level 12
   Each remuneration band consists of 16
    remuneration packages
   Existing JE weights linked to salary levels 11 and
    12 remain
   Remuneration scales and packages (and
    translation keys) will be provided once the annual
    cost-of-living adjustment for level 1 to 12 has been
    concluded

                                                     17
      STRUCTURE OF THE PACKAGE (1)


   Package for a member admitted to the GEPF
    consists of:
          Basic salary (pensionable)

          Employer’s contribution to pension fund
           (pension related)

          Flexible portion (non-pensionable)

                                                 18
      STRUCTURE OF THE PACKAGE (2)
              (Basic salary)
   Two sets of basic salary apply
        MMS Level 11

            SET 1 - 75% of total package

            SET 2 – 70% of total package

        MMS Level 12

            SET 1 - 76% of total package

            SET 2 – 70% of total package

   Member has once-off choice between sets of
    basic salary


                                                 19
       STRUCTURE OF THE PACKAGE (3)
               (Basic salary)

   Implications of different Sets within each level
      Set 1 (75% & 76% respectively)
         Allows member to set the basic salary, on
          which the employer’s and member’s
          contributions to the GEPF are calculated, at
          least on the levels that have prevailed before
          translation to the dispensation – therefore the
          pensionable income is not reduced on
          translation.
         “Limits” the flexible portion of the package



                                                      20
    STRUCTURE OF THE PACKAGE (4)
            (Basic salary)

   Set 2 (70% in both levels)
      Allows member to set the basic salary, on

       which the employer’s and member’s
       contributions to the GEPF are calculated, at
       levels lower that have prevailed before
       translation to the dispensation – therefore a
       reduction in pensionable income on
       translation.
      Increases the flexible portion


                                                  21
       STRUCTURE OF THE PACKAGE (5)
               (Basic salary)

   Members must exercise the choice either to be
    awarded Set 1 or 2 on translation
   Members may exercise the choice only once -
    it may not be changed in any way or at any time -
    not even with promotion from level 11 to 12 or with
    the awarding of a higher package - while the
    member is remunerated in terms of this
    dispensation


                                                    22
       STRUCTURE OF THE PACKAGE (6)
               (Basic salary)

   Extremely important choice as it affects members’
    pensionable position in future (effect on retirement
    and resignation benefits).
   If member fails to exercise choice within period
    specified – SET 1 will be awarded as default
   Due to implications and to ensure a smooth
    transition, a transitional provision (grace period)
    applies for 6 months, commencing on 1 July 2005,
    to change the decision on Set 2 to Set 1
                                                     23
        STRUCTURE OF THE PACKAGE (7)


   Flexible portion
       Remaining portion of the package
       Member afforded the opportunity to structure
        this portion
       Structuring may not exceed amount available in
        the flexible portion



                                                       24
        STRUCTURE OF THE PACKAGE (8)


   Members not admitted to GEPF

     Package does not consists of these
      components
     Total package may be structured - normal

      structuring rules apply




                                                 25
       EXAMPLE – EFFECT OF SET 1
         AND 2 ON MMS LEVEL 11

Set 1 (75%)                Set 2 (70%)
                           `

Package        R250 000    Package            R250 000

Basic salary   R187 500    Basic salary       R175 000

GEPF           R24 375     GEPF               R22 750

Flexible portion R38 125   Flexible portion   R52 250


                                                   26
          EXAMPLE – EFFECT OF SET 1
            AND 2 ON MMS LEVEL 12

Set 1 (76%)                Set 2 (70%)
                           `

Package        R300 000    Package            R300 000

Basic salary   R228 000    Basic salary       R210 000

GEPF           R29 640     GEPF               R27 300

Flexible portion R42 360   Flexible portion   R62 700

                                                        27
          ALLOWANCES/BENEFITS TO
               STRUCTURE
   Car allowance (max 25% of package)
   13th Cheque (1/12 of basic salary) (excluding
    members not admitted to the GEPF)
   Medical assistance (employer’s contribution to
    medical aid scheme)
   Housing allowance (amount to be decided by
    member)
   Non-pensionable cash allowance
    (any remaining portion of the flexible portion)
   Not obliged to structure for all these
    allowances/benefits
                                                      28
          PART-TIME/OTHER MEMBERS


   A member employed in a part-time capacity (5/8th
    or 6/8th basis) or an employee on salary level 10 or
    lower who is awarded a package that fall within
    the range of MMS Levels 11 & 12 may structure
    package
   The same provisions/measures applicable to full-
    time members apply



                                                     29
       CALCULATION OF ALLOWANCES/
              PAYMENTS (1)
   Allowances/payments that used to be calculated
    as % of member’s actual notch or a notch of a
    particular salary level – now calculated as % of the
    component basic salary of appropriate package
   SET 1 of the component basic salary must be
    utilised for this purpose, irrespective whether
    individual member’s basic salary is set at SET
    1 or 2
   This means that all members on the same
    package who meet the qualifying criteria for a
    particular allowance will be compensated equally
                                                     30
       CALCULATION OF ALLOWANCES/
              PAYMENTS (2)
   Acting allowance for members who act in a higher
    (vacant and funded) SMS position - calculated as
    the difference in the acting member’s total
    package and the minimum package attached to
    the higher SMS post.
   Acting allowances for employees on salary levels
    1 to 10 who act in a MMS Level 11 or 12 position -
    calculated as the difference between member’s
    salary notch and the basic salary ito Set 1 (75% or
    76%) of the minimum package of the higher
    vacant post

                                                    31
       INCENTIVE POLICY FRAMEWORK


   Members qualify for pay progression in terms of
    the Incentive Policy Framework, as contained in
    DPSA letter 1/7/1/4/1 dated 27 January 2003
   Performance awards/bonuses (merit awards)
    payable in terms of departmental performance
    schemes, as provided for in said DPSA letter, are
    limited to a maximum 14% of total package
   Departments should align their departmental
    policies accordingly
                                                  32
         CONTRACT/CASUAL MEMBERS

   Remuneration of a contract member (with a fixed
    term) - equal to the total package of an equivalent
    permanent member, derived from-
      evaluation of the job (PSR), or
      remuneration package of a similar existing
       position
   Clause 36 of PSCBC Resolution 3 of 1999 –
    payment of 30% of basic salary in lieu of benefits
    - is not applicable to MMS members
   Remuneration of casual (hourly, weekly or monthly
    basis) - set proportional to the total package of an
    equally graded full-time member

                                                     33
             TRANSLATION TO NEW
                DISPENSATION

   Members to be translated to appropriate bands
    (scales) and packages ito of translation keys
   Separate translation processes to apply for
    members-
      on standard salary notches

      not on standard (identifiable) notches

   Members must be informed in writing that errors
    (over/under payments) would be rectified

                                                  34
       TRANSLATION OF MEMBERS ON
           STANDARD NOTCHES
   Translation to scales and packages and
    structuring of package - to be done at
    departmental level – not “automatic” on PERSAL
   Each member must be informed in writing of new
    band (scale) and package
   Each member to structure package - must be
    confirmed in writing before department may
    implement on PERSAL
   Member’s package cannot be “implemented” on
    PERSAL without the opportunity to structure it

                                                 35
       TRANSLATION OF MEMBERS NOT
          ON STANDARD NOTCHES

   Translation of any member that cannot be effected
    ito of the translation keys – to be submitted to the
    DPSA for an appropriate translation key.
   Once DPSA has provided the translation key – the
    same process for “members on standard notches”
    must be followed.




                                                     36
     FINANCING OF NEW DISPENSATION/
      COMMUNICATION WITH MEMBERS

   Expenditure must be defrayed from departmental
    budgets and, where necessary, requests for
    additional funds should be included in
    departments’ adjusted estimates for the 2005/06
    financial year
   DPSA addressed a communiqué to each member
    – departments to ensure that each affected
    members receives it
   New dispensation, and implications of members’
    choices in terms thereof, spelt out in communiqué
                                                   37
       ASSISTANCE TO MEMBERS TO
      STRUCTURE THEIR PACKAGES (1)

   DPSA provides an Excel spreadsheet (MMS
    Model) to assist members to structure packages
   Calculations in Model may differ from PERSAL
   Model can be accessed from DPSA website
    (www.dpsa.gov.za) (follow links to Document
    Archive/Circulars/Remuneration
   Members are encouraged to make use of
    services of private experts

                                                   38
       SUMMARY OF KEY ELEMENTS (1)



   Two separate scales for levels 11 and 12
   Existing job weights retained
   Each scale – 16 packages
   Pay progression still applicable
   Performance bonuses still payable in terms of
    departmental performance management systems




                                               39
                  SUMMARY (2)
                     Package

   Admitted to GEPF        Not admitted to GEPF
     Basic salary            No components
        Level 11 –
                              Total package
         75%/70%               “constitutes flexible
        Level 12 –
                               portion”
         76%/70%
                              To structure for
     Employer
      contribution to          same allowances
      GEPF                     and benefits (excl
     Flexible portion
                               13th Cheque)

                                                 40
                    SUMMARY (3)
                   Flexible portion

   Car allowance (max 25% of package)
   13 Cheque (1/12 of basic salary) (excluding
    members not admitted to the GEPF)
   Medical assistance (employer’s contribution to
    medical aid scheme)
   Housing allowance (amount to be decided by
    member)
   Non-pensionable cash allowance
    (any remaining portion of the flexible portion)

                                                      41
           FUTURE PRESENTATIONS


   DPSA to conduct a detailed follow-up session on
    the MMS dispensation and implementation thereof
   Focus will be on-
      Mechanics of dispensation – the do’s and do
       not’s
      Tax implications

      Practical examples (case studies)

      Practical demonstration of DPSA MMS Model
       (Excel spreadsheet)

                                                42

				
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