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New Code and Accounts Direction on Senior Pay Published

on Thursday, 21 June 2018.

The Committee of University Chairs (CUC) has recently published its new remuneration code for senior staff in Higher Education.

This was followed by the Office for Students (OfS) publishing its accounts direction covering disclosures about senior pay on 19 June 2018. The code and direction are set against the background of significant student, public and press interest in the remuneration packages of Vice-Chancellors and other senior staff.

CUC Code

The code is voluntary and provides guidance to governing bodies on setting the remuneration of, and determining severance payments made to, Vice-Chancellors and other senior post holders and sets out three key elements required for fair and appropriate remuneration:

  • A fair, appropriate and justifiable amount
  • Procedural fairness
  • Transparency and accountability

In determining the level of pay account should be taken of factors including the context in which the HEI operates, the individual's value, responsibilities and contribution to the HEI's success, the individual's performance against specific objectives and value for money. There should be consequences if the individual does not deliver the expected contribution.

Procedurally, Remuneration Committees should be independent and competent and make their decisions based on appropriate evidence, looking at comparator institutions and assessing the value of the role, the context and the individual's performance. Vice-Chancellors should not be members of these committees and no individual should be involved in deciding his/her remuneration.

In terms of transparency and accountability, decisions of the Remuneration Committee should be justifiable, published in an annual statement and should be related to the remuneration of other staff within the HEI. The annual statement should specify how the Vice-Chancellor's remuneration compares with the median earnings of the HEI's workforce as a whole.

Severance payments made to senior staff must be reasonable and justifiable. They should be based on contractual and statutory entitlements and governing bodies need to explain the reasons behind any payment, with their decisions being informed by appropriate legal advice where necessary.

HEIs are encouraged to publish their written commitment to complying with the code. If they choose not to do so, they will need to provide a public explanation; together with details of alternative arrangements they have in place to meet the principles of the code.

The code will be reviewed every four years.

OfS Direction

The direction says that HEIs should have regard to the CUC's code and then goes on to set out the information that HEIs are required to include in their audited financial statements. This includes disclosures about pay and severance payments for senior staff, ie those with a basic annual salary of over £100,000. The direction replaces the 2017 HEFCE guidance on severance pay and remuneration of senior staff.

In the notes to their annual financial statements, HEIs are required to disclose the number of staff paid over £100,000 per annum, shown in a table broken down into bands of £5,000.

Each HEI also has to provide full details of the remuneration of its Vice-Chancellor (or equivalent) including basic salary, performance-related pay, bonuses, pension contributions and other benefits such as a car and subsidised accommodation and a justification for this package linked to the value and performance of the individual. Details of the relationship between the Vice-Chancellor's remuneration package and the median pay of all other employees, expressed as a pay multiple, also need to be given.

There are also disclosure requirements in relation to severance payments, including the total amount of any payments of compensation for loss of office paid across the whole HEI and the number of people to whom this was paid and any compensation for loss of office paid to a Vice-Chancellor, including any benefits.

The Chief Executive of the OfS, Nicola Dandridge said that "these disclosures will become part of our regulatory requirements and if a provider fails to comply with these requirements or fails to provide justification this may amount to a breach of our regulatory conditions, and we will not hesitate to intervene."


For further information please contact Jane Byford in our Employment Law team on 0121 227 3712.

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