Market supplements scheme - Principles

For recruitment purposes, payment is designed to be a one off incentive payment to attract candidates. It should not normally be paid until after the employee has successfully completed the probation period.

For retention purposes, payments are in addition to the salary as a supplement to the spinal column point (SCP) of the grade and made for a specified period to retain employees where it can be demonstrated that difficulties in replacing staff will cause essential skills shortages that will prevent effective business operations.

In either case, any proposed use of this facility will only happen after alternative, acceptable ways of recruiting and retaining staff have been explored. Therefore it is expected that the use of the supplement will be in exceptional circumstances only and therefore will be extremely rare.

Any case for the payment of a Market Supplement must be properly justified, with supporting evidence of pay-related recruitment and retention difficulties against a range of indicators, for example:

• abnormally high turnover rate of staff
• low number of suitable applicants for jobs/evidence of a national shortage
• negative exit interview feedback
• unsuccessful recruitment initiatives explored/exhausted
• inadequate staffing levels in order to ensure service delivery
• changes to organisational or working arrangements have not resolved the issue
• low risk impact on both cost implications and on other relevant existing staff

In addition to the criteria above, account should be taken of the wider employment context applicable to the occupational group and whether the payment of a Market Supplement will address the particular underlying issues or whether alternative or additional actions are required.  For example:

• are the difficulties an indicator of other issues of concern within the service or occupational group which can be more appropriately resolved by other management action and/or non-pay measures?
• is there a specific, regional or national shortage for which longer term initiatives such as new / alternative training schemes (for example Apprenticeships, Vocational training, Social Worker Academy, Career Grades) would be a more appropriate solution?
• are the non-reward benefits sufficiently promoted - for example, annual leave, flexible working etc.
• are there more appropriate ways of resourcing or delivering the service rather than through an in-house workforce?

The level of the Market Supplement should be proportionate and assessment should include market-based salary comparisons with competing local or regional employers (public and/or private sector as appropriate) ensuring that there is a valid comparison between the posts, i.e. the same in terms of duties and responsibilities, and assessment of differences in the terms and the overall reward package.

Where a Market Supplement is agreed for a post which is identical to another or other posts, these post holders may be eligible for the same payment depending on the rationale and circumstances. For example if the geographic location of a job is a factor the market supplement will not be paid to others in the same role but outside of that specified area.

Managers will need to ensure that there is sufficient budget available to pay the supplement and to include the total cost, including on costs, for each future year that it is anticipated the supplements will apply. They are not envisaged to be long term payments. Time limits for the payments must be specified.

Monthly Market Supplements will be paid in addition to the individual’s normal salary and will be subject to the normal income deductions such as tax, national insurance and pension contributions if applicable. The supplement will be shown separately on the employee’s payslip. Pro rata payments will apply to part time employees.

Market supplements will be:

• stopped or reduced if the employee changes their job or grade
• stopped or reduce if the market factors change and the supplement can no longer be justified

If an employee is in receipt of pay protection this must not exceed the total pay for the job including the market supplement. Other payments e.g. sessional payments or payments for working non-standard, where applicable, will be based on the basic pay and not on the Market Supplement pay level.

As Market Supplements are designed to recruit and retain employees they should not be paid to temporary or fixed term employees or casual workers.

A Market Supplement may be reduced or removed following a review process.

Payment of a Market Supplement is subject to an employee remaining in post for a specified period normally three years from the commencement date of the supplement. If an employee decides to leave their employment with the council, repayment of the supplement will be required if this is within the three years of the last payment. 

Repayment will not be required if the reason for leaving the post is redundancy or redeployment as an alternative to redundancy. Repayment will be deducted from the final salary and any outstanding amount must be repaid to the council within 28 days of the date of termination. Appendix 2 must be used as the ‘agreement’ between the council and the employee.