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Market supplement policy

  1. Policy statement
  2. Definition and scope
  3. Procedure
  4. Stage 1: Investigate recruitment and / or retention problems
  5. Stage 2: Gathering / analysing market data
  6. Stage 3: Formal request for a market supplement
  7. Stage 4: Implementation of the supplement
  8. Stage 5: Monitoring and review

Policy statement

The University of St Andrews is committed to the principles of equal pay for work of equal value, and uses the HERA job evaluation scheme to determine the relative value of all posts, in Grades 1 to 9, which are covered by the Framework Agreement. The University does acknowledge, however, that there may be occasions where the total reward package offered for particular posts may not be as competitive as those offered in the wider labour market, leading to recruitment and retention difficulties. In such cases where it is established that there is a clear business/organisational need, and this is supported by objective market data, the University will consider applying a market supplement to the normal reward package for the post.

Such payments will only be made in exceptional circumstances and the University will follow a clear and consistent procedure for the determination, implementation and review of any market supplements which ensures that:

  • there is compliance with equal pay legislation;
  • a clear and demonstrable business need exists;
  • an objective assessment of appropriate evidence has been carried out which supports this approach;
  • all other methods, approaches and potential problems have been fully explored (including non-pay issues), before a market supplement is considered;
  • supplementary payments will be subject to review on a regular basis;
  • the rationale for the use of a market supplement is recorded, and the pay data is included in equal pay audits.

Definition and scope

Market supplements are temporary payments applied to an individual post (or group of posts) in addition to the standard salary established through the job evaluation process. They are paid when it has been demonstrated that the total reward package offered by the University is not sufficient to attract, recruit and retain staff. The total reward package in this instance includes basic salary plus all other benefits (eg pension, annual leave) and will be used when making comparisons with the market. The initial payment is normally for a fixed period of 2 years and is then subject to review every 2 years thereafter.

This policy covers all prospective and existing staff, and relates to both internally and externally funded posts. For equal pay purposes, where a market supplement payment has been agreed, it must be applied to all staff with a directly comparable role.

Procedure

Where significant difficulties are experienced in recruiting or retaining staff in a role, or there is evidence that this will be the case, the following procedure should be used to assess whether a market supplement payment is justified.

Stage 1: Investigate recruitment and / or retention problems

A market supplement will only be considered once other ways of improving recruitment and retention have been explored and exhausted and market pay is shown to be the main issue. Therefore, before a request for a market supplement is made, the School/Unit must establish (where applicable) that:

  • the recruitment process has been of a high quality, and no problems with it can be identified;
  • evidence concerning high levels of staff turnover suggests that the main reason for staff leaving is for more pay to undertake comparable roles (thus discounting normal career progression/personal development);
  • strong evidence exists to suggest that such problems are likely to arise;
  • non-pay approaches, including using secondments, giving greater prominence to benefits, offering training and career development opportunities etc have proved ineffective;
  • there is evidence to suggest that the normal reward package offered is uncompetitive in the current market.

If, following this initial investigation, it is established that market pay is the key issue, sufficient data must be gathered to support this.

Stage 2: Gathering / analysing market data

Market pay data must be gathered from a minimum of two relevant and reliable sources (one of which will normally be from Capital Health Service Partners). A Human Resources Officer will provide assistance with the identification and analysis of relevant and appropriate market pay data.

If, following an analysis of the data, it is established that the market rate for the post/group of posts is significantly higher than the total reward package being offered by the University, a formal request to implement a market supplement along with a recommendation as to its amount and duration should be made to Director of Human Resources.

Stage 3: Formal request for a market supplement

In order to formally request implementation of a market supplement, the Head of School/Unit should complete a Market Supplement Request Form (Word, 14 KB)and return it to the Director of Human Resources. This form will ask for information which shows that Stages 1 and 2 of the procedure have been followed, and that there is evidence to support the use of a supplementary pay for recruitment/retention purposes.

The case will then be considered by the Director of Human Resources together with the appropriate member of the Principal’s Office. The decision, which will be recorded and retained by Human Resources for auditing purposes, will then be communicated to the Head of School/Unit.

Stage 4: Implementation of the supplement

Value and duration

Where payment of a market supplement has been approved, it will be for a fixed period of time, normally two years, and, thereafter, will be subject to review every 2 years.

The value of the market supplement will typically be calculated from the difference between the standard University of St Andrews pay rate (including the value of the other benefits) and the median market rate, but will not normally exceed 20% of the base salary.

Market supplements will be subject to National Insurance, PAYE income tax and occupational pension scheme deductions, where the employee is a member of a scheme. These payments will not be subject to cost of living increases. Market supplements will be taken into consideration in the calculation of all statutory and occupational pay entitlements such as sickness, family leave (maternity, paternity, adoption, etc) overtime and redundancy.

Payment process

Supplements will be equated to an annual cash amount, normally paid equally over 12 months through the normal salary system, and will be identified separately from the base salary in documentation and records, including payslips.

On appointment, an employee shall be placed on the appropriate scale point of the graded post (as identified through role analysis and in accordance with the Starting salary policy). Normally, this will be the top non-discretionary point of the grade that the role has been evaluated at. The market supplement will then be applied.

Applying supplements to other posts

Market supplements are paid in relation to specific posts and where it is agreed that the payment of a market supplement is appropriate, it will apply to all directly comparable posts as agreed by Human Resources and will be paid pro-rata for part-time staff. All employees entitled to a market supplement will be provided with a written statement detailing the amount of the supplement, its duration and the review periods.

Withdrawing supplementary payment

Where an employee who is in receipt of a supplement moves to another role within the University that does not attract such a payment, the supplement will cease from the date they take up their new post.

Where there ceases to be an organisational need or market justification for a supplement (see Monitoring and Review below), the post holder(s) will be given written notice that the payment will be withdrawn.

Stage 5: Monitoring and review

Data on all market supplements will be reviewed annually via the Remuneration Committee. Supplements will also be included in any equal pay audits that the University undertakes.

Individual market supplements will be formally reviewed every 2 years by a Human Resources Officer in conjunction with the Head of School/Unit. This will involve a further assessment of the market conditions and organisational requirements to determine (via a Market Supplement Review Form (Word, 15 KB)) whether the payment should be preserved, varied or withdrawn. A recommendation will be put forward to the Director of Human Resources and the appropriate member of the Principal’s Office for formal consideration.

  • Where the outcome of the review is that the supplement is to be increased to reflect the current market conditions, this will take effect in the month following the review date.
  • Where the outcome of the review is that the supplement is to be reduced or withdrawn, the employee(s) concerned will be given three months written notice of the variation, after which time the reduction/withdrawal will take effect.
  • Any continuation of the market supplement will be for a fixed time period, normally two years, and any further extension will be considered at the next review date.