MIDDLE MANAGEMENT SERVICE Salary levels 11 and 12 Inclusive flexible remuneration package dispensati

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MIDDLE MANAGEMENT SERVICE(Salary levels 11 and
12)Inclusive flexible remuneration package
dispensation Effective from 1 July 2005

• May 2005

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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

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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

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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

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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)

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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

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CURRENT REMUNERATION SYSTEM (1)

• Current system comprises of the following
  elements
• Basic salary (notch)
• Service bonus
• Employers contribution to GEPF
• Employers contribution to registered medical aid
  scheme
• HOA

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CURRENT REMUNERATIONSYSTEM (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)

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WHAT IS AN INCLUSIVEREMUNERATION 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)

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WHAT IS AN INCLUSIVEREMUNERATION 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

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WHAT IS AN INCLUSIVEREMUNERATION 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

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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

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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)
• Employers contribution to GEPF 15 (last offer
  in the PSCBC)
• Service bonus
• Employers maximum contribution to medical aid
  (R12 168 annual amount)
• HOA (R8 508) last offer in the PSCBC

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WHAT DOES THE NEW DISPENSATION ENTAIL? (3)

• Maximum amounts for medical and HOA amounts
  contained in the employers 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

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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

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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

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COMPOSITION OF THEREMUNERATION 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

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STRUCTURE OF THE PACKAGE (1)

• Package for a member admitted to the GEPF
  consists of
• Basic salary (pensionable)
• Employers contribution to pension fund (pension
  related)
• Flexible portion (non-pensionable)

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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

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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 employers and members 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

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STRUCTURE OF THE PACKAGE (4) (Basic salary)

• Set 2 (70 in both levels)
• Allows member to set the basic salary, on which
  the employers and members 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

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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

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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

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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

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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

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EXAMPLE EFFECT OF SET 1 AND 2 ON MMS LEVEL 11
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EXAMPLE EFFECT OF SET 1 AND 2 ON MMS LEVEL 12
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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 (employers 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

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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

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CALCULATION OF ALLOWANCES/PAYMENTS (1)

• Allowances/payments that used to be calculated as
  of members 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 members 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

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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 members 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 members
  salary notch and the basic salary ito Set 1 (75
  or 76) of the minimum package of the higher
  vacant post

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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

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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

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TRANSLATION TO NEWDISPENSATION

• 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

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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
• Members package cannot be implemented on
  PERSAL without the opportunity to structure it

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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.

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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
  

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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

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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

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SUMMARY (2)Package

• Admitted to GEPF
• Basic salary
• Level 11 75/70
• Level 12 76/70
• Employer contribution to GEPF
• Flexible portion

• Not admitted to GEPF
• No components
• Total package constitutes flexible portion
• To structure for same allowances and benefits
  (excl 13th Cheque)

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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 (employers contribution to
  medical aid scheme)
• Housing allowance (amount to be decided by
  member)
• Non-pensionable cash allowance
• (any remaining portion of the flexible portion)

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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 dos and do
  nots
• Tax implications
• Practical examples (case studies)
• Practical demonstration of DPSA MMS Model (Excel
  spreadsheet)