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Directive on Executive Compensation - Salary Elements

The Policy on the Management of Executives ensures that there is a consistent approach to managing executives across the public service. One of the directives referenced in this policy is the Directive on Executive Compensation. This fact sheet provides an overview of the directive that is related to salary.

Please consult “Appendix B—Salary Elements of Executive Compensation” of the Directive on Executive Compensation for more details on the provisions listed below.

Application

  • “Appendix B—Salary Elements of Executive Compensation” of the Directive on Executive Compensation applies to employees in excluded positions in the following groups and levels:
    • Executive (EX) Group (levels 01 to 05); and
    • Defence Scientific Service (DS) Group (levels 7A, 7B, and 8).

Salary Entitlements

  • Indeterminate and term executives, and executives employed as casual workers, are paid in accordance with Appendix B and related Treasury Board decisions that affect executive salaries.
  • A part-time executive receives a salary that is pro-rated to the number of hours of work per week as indicated in the letter of appointment.
  • An executive is not entitled to payment for overtime.

Salary Revisions

  • Executive salary ranges are revised periodically, as authorized by Treasury Board.
  • An executive whose performance on his or her commitments is assessed as being at Level 1 (did not meet commitments) is not eligible for revisions in the fiscal year immediately following the year in which the rating was obtained. This means that the executive’s salary can fall below the minimum of the salary range of the executive position.
  • An executive who is on leave with or without pay is eligible for the full percentage increase of the salary revision.
  • The salary-based allowance (e.g., maternity, parental, education allowance) of an executive on leave without pay is adjusted to reflect the revision.

Payment of Retroactive Revisions

  • Retroactive remuneration is paid in an amount equal to what would have been paid to the executive had the revision been approved on the effective date.
  • A retroactive revision in salary ranges applies to executives, former executives, or, in the case of death, the beneficiary or estate of former executives employed during the retroactive period.

Salary on Appointment

Appointment to an Executive Position From Outside the Public Service

  • Persons recruited to executive positions from outside the public service can be appointed at any rate of pay within the applicable salary range of the executive position as determined by the delegated manager.
  • In exceptional circumstances, to facilitate recruitment and retention of executives from outside the public service, where a person’s previous salary exceeds the maximum salary of the executive position, the deputy head can authorize a one-time lump sum payment. This authority cannot be sub-delegated. This lump sum is payable at the beginning of the executive’s second year in the core public administration and is based on successful completion of agreed-upon commitments. The lump sum is established within the following limits:
    • 10 per cent of the salary to a maximum of the position for EX-01, EX-02, EX-03, DS-7A, and DS-7B levels;
    • 15 per cent of the salary to a maximum of the position for EX-04, EX-05, and DS-8 levels;
    • the amount of the lump sum is to be pro-rated against the number of hours worked for executives hired on a part-time basis; and
    • the lump sum is a percentage of the salary on appointment.
  • The following factors are to be considered when determining the rate of pay and the percentage of the lump sum awarded on appointment:
    • internal salary relativities, i.e., the relationship of the proposed salary to that of the executive’s immediate manager, subordinates, and peers;
    • requirement to relocate (within Canada only), i.e., regional economic differences;
    • any automatic revisions that would have been granted to the executive in the former position during the balance of the calendar year in which the appointment occurs;
    • the position of the salary in the new range so as to leave room for future in-range salary movement;
    • cash compensation (salary, performance awards) received before joining the core public administration; and
    • shortage of skills.

Appointment to an Executive Position From Other Occupational Groups Within the Public Service

  • An increase in salary of 5 per cent of the maximum salary of the executive position is the norm. The salary on appointment is at least the minimum salary of the executive position. In exceptional circumstances, the deputy head can authorize an increase in salary of up to 10 per cent of the maximum salary of the executive position. This authority cannot be sub-delegated.

Appointment to a Higher-Level Executive Position

  • An increase in salary of 5 per cent of the maximum salary of the higher executive position is the norm. The salary on appointment is at least the minimum salary of the higher executive position. In exceptional circumstances, the deputy head can authorize an increase in salary of up to 10 per cent of the maximum salary of the higher executive position. This authority cannot be sub-delegated.

Appointment or Deployment to a Position at the Same Level

  • There is no salary increase on appointment or deployment to a position at the same level.
  • In cases of employer-requested appointments or deployments involving relocation within Canada, the deputy head can grant an increase in salary of up to 5 per cent of the maximum salary of the executive position. This authority cannot be sub-delegated. Geographic factors such as high cost of living or remoteness can be taken into account in determining whether to invoke this provision. Any such increase is paid as salary up to the maximum salary and the balance, if any, is paid as a one-time lump sum payment on appointment or deployment.

Appointment of an EX-04 or EX-05 to a Different EX Group Position Level

  • When appointing an EX-04 or EX-05 to an EX Group position at a different level, the deputy head can authorize that the executive continue to be paid at his or her personal classification level.

Demotion or Voluntary Transfer to a Lower-Level Position

  • An executive who is demoted or accepts a transfer to a lower-level position for personal reasons (career change, preference for work location, etc.) is not entitled to salary protection or salary maintenance.
  • When the appointment or deployment is to a lower-level executive position, the executive’s salary is the lesser of:
    • the maximum salary of the new position; or
    • the executive’s current salary.
  • When the appointment or deployment is to a lower-level non-executive position:
    • the demotion or deployment rules under the Directive on Terms and Conditions of Employment apply to the executive; and
    • the Policy on the Management of Executives and its associated directives cease to apply from the effective date of the appointment or deployment to the non-executive position.

Retroactive Reclassifications

  • In the event of retroactive reclassifications, the salary elements of the new group or level are effective as of the date of appointment. The non-salary elements applicable to the new group or level are effective as of the date the reclassification decision is authorized.

Retroactive Promotions

  • In the event of a retroactive promotion, salary and non-salary elements are effective as of the date of appointment.

Salary Protection

  • When an executive’s position is reclassified to a group or level that has a lower maximum salary, the executive’s salary is protected:
    • as long as the executive continues to occupy the lower-level position; or
    • until the maximum salary for the lower-level position matches or exceeds the maximum salary for the higher level.
  • The Directive on the Performance Management Program (PMP) for Executives applies to salary-protected executives. All salary-protected executives are eligible for in-range movements, in accordance with the PMP.

Salary Maintenance

  • Salary maintenance is provided when:
    • an executive is declared surplus under the Directive on Career Transition for Executives and is subsequently appointed to a lower-level position while his or her salary is above the maximum salary of this position; or
    • the salary of a non-executive appointed to an executive position is greater than the maximum salary of the executive position to which the non-executive is appointed.
  • When an executive is declared surplus and is subsequently appointed to a lower-level executive position while his or her salary is above the maximum salary of this position:
    • the executive’s salary is maintained at the rate in effect on the date of the appointment to the lower-level position until such time as it falls within the salary range of this new position; and
    • the salary elements, non-salary elements, and PMP applicable to the lower-level executive position apply.
  • When an executive is declared surplus and is subsequently appointed to a lower-level non-executive position while his or her salary is above the maximum salary of the new position:
    • the former executive’s salary is maintained at the rate in effect on the date of the appointment to the lower-level position until such time as it falls within the salary range of this position; and
    • The salary elements, non-salary elements, and PMP applicable to the executive position cease to apply.

Executives Acting in Higher-Level Executive Positions

  • Executives at the EX-04 or EX-05 level or executives in the Accelerated Executive Development Program (AEXDP) are not eligible for acting pay.
  • An executive is eligible to receive acting pay once three conditions are met. Acting pay is then retroactive to the date the executive began the acting appointment. The three conditions are:
    • the executive’s substantive level must be EX-01, EX-02, EX-03, DS-7A, or DS-7B;
    • the executive substantially performs the duties of a position that has a higher maximum salary; and
    • the executive has acted for at least three consecutive months.
  • In organizations where rotational pools, developmental programs, or appointment-to-level conditions prevail, deputy heads can elect not to provide acting pay to participating executives.
  • Acting appointments are not to exceed 12 months. In exceptional circumstances, deputy heads can approve acting pay situations that exceed this duration. This authority cannot be sub-delegated.
  • The acting salary of an executive is determined as if the executive had been appointed to the higher level.
  • The executive’s substantive salary is increased by 5 per cent of the maximum salary of the acting position. The acting salary must be at least the minimum of the salary range of the acting position.
  • In exceptional circumstances, the deputy head can authorize an increase in acting salary of up to 10 per cent of the maximum salary of the acting position. This authority cannot be sub-delegated. If the rate of increase causes the new salary to exceed this maximum salary, the acting salary is limited to the maximum salary. No lump sum is paid for any amount that surpasses the maximum salary. The amount of the increase is determined by considering such factors as:
    • internal salary relativities, i.e., the relationship of the proposed salary to that of immediate managers, subordinates, and peers;
    • requirement to relocate in cases of employer-initiated relocation (within Canada only), i.e., regional economic differences;
    • any revisions that would have been granted to the executive in the former position during the balance of the calendar year in which the appointment occurs;
    • the position of the salary in the new range so as to leave room for future in-range salary movement; and
    • shortage of skills.
  • An executive who receives acting pay is eligible for revisions applicable to the position in which he or she is acting.
  • When an executive who is already receiving acting pay accepts another acting appointment at the same level as the previous acting appointment without a significant break between the two acting appointments:
    • a new three-month qualifying period does not have to be served in order to be eligible for acting pay in this subsequent acting appointment; and
    • the executive will be paid at the same rate of pay that was paid for the previous appointment.

Executives Acting in Non-Executive Positions

  • An executive is eligible to receive acting pay when temporarily appointed to and substantially performing the duties of a non-executive position that has a higher maximum salary than the executive’s substantive executive salary. An executive who is temporarily performing the duties of a non-executive position can be:
    • assigned these duties without receiving acting pay, in which case the executive remains subject to the Policy on the Management of Executives and its associated directives; or
    • appointed with acting pay, in which case the executive is subject to the applicable collective agreement or terms and conditions of employment of the non-executive position.
  • An executive appointed to a non-executive position on an acting basis (receiving acting pay) becomes subject to the collective agreement or terms and conditions of employment governing the non-executive position. The salary elements, non-salary elements, and PMP cease to apply for the duration of the acting appointment.
  • The substantive salary of an executive acting in a non-executive position cannot exceed the maximum salary of the non-executive position. Acting pay ceases when the executive’s substantive salary exceeds the maximum salary of the non-executive position.

Non-Executives Acting in Executive Positions

  • A non-executive acting in an executive position remains subject to the collective agreement governing his or her substantive position.
  • The regulations for acting pay that appear in section 6 of the appendix to the Directive on the Terms and Conditions of Employment continue to apply to a non-executive acting in an executive position. In addition to these regulations, the following exceptions and clarifications apply:
    • To determine the acting pay, the non-executive’s substantive salary is increased by 5 per cent of the maximum salary of the executive position. The acting salary is at least the minimum salary of the executive position.
    • In exceptional circumstances, the deputy head can authorize an increase of up to 10 per cent of the maximum salary of the executive position. This authority cannot be sub-delegated. If the rate of increase causes the acting salary to exceed the maximum salary, the acting salary is limited to the maximum salary. No lump sum is paid for any amount that surpasses the maximum salary.
    • Acting pay ceases when the non-executive’s substantive salary exceeds the maximum salary of the executive position in which the non-executive is acting.
    • A non-executive acting in an executive position is not entitled to overtime pay.
    • When an increment or in-range increase to the non-executive’s substantive salary occurs, the acting salary is recalculated and any resulting increase is paid to the non-executive.
  • A non-executive acting in an executive position can become eligible to apply for coverage under the Public Service Management Insurance Plan during the acting appointment.

For further information on salary elements of the Directive on Executive Compensation, contact the Executive Management Policy Branch, Office of the Chief Human Resources Officer, by email.

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