Ofsted grades, exam results and the wages of previous bosses will be used to decide whether bumper CEO pay packets are given the ministerial green light. Days before Labour’s £174,000 executive wage cap comes into force, the Department for Education has published detailed guidance on how the controls will be applied. It also cautioned trusts already paying over the limit not to assume incoming leaders will automatically be in line for the same salaries. Leora Cruddas But Confederation of School Trust chief executive Leora Cruddas is “unconvinced” officials have “the capacity or capability to make determinations on individual pay awards on behalf of employers”. “This is an example of overreach and micromanagement of trusts as independent entities,” she argued. “We welcome regulation that is risk-based and proportionate but not practices that drive compliance to a lowest common denominator. “This will not unleash greatness in our education system – the practice of regulation as compliance drives out innovation.” Five categories Until now, executive pay has been set by academy trust boards. The current rules state decisions must “follow a robust evidence-based process and are a reasonable and defensible reflection of the individual’s role and responsibilities”. But ministers announced in July they will impose a £174,000 cap on executive pay. Under the new rules – which come into force tomorrow – trusts will need to seek government approval before advertising roles over the threshold, or awarding performance-related bonuses of more than £25,000. Permission will also be needed if trusts want to lift executive pay at a faster rate than that of the trust’s teachers, regardless of the amount. Applications will be ruled on by DfE regional directors. Guidance published this week shows applications will be assessed on five areas: the complete pay package, influence and impact of the role, benchmarking data, trust-specific factors, and the wider labour market alongside location of the job. 1. Overall pay When considering the overall package, DfE officials will consider the amount the executive would take home, their pension contributions, performance-related pay and any additional benefits, like salary-sacrifice arrangements. 2. Influence and impact They will then examine “the nature and extent of the role”, its responsibilities and expected impact on the trust and educational outcomes. For performance-related pay applications, evidence will need to be shown that any “risks of unintended incentives have been considered and mitigated”. An example given by the DfE is one where the executive’s “performance measures could encourage behaviours that conflict with securing good educational outcomes for all children, financial sustainability or good governance”. 3. Benchmarking data The type of benchmarking data required includes “information relating to comparable roles at similar trusts” and the package of the person’s predecessor. But the guidance added: “Trusts should not assume that a new post-holder should be recruited with the same remuneration package as their predecessor.” A Schools Week investigation in July showed 182 trusts paid their chief executives at least £175,000 last year. Ninety per cent had been given a rise. 4. Trust-specific factors The size of the academy chain, including pupil numbers and budgets, and its financial health are among the trust-specific factors considered. Its Ofsted results will also be assessed in cases where “there is need to attract a candidate with a track record of improvement”, along with the role’s complexity if there are planned restructuring or intervention. 5. The market and geography When examining the labour market and location of the job, trusts will need to evidence factors indicative of above-average living costs where they’re based and why the job needs to be in that location. Trusts can also provide details about whether they are in a “competitive or urban location”, or a “rural area where it is difficult to attract high-calibre candidates”. Decisions can be appealed The DfE stressed providing evidence against each factor “will not automatically result in approval”. Instead, the “strength of the evidence provided as a whole” will be assessed to decide if the trust “has made a sufficiently robust case”. Trusts have been told to allow a minimum of 20 working days for a verdict. However, they can lodge appeals if they “can provide additional supporting evidence that was not available at the time of the original application”. Trust can also do this if they want revise their original proposals “following the DfE’s decision, that is for lower remuneration, performance-related pay or a percentage increase above that paid to teachers at the trust”. Appeals must be submitted within two months of notice of the decision. If it’s lodged outside that window, reconsideration will at the discretion of the relevant DfE regional director.