Policy Number: 3.05 - Compensation
Application: Classified and hourly employees.
To establish, maintain, and administer a compensation plan for positions covered by this policy.
|Agency Business Need||
This is one of thirteen Pay Factors used for pay determination purposes. Agency Business Need describes the specific activities and organizational, financial, and human resource requirements that are derived from the agency’s mission.
|Agency Salary Administration Plan||
This document outlines how agencies will implement the Compensation Management System and is the foundation for ensuring the consistent and equitable application of pay decisions. The Agency Salary Administration Plan addresses the agency’s internal compensation philosophy and policies; responsibilities and approval processes; recruitment and selection process; performance management; administration of pay practices; program evaluation; appeal process; EEO considerations and the employee communication plan. Agencies should review the plan periodically to ensure its continued conformance to state policy and applicability to the agency’s mission and organizational needs.
|Alternate (Pay) Band||(See Salary Range.) A salary range assigned to one or more positions based on agency needs or an approved Competitive Differential. (See Human Resource Management Manual, Chapter 9, Differentials and Supplements.)|
|Budget Implications||This is one of thirteen Pay Factors used for pay determination purposes. Budget Implications consider the short and long-term financial consequences of pay decisions and how salary dollars are managed by an agency.|
|Competitive Differential||Competitive differentials are based on local market conditions and are typically reflected through an Alternate Pay Band, which extends the minimum and maximum salaries of an existing pay band. Competitive differentials are administered as a percentage of base pay that may be added to the pay band to address a particular position, Work Title, Standard Occupational Classification (SOC) or Role because the normal salary range is not competitive due to market conditions in a specific agency and/or geographic location. They may apply to locations in either the statewide (SW) Pay Area or the northern Virginia (FP) Pay Area. (See Differentials.)|
|Competitive Salary Offer||
External: This Pay Practice allows agency management to counter a higher salary offered by an organization outside the Commonwealth to an employee deemed critical to the agency.
|Current Salary||This is one of the thirteen pay factors used for pay determination purposes. Current Salary is the candidate's or incumbent's present base pay compensation, which may be reported as an hourly wage, weekly, semi-monthly, monthly or annual salary. It does not include shift differentials, temporary pay, benefits, overtime, incentive premiums, bonuses, commissions or other similar non-base pay compensation.|
Voluntary: Employee initiated movement to a different position in a lower Pay Band. This move may result from a competitive (recruitment) or non-competitive (employee request) process.Performance or disciplinary: Management initiated assignment of an employee to the same or a different position in the same or lower Pay Band with less job responsibilities that results in a minimum of a 5% reduction in base salary.
|Differentials||Base pay adjustments to make salaries more competitive with the market. Differentials may be applied to Roles, Standard Occupational Classification (or SOC) Titles, Work Titles, Pay Areas, or individual positions in an agency and/or geographic location.|
|Disciplinary or Performance-Related Salary Action||This Pay Practice is initiated by agency management for disciplinary or performance reasons and results in a minimum of a 5% reduction in base salary. (See Demotion: Performance or Disciplinary.)|
|Duties And Responsibilities||This is one of thirteen Pay Factors used for pay determination purposes. Duties and Responsibilities describe the primary and essential work functions performed by an employee or group of employees. Variation in duties and responsibilities helps distinguish one employee from another for comparison purposes.|
|Exceptional Recruitment and Retention Incentive Options||Exceptional Recruitment and Retention Incentive Options may be applied when there are significant recruitment and retention problems for positions that are critical to the agency’s mission and on-going operations. These options include sign-on bonus, retention bonus, project-based incentives, compensatory leave, annual leave, and referral program.|
|Hiring Range||A segment of the pay band included, at agency option, in job advertisements to communicate the salary the agency is willing or able to pay current or potential employees, and used exclusively in the hiring process. (See Salary Range.)|
|In-Band Adjustment||This multi-faceted Pay Practice allows agency management the flexibility to adjust employees’ salaries on the basis of Change in Duties, Professional/Skill Development, Retention, and Internal Alignment.
In-Band Adjustments provide employees potential salary growth by recognizing career progression, and provide management with tools to resolve specific salary issues
|In-Band Bonus||A pay option that allows an agency to provide a lump-sum payment in lieu of a base pay adjustment to an employee for changes in duties, the application of new knowledge, skills or abilities, retention, or internal salary alignment.|
|Internal Salary Alignment||This is one of thirteen Pay Factors used for pay determination purposes. Internal Salary Alignment is a fairness criterion that takes into consideration the proximity of one employee’s salary to the salaries of others who have comparable levels of training and experience; duties and responsibilities; performance; and knowledge, skills, abilities and competencies.|
|Knowledge, Skills, Abilities
|This is one of thirteen Pay Factors used for pay determination purposes. Knowledge refers to acquired principles and practices related to a particular job; Skills refer to acquired psychomotor behaviors; and Abilities are the talents, observable behaviors or acquired dexterity. Competencies are behaviors, knowledge and skills that directly and positively impact the success of the employee. Together KSA’s are the elements listed for job requirements, hiring qualifications or employee credentials. Additionally, KSA’s are a job evaluation consideration for the Compensable Factor, Complexity of Work and the application of acquired KSA’s are essential to the In-Band Adjustment (Professional and Skill Development) pay practice.|
|Long Term Impact||This is one of thirteen Pay Factors used for pay determination purposes. Long Term Impact considers the strategic and financial effect of anticipated future salary costs, staffing changes, salary alignment among employees, career growth and salary reference data changes.|
|Market Availability||This is one of thirteen Pay Factors used for pay determination purposes. Market Availability is the relative availability of suitable, qualified candidates in the general labor market that is subject to the changes in supply and demand.|
|Non-Base Pay Options||Pay options or programs such as In-Band Bonuses, Employee Recognition Programs, Service Awards, or the Employee Suggestion Program, that provide lump-sum payments, leave or non-monetary items to employees. Non-Base Pay Options are not included in the calculation of base pay but are considered part of an employee's total compensation.|
|Pay Area||The Commonwealth's pay plan recognizes two distinct pay areas (1) Statewide (SW) and (2) Northern Virginia (FP), where market conditions require the use of expanded pay ranges. The Statewide Pay Area (SW) applies to positions in all localities in the state except those designated in northern Virginia. The northern Virginia Pay Area (FP) applies to positions located in the counties of Fairfax, Arlington, Prince William and Loudon – and the cities of Alexandria, Fairfax, Falls Church, Manassas, and Manassas Park.|
|Pay Band||(See Pay Structure and Salary Range.)|
|Pay Factors||These thirteen factors are considered by managers for determining and justifying pay actions and include Agency Business Need; Duties and Responsibilities; Performance; Work Experience and Education; KSAs and Competencies; Training, Certification and Licensure; Internal Salary Alignment; Market Availability, Salary Reference Data; Total Compensation, Budget Implications; Long Term Impact; and Current Salary.|
|Pay Practices||These practices provide the rules for setting and changing compensation and include Starting Pay, Promotion, Voluntary Transfer, Voluntary Demotion, Temporary Pay, Role Change, In-Band Adjustment, Disciplinary or Performance-Related Salary Action, and Competitive Offer. (See Attachment A.)|
|Pay Structure||The structure of Pay Bands established by the Commonwealth. This structure consists of 9 stepless Pay Bands.”|
|Performance||This is one of thirteen Pay Factors used for pay determination purposes. Performance considers previous and/or current work accomplishments or outcomes and behavioral interactions that are assessed as part of the Performance Management Program.
Note: All management-initiated salary increases normally are reserved for employees performing at the “contributor” or “extraordinary contributor” level.
|Promotion||This pay practice allows the advancement of an employee to a different position in a higher Pay Band through a Competitive Selection Process.|
The Pay Band
|Action of agency management to move an employee from one position to a different position in the same Role or Pay Band.|
|Re-Banding||This action involves the movement of a Role to a higher Pay Band due to extreme changes in the labor supply or market conditions. Such actions will occur infrequently because of the Pay Band structure.|
|Role Change||This pay practice allows agency management to change a position to a different Role in a higher, (Upward Role Change), lower (Downward Role Change), or same (Lateral Role Change) Pay Band.|
|Salary Range||The pay range assigned to a position for purposes of recruitment, Pay Practices, and compensation administration. A salary range may be the Pay Band; an Alternate Band; a Sub-Band; a Northern Virginia (FP) Expanded Range; or, for competitive recruitment actions, a hiring range, as determined by the agency.|
|Salary Reference Data||This is one of thirteen Pay Factors used for pay determination purposes. Salary Reference Data is a composite of relevant salary information (e.g. average salary range, median salary, weighted average salary, etc.) extracted from available surveys that indicate market pricing for various jobs in the Commonwealth.|
|Starting Pay||This Pay Practice is used to attract highly skilled and competent job candidates (new hires or rehires) to the Commonwealth’s workforce.|
|Sub-Band||A portion of an existing Pay Band that has a defined minimum and maximum salary within that Pay Band. A Sub-Band is a tool used to manage employees’ salaries within Pay Bands based on agency need. Sub-Bands may be established at agency discretion in accordance with the agency's Salary Administration Plan. (See Salary Range.)|
|Supplements||Payments that apply to specific positions designed to address unique needs of the agency. Supplements are not added to an employee's base pay.|
|Temporary Pay||This Pay Practice applies when an agency assigns an employee to perform different key (essential) duties on an interim basis, or for critical assignments associated with a special time-limited project, or for employees serving in an acting capacity in a higher level position, or for military pay supplements. Temporary pay is not added to an employee’s base pay.|
|Total Compensation||This is one of thirteen Pay Factors used for pay determination purposes. Total Compensation includes all forms of cash compensation (e.g. base pay, shift differentials, overtime, on-call pay, bonuses, commission, etc.) and the dollar value of the employer-sponsored benefit package (e.g. health and dental insurance, long and short term disability, paid leave, retirement, life insurance, etc.).|
|This is one of thirteen Pay Factors used for pay determination purposes. Training refers to a specialized course of instruction outside the realm of recognized academic degree programs. Certification refers to a specialized course of study resulting in a certificate upon successful completion. License refers to a licensing credential that is required by law to practice one’s occupation.|
|Voluntary Transfer||This personnel action occurs when an employee moves to a different position within the same or different Role within the same Pay Band. Voluntary Transfers may be accomplished through a Competitive or Non-competitive Process.
NOTE: Non-competitive transfers must be within the same agency or between agencies under a common parent agency. Transfers between different agencies must be accomplished through a competitive process.
|Work Experience And Education||This is one of thirteen Pay Factors used for pay determination purposes. Work Experience and Education is the relevant employment history and academic qualifications of the employee or applicant.|
Makes recommendations to the Governor regarding the establishment and maintenance of a compensation plan for the Commonwealth, monitors agency compliance with the plan, and recommends corrective action when necessary in accordance with its statutory authority.
Employees’ salaries will be adjusted as provided in:
|Agencies should implement compensation actions prospectively. Compensation actions retroactive more than 90 days should be discussed with DHRM prior to implementation.
Agencies must set or adjust salaries based on the following guidelines. Salary decisions must be documented.
Note: Pay practices are to be applied to actions occurring within or between agencies except as noted below.
Starting pay guidelines are flexible to attract a highly skilled, competent workforce. Starting pay decisions are the responsibility of individual agencies.
Salary negotiations for promotions consider the Pay Factors and provisions of the Agency’s Salary Administration Plan.
Salary negotiations for voluntary transfers consider the Pay Factors and provisions of the Agency’s Salary Administration Plan.
Salaries for demotion consider the Pay Factors and provisions of the Agency’s Salary Administration Plan.
Performance Or Disciplinary
Agency management may initiate a demotion for discipline or performance reasons. (See Policy 1.40, Planning, Performance and Evaluation and Policy 1.60, Standards of Conduct.)
In Lieu of Layoff
Agencies may provide temporary pay to an employee who is assigned different duties on an interim basis, or because of the need for additional assignments associated with a special time-limited project, or for acting in a higher-level position in the same or different Role in the same or a higher Pay Band, or for military pay supplements.
Temporary pay is a non-competitive management-initiated practice paid at the discretion of the agency. The effective date for beginning temporary pay also is at the agency’s discretion.
Temporary Pay–Higher Pay Band
When temporary pay is granted for assuming the duties of the same or different Role in the same Pay Band, agency management may grant 0-10% above the employee’s current salary as long as the offer does not exceed the maximum of the assigned Salary Range.
A non-competitive action in which a position is changed to a different Role in a higher, lower or same Pay Band. There is no change in position number.
Salary changes for upward, downward or lateral Role Changes consider the Pay Factors and provisions of the Agency’s Salary Administration Plan.Upward Role Change
Occurs when a position is changed to a different Role in a higher Pay Band.
Occurs when a position is changed to a different Role in a lower Pay Band.
Occurs when a position is changed to a different Role in the same Pay Band.
|In-Band Adjustment (IBA)||A non-competitive pay practice that allows agency management flexibility to provide potential salary growth and career progression within a Pay Band or to resolve specific salary issues.
Salary changes for in-band adjustments consider Pay Factors and provisions of the Agency’s Salary Administration Plan.
In-Band Adjustment Change In DutiesAn increase of 0-10% may be granted to employees who assume new higher-level duties and responsibilities that are critical to the operations of an agency.
In-Band Adjustment Professional/Skill DevelopmentAn increase of 0-10% may be granted to employees who apply new knowledge and skills that benefit the agency and are acquired through job-related training, education, certification, and/or licensure.
In-Band Adjustment RetentionAn increase of 0-10% may be granted to prevent employees from seeking employment outside the agency including:
In-Band Adjustment Internal Alignment
Agencies may provide competitive salary adjustments to employees who are deemed critical to the agency's mission and on-going operations when the employee receives a job offer from another state agency (internal competitive salary offer), or from outside of state government or other entities not subject to the Virginia Personnel Act (external competitive salary offer). A competitive offer may not occur within an agency. When providing competitive salary adjustments, agencies should consider the following guidelines:
When an employee receives a higher salary offer in the same or higher Pay Band from another state agency, there can be only one counter offer from the current agency.
External Competitive Salary Offer
|NON-BASE PAY OPTIONS|
|Non-Base Pay Options allow agencies to provide payment, leave, or non-monetary items to employees (see Attachment B). These pay options or programs include In-Band Bonuses, Awards for Length of Service (see Policy 1.10), Employee Recognition Programs (see Policy 1.20), and the Employee Suggestion Program (see Policy 1.21).|
In-Band Bonuses allow agencies flexibility to provide additional compensation to employees without adjusting employees' base pay. Bonuses offer an option when:
In-Band Bonuses may be provided for the following reasons:
NOTE: In-Band Bonuses for changes in duties or internal alignment should be used only when, due to budget constraints, the agency requires time to develop budget options to fund base pay adjustments.
Agencies should consider the Pay Factors and provisions of the Agency’s Salary Administration Plan when providing in-band bonuses.
|Exceptional recruitment and retention Incentive Options|
Exceptional incentive options are reserved exclusively for situations where employees are extremely difficult to recruit and retain and critical to the agency’s mission and ongoing operations. (See Attachment C.)
These practices apply to new hires to state government (recruitment) and current employees (retention).
Agencies must review and reevaluate the need to continue these Exceptional Recruitment and Retention Incentive Optionsat leastannually based on market availability and the type of competition that exists in the labor market. (See Human Resource Management Manual, Appendix I.)
Sign-On Bonuses are used to encourage individuals to accept employment in specific critical positions, Roles, or Career Groups.
NOTE: Before an agency enters into an agreement, the agreement should be reviewed and approved by the Office of the Attorney General.
Retention Bonuses are used to encourage current employees to remain in specific critical positions, Roles, or Career Groups.
Project-Based Incentives are used to encourage individuals in specific positions, Roles, or Career Groups to remain employed for the duration of key projects that are critical to the agency's operation or mission.
Compensatory Leave incentives are intended to encourage employees to remain in specific critical positions, Roles or Career Groups.
Annual Leave incentives include: (1) providing additional annual leave, (2) advancing annual leave based on repayment from future accruals, or (3) paying employees for a portion of their existing annual leave balances. These incentives are intended to encourage individuals to accept or continue employment in or current employees to remain in critical positions, Roles, or Career Groups.
|Referral Program||Referral Programs are intended to encourage current employees to refer individuals as applicants for critical positions, Roles, or Career Groups.
The following procedures shall be followed when implementing the Referral Program.
|REASSIGNMENT WITHIN THE PAY BAND|
From time-to-time agency business (staffing or operational) needs may require the movement of staff. Reassignment Within the Pay Band is the management-initiated action that is used for this purpose. Under Reassignment Within the Pay Band:
When an agency is experiencing staffing problems for a Role a request for Rebanding may be proposed to DHRM or the General Assembly may initiate a study. The Human Resource Management Manual provides guidelines. The effective date for Rebanding normally will be June 25, unless a different effective date is approved by the Secretary of Administration and the Secretary of Finance because of an emergency situation.Employee increases will be determined cooperatively by DHRM and the affected agency(ies) based on the severity of the problem and available funding.
Differentials are authorized by DHRM to provide payments as base pay adjustments to make salaries more competitive with the market. Differentials may be applied to Roles, Standard Occupational Classification (SOC) Titles, Work Titles, or Pay Areas or be based on geographic locations.
Proposals for additional differentials must be submitted to DHRM with appropriate documentation. (Refer to the Human Resource Management Manual, Chapter 9 for additional information about differentials.)
When an employee moves from one position to another, any differential that might apply to the former position is removed if it does not apply to the new position.When a differential is discontinued because it no longer applies to the Role, SOC Title, Work Title, Pay Area or geographic location, etc., employees affected by the change will retain their current salaries. Employees whose salaries are at or above the new, reduced Pay Band maximum will be frozen until the Role is re-banded or Pay Band adjustments allow for additional salary increases.
Supplements are non-base-pay payments that apply to specific positions under certain circumstances. Supplements apply to situations where employees are doing something in addition to what is normally expected of employees in similar jobs. Supplements are designed to address unique needs of an agency and often reflect market practices used for similar jobs. Supplements are not added to an employee's base pay, but are processed through payroll as "special payments."DHRM authorization is not needed for agencies to use the supplements listed below. However, if an agency desires to implement other types of supplements, information on the desired supplement must be submitted to DHRM prior to implementation. This will allow DHRM to determine the potential for statewide impact.
|Type of Supplements||
This supplement may be provided to employees who have unusual risks associated with their positions that exceed the risks normally associated with the work environment of state employees.
Agencies should maintain documentation that supports
|RETURN TO STATE SERVICE|
All former employees' salaries will be established according to the Starting Pay provisions of this policy.Exception: Employees returning to state service after resigning for military reasons may have their salaries established according the provisions of Policy 4.50, Military Leave. (Also, refer to Policy 1.55, Return to State Service.)
Lwop Conditional (Position Not Held)
|Virginia Sickness And Disability (VSDP)||
Short Term Disability
Long Term Disability (Working)
Long Term Disability
|Return From Layoff||See provisions of Policy 1.30, Layoff.|
|Return From Military Leave||See provisions of Policy 4.50, Military Leave.|
The Department of Human Resource Management issues this policy pursuant to the authority provided in Chapter 12, Title 2.2 of the Code of Virginia.
The Director of the Department of Human Resource Management is responsible for official interpretation of this policy, in accordance with section 2.2-1201 of the Code of Virginia.
Questions regarding the application of this policy should be directed to the Department of Human Resource Management's Division of Agency Human Resource Services
The Department of Human Resource Management reserves the right to revise or eliminate this policy.