32. Section 38 bodies

oFile Ref and link to page number at index
Lead topic: Pay
Sub-topic: Top-Up
Payments in Section 38
bodies in Health sector
Contact: Tom Clarke
Ext: 5435
FAST FACTS
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D/PER is currently examining D/Health proposals in relation to appropriate salary
levels for future CEO’s of Section 38 bodies, following a review carried out by
D/Health in conjunction with the HSE.
The D/Health proposals cover CEO’s in Voluntary Hospitals and Social Care
organisations which vary significantly in terms of size, complexity, budgets etc.
D/PER has also received proposals from D/Health in relation to top-up payments to
certain individuals in Section 38 bodies which are not in line with Government pay
policy in an effort to address issues identified following an Internal Audit of Section
38 agencies in the Health sector. Some further information has been sought by D/PER
to facilitate detailed consideration of the proposals submitted.
Q&A’S
Why is a review of salary levels of Senior Managers in Section 38 bodies necessary?
The review of salary levels for CEO’s of Section 38 agencies was carried out by the
D/Health in conjunction with the HSE on foot of Recommendation No. 20 in the HSE’s
Internal Audit report which stated that a review of the remuneration rates of CEOs and
senior management was required for a number of organisations, particularly in the social
care area, to ensure pay rates reflect the comparable size, scale and complexity of each
organisation. Furthermore, the D/Health consolidated salary scales do not currently
contain approved rates of pay for the CEO’s of a large number of Section 38 agencies
(e.g. Social Care Agencies) and the approved rate for a number of the CEO posts was no
longer clear. It is essential that there is no ambiguity around the approved rate of pay for
senior managers in the health service in light of the evidence of payment of unapproved
allowances and salaries that the HSE’s Internal Audit Report uncovered within Section
38 agencies.
What is D/PER doing about unsanctioned payments in Section 38 bodies?
While D/PER creates the policy on payments and sanctions the salary rates within the
Health Sector, it cannot monitor implementation or audit compliance. The latter is properly
a matter in the first instance for the Department of Health and HSE, to ensure that
Government policy on pay is being complied with. A situation whereby a publicly funded
body in the voluntary sector can generate significant increased costs which ultimately fall
on the public purse without appropriate sanction is not tenable. We support the view of
the Minister for Health that departures from public service pay policy are unacceptable.
This is underscored by the fact that such payments have on occasion been paid on a
pensionable basis, thereby accruing an ongoing cost to the State. D/PER has supported the
work of the Department of Health and the HSE, in addressing the payment of unsanctioned
amounts being made in the Section 38 (Health Act) Agencies and will continue to do so as
appropriate.
Why not simply cease any unsanctioned payments?
Unsanctioned payments that have not been appropriately sanctioned can give rise to
contractual expectations or demands which may compromise public service pay policy. In
line with Government pay policy, and as part of the ongoing process to reach compliance,
Section 38 organisations seeking to make a business case for the continuation of an
unapproved allowance were invited to submit their business cases for consideration by the
HSE. Business cases were also required for the continued payment of allowances which
are not encompassed by or in line with the D/Health Consolidated Salary Scales but may
have been sanctioned in the past. Proposals from D/Health have been recently received by
D/PER to address issues identified following an Internal Audit of Section 38 Agencies in
the Health Service. Some further information has been sought to facilitate detailed
consideration of the proposals submitted.
Additional material on next page.
Briefing Note: Agencies funded under Section 38 and Section 39 of the Health Act 2004.
1. Overview
The HSE funds over 1,900 voluntary agencies to a value of approximately €3.1 billion. Forty-four of
these agencies, accounting for €2.5 billion are funded under section 38 of the Health Act 2004, while the
remaining agencies of which there are more than 1,800 are part-funded under section 39 of the Health
Act.
Section 38 agencies are organisations that are funded, under Section 38 of the Health Act 2004, to
provide a defined level of health and personal social services on behalf of the HSE. Section 38 agencies
include both acute and non-acute organisations. The employees of bodies that are funded under Section
38 are classified as public servants. They are subject to the standard salary scales for the health sector
and have access, in the main, to public service pension schemes. The employees of Section 38 agencies
are included in in public service employment numbers.
Section 39 agencies are agencies under Section 39 of the Health Act 2004 where the HSE provides a
grant to allow the agency to provide services similar or ancillary to the HSE. The governance context in
which the HSE engages with section 39 agencies is distinctly different from that which applies in the
case of section 38 agencies. For example, the employees of section 39 agencies are not public servants,
are not members of public sector pension schemes and, unlike their section 38 counterparts, are not
directly bound by the Department of Health consolidated pay scales.
2. Superannuation arrangements
In general the employees of Section 38 bodies are regarded as Public Servants and the majority of
Section 38 employees have access to a public service pay as you go pension scheme. The basis for this
is either (i) a statutory provision in relation to bodies established under statute or (ii) where granted
access by the Minister on an administrative basis. The latter provision applies particularly to the
disability organisations that are members of the Nominated Health Agencies Superannuation Scheme
(NHASS).
However in some Section 38 bodies some/all employees may, for various reasons, be members of a
funded (private) pension scheme. In such cases the employer normally makes a contribution to the
scheme and therefore the scheme is considered a public service pension scheme in the context of the
FEMPI Act 2009; but it is not what is more generally understood as a Public Service pay as you go
scheme.
The main public service pension schemes that operate in Section 38 organisations are as follows;
Voluntary Hospitals Superannuation Scheme (VHSS), Nominated Health Agencies Superannuation
Scheme (NHASS) and the Local Government Superannuation Scheme(LGSS).
There are a number of public service bodies that have a proportion of posts which historically either
are or were funded from other sources such as a grant in aid or other non-exchequer funding. The
employees concerned currently have access to funded (private) pension schemes to which the
employer makes a contribution and the employees are therefore subject to PRD under the FEMPI Act
2009.