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Annual report 2019 to 2020 - Remuneration and people report

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Remuneration report

This section provides details of the remuneration (including any non-cash remuneration) and pension interests of Board members, independent members, the Chief Executive and the Executive Team. The content of the tables and fair pay disclosures are subject to audit.

Remuneration of the Chair and non-executive Board members

Non-executive Board members’ remuneration is determined by the Department of Health and Social Care (DHSC) based on a commitment of two to three days per month.

There are no provisions in place to compensate for the early termination or the payment of a bonus in respect of non-executive Board members.

The Chairman, non-executive Board and independent members are reimbursed for the cost of travelling to Board meetings and to other events at which they represent CQC.

Payments to independent members (subject to audit)

Fees and expenses were paid to independent members of the ACGC on a per meeting basis. During 2019/20 Linda Farrant, who’s term of appointment ended in July 2019, was paid £4k (2018/19: £5k). Payments were also made to Jeremy Boss, £2k, and David Corner, £2k, who were both appointed in January 2020.

Remuneration of the Chief Executive

The Chief Executive’s remuneration is agreed by the Board via the Remuneration Committee with reference to DHSC’s guidance on pay for its arm’s length bodies.

Remuneration of the Executive Team

The Executive Team are employed on CQC’s terms and conditions under permanent employment contracts.

The remuneration of the Chief Executive and theExecutive Team members was set by the Remuneration Committee and is reviewed annually within the scope of the national pay and grading scale applicable to arm’s length bodies.

For the Chief Executive and Executive Team, early termination, other than for gross misconduct (in which no termination payments are made), is covered by their contractual entitlement under CQC’s redundancy policy (or their previous legacy Commission’s redundancy policy if they transferred). The Executive Team has three months’ notice of termination in their contracts. Termination payments are only made in appropriate circumstances and may arise when the employee is not required to work their period of notice. They may also be able to access the NHS Pension Scheme arrangements for early retirement depending on age and scheme membership. Any amounts disclosed as compensation for loss of office are also included in the People report.

Salary includes gross salary, overtime, recruitment and retention allowances and any other allowance to the extent that it is subject toUK taxation. It does not include employer pension contributions and the cash equivalent transfer value of pensions.

No performance pay, bonus or compensation for loss of office were paid to any member of the Executive Team, or former members, during 2019/20.

The monetary value of benefits in kind covers any payments or other benefits provided by CQC which are treated by HM Revenue and Customs (HMRC) as a taxable emolument. Ian Trenholm and Kirsty Shaw have lease cars provided through a non-subsidised salary sacrifice scheme that is open to all permanent CQC staff including members of the Executive Team. The benefit in kind arising from these arrangements are included in the table below, but it should be noted that the costs of the scheme are paid for by the employee.

Fair Pay (subject to audit)

Reporting bodies are required to disclose the relationship between the remuneration of the highest paid director in their organisation and the median remuneration of the organisation’s employees.

The annualised banded remuneration of the highest paid director in CQC during 2019/20 was £205-210k (2018/19: £195-200k). This was 5.2 times (2018/19: 5.1) the median remuneration of CQC’s employees, which was £39,810 (2018/19: £39,029).

In 2019/20 three employees (2018/19: two employees) received annualised remuneration in excess of the highest paid director. The calculation is based on the full-time equivalent employees of the reporting entity at the reporting period end date on an annualised basis. Remuneration ranged from £15-20k to £205-210k (2018/19: £15-20k to £195-200k).

Total remuneration includes salary, non-consolidated performance-related pay, benefits in kind but not severance payments. It does not include employer pension contributions and the cash equivalent transfer value of pensions.

Payments made for loss of office

There were no payments made to any member of the Executive Team, or former members, for loss of office during 2019/20 (2018/19: £nil).

Amounts payable to third parties for services as a senior executive

No amounts were paid to third parties for services as a senior executive during 2019/20 (2018/19: £nil).

Pension benefits

Pension benefits of non-executive Board members

Non-executive Board members are not eligible for pension contributions or performance-related pay as a result of their employment with CQC.

Pension benefits of the Chief Executive and Executive Team

Pension benefits were provided through the NHS Pension Scheme or local government pension scheme (LGPS) for members of the Executive Team who chose to contribute. Pension benefits at 31 March 2020 may include amounts transferred from previous employment, while the real increase reflects only the proportion of the time in post if the employee was not employed by CQC for the whole year.

Cash equivalent transfer values

A cash equivalent transfer value (CETV) is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member’s accrued benefits and any contingent spouse’s pension payable from the scheme. A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which the disclosures apply.

The CETV figures include the value of any pension benefit in another scheme or arrangement that the individual has transferred to the NHS pension scheme. They also include any additional pension benefit accrued to the member as a result of them purchasing additional years of pension service in the scheme at their own cost. CETVs are calculated within the guidelines and framework prescribed by the Institute and Faculty of Actuaries and do not take account of any potential reduction to benefits resulting from Lifetime Allowance Tax that may be due when pension benefits are drawn.

Real increase in CETV

This reflects the increase in CETV effectively funded by the employer. It does not include the increase in accrued pension due to inflation or contributions paid by the employee (including the value of any benefits transferred from another pension scheme or arrangement).

Automatic enrolment

The Pensions Act 2008 introduced measures aimed at encouraging greater private saving by making changes to workplace pensions. From 1 August 2013, all CQC employees entitled to be enrolled into a workplace pension were automatically enrolled, or from their start date if later than this date. All employees enrolled into a workplace pension retain the option to opt out at any time.

Automatic enrolment applies to all employees defined as a worker under the new legislation. This applies to all employees under a normal contract of employment with CQC as well as Mental Health Act Reviewers, Second Opinion Appointed Doctors (SOADs) and all employees on casual or zero-hour contracts. The new rules do not apply to honorary appointments, such as the Chair and Board members, agency workers, Experts by Experience or employees seconded in from other organisations.

CQC operates the NHS Pension Scheme for automatic enrolment, as this is the principal pension scheme for employees recruited directly by CQC. Those not eligible to join the NHS Pension Scheme are enrolled with the National Employment Savings Trust.

NHS Pension Scheme

The principal pension scheme for employees recruited directly by CQC is the NHS Pension Scheme.

Past and present employees are covered by the provisions of the two NHS Pension Schemes. Details of the benefits payable and rules of the Schemes can be found on the NHS Pensions website. Both are unfunded defined benefit schemes that cover NHS employers, GP practices and other bodies, allowed under the direction of the Secretary of State for Health and Social Care in England and Wales. They are not designed to be run in a way that would enable NHS bodies to identify their share of the underlying scheme assets and liabilities. Therefore, each scheme is accounted for as if it were a defined contribution scheme: the cost to the NHS body of participating in each scheme is taken as equal to the contributions payable to that scheme for the accounting period.

In order that the defined benefit obligations recognised in the financial statements do not differ materially from those that would be determined at the reporting date by a formal actuarial valuation, the FReM requires that “the period between formal valuations shall be four years, with approximate assessments in intervening years”. An outline of these follows:

a) Accounting valuation

A valuation of scheme liability is carried out annually by the scheme actuary (currently the Government Actuary’s Department) as at the end of the reporting period. This utilises an actuarial assessment for the previous accounting period in conjunction with updated membership and financial data for the current reporting period and is accepted as providing suitably robust figures for financial reporting purposes. The valuation of the scheme liability as at 31 March 2020, is based on valuation data as 31 March 2019, updated to 31 March 2020 with summary global member and accounting data. In undertaking this actuarial assessment, the methodology prescribed in IAS 19, relevant FReM interpretations, and the discount rate prescribed by HM Treasury have also been used.

The latest assessment of the liabilities of the scheme is contained in the report of the scheme actuary, which forms part of the annual NHS Pension Scheme Accounts. These accounts can be viewed on the NHS Pensions website and are published annually. Copies can also be obtained from The Stationery Office.

b) Full actuarial (funding) valuation

The purpose of this valuation is to assess the level of liability in respect of the benefits due under the schemes (taking into account recent demographic experience) and to recommend contribution rates payable by employees and employers.

The latest actuarial valuation undertaken for the NHS Pension Scheme was completed as at 31 March 2016. The results of this valuation set the employer contribution rate payable from April 2019 to 20.68%, and the Scheme Regulations were amended accordingly.

The 2016 funding valuation was also expected to test the cost of the Scheme relative to the employer cost cap set following the 2012 valuation. Following a judgment from the Court of Appeal in December 2018 Government announced a pause to that part of the valuation process pending conclusion of the continuing legal process.

In 2019/20, CQC’s employer contribution for employees in the NHS Pension Scheme was £20,274k (2018/19: £13,954k) at a rate of 20.68% (2018/19: 14.38%). This rate includes a charge to cover the cost of scheme administration and equates to 0.08% of each active member’s pensionable pay.

For early retirements, other than those due to ill health, the additional pension liabilities are not funded by the scheme. The full amount of the liability for the additional costs charged to expenditure was £nil (2018/19: £62k).

Local government pension schemes

The LGPS changed from a final salary to career average basis from 1 April 2014 and is open primarily to employees of local government, but also to those who work in other organisations associated with local government. It is also a funded scheme with its pension funds being managed and invested locally within the framework of regulations provided by government.

Due to legacy arrangements, CQC initially inherited 17 local government schemes. Membership in the Derbyshire pension fund ceased on 31 March 2014 and during 2019/20 membership in the Surrey pension fund also ceased on 30 September 2019. A cessation charge totalling £661k was payable by CQC, which was equal to the actuary assessed pension deficit at 30 September 2019.

All remaining schemes are closed to new CQC employees. Under the projected unit method, the current service cost will increase as the members of the scheme approach retirement.

Employer contributions for 2019/20, based on a percentage of payroll costs only, were £2,869k (2018/19: £3,212k), at rates ranging between 0% and 41.6% (2018/19: 0% and 41.6%). Employer contributions relating to the largest scheme, Teesside Pension Fund, were £2,519k (2018/19: £2,788k) at a rate of 17.9% (2018/19: 17.9%).

During 2019/20, an indexed cash sum was levied in addition to a percentage of payroll costs in an effort to reduce the pension fund deficits. In total, £1,936k (2018/19: £1,801k) was paid to 12 of the 15 remaining pension funds with amounts ranging from £28k to £515k. No additional sums were paid to Teesside as it currently has sufficient employee members to enable the deficit to be recovered solely by a percentage of payroll, as well as having members who are of an age that allows the deficit to be recovered over a longer period of time.

No pension deficit lump sum payments were made to Surrey pension fund during 2019/20 (2018/19: £nil).

Contribution rates for 2020/21 range between 0% and 49.2% (17.9% for Teesside Pension Fund), with annual cash sums ranging from £7k to £515k (£nil for Teesside).

National Employment Savings Trust

The National Employment Savings Trust is a qualifying pension scheme established by law to support the introduction of automatic enrolment from 1 August 2013.

Employer contributions based on a percentage of payroll costs total £71k for 2019/20 (2018/19: £44k) at a rate of 3% (2018/19: 2%).

People report

The information presented in notes 1 and 10 are subject to audit.

1. Employee costs and numbers

1.2 Average number of employees

The average number of whole-time equivalent employees during the year
  2019/20 number 2018/19 number
Directly employed 3,111 3,025
Other 13 15
Employees engaged on capital projects 0 0

‘Other’ does not include bank inspectors, specialist advisors or Second Opinion Appointed Doctors who are paid per session.

The actual number of directly employed whole-time equivalents as at 31 March 2020 was 3,102 (31 March 2019: 3,210).

2. Employee composition

3. Gender pay gap

The gender pay gap gives a snapshot of the gender balance in an organisation. It measures the difference between the average earnings of all male and female employees, irrespective of their role or seniority.

As at 31 March 2020 the gender split in CQC was 69.5% female employees to 30.5% male employees and this was closely replicated across the quartile data. The data shows that there is no gender pay gap at CQC as employees are paid within salary bands and the mean and median hourly rate of pay are virtually the same across all quartiles. This remains similar to 31 March 2019.

No data is included in CQC’s gender pay gap reporting for bonuses as CQC does not pay performance-related bonuses.

4. Sickness absence data

During 2019/20, the average number of long-term days of sickness per absent employee was 17 (2018/19: 11 days) and the average number of short-term days of sickness was 4 (2018/19: 6 days).

5. Trade union facility time

5.1 Relevant union officials
Number of employees who were relevant union officials during the relevant period 42
Full-time equivalent employee number 41.5
5.2 Percentage of time spent on facility time
Percentage of time Number of employees
0% 0
1 to 50% 42
51 to 99% 0
100% 0
5.3 Percentage of pay bill spent on facility time
Total cost of facility time £52,000
Total pay bill £173,701,000
Percentage of the total pay bill spent on facility time, calculated as: (total cost of facility time ÷ total pay bill) x 100 0.03%
5.4 Paid trade union activities
Time spent on paid trade union activities as a percentage of total paid facility time hours calculated as: (total hours spent on paid trade union activities by relevant union officials during the relevant period ÷ total paid facility time hours) x 100 26.76%

6. People policies and engagement

CQC’s people are involved in a wide range of consultation and engagement on policies on areas such as organisational change and future strategic direction, to make sure all views are heard.

We recognise UNISON, the Royal College of Nurses, the Public and Commercial Services Union (PCS), Unite and Prospect for the purposes of collective bargaining and consultation. Representatives from across the unions make up CQC’s Joint Negotiation and Consultation Committee (JNCC). CQC’s management collaborates with the JNCC on a range of issues affecting employees.

We also have a forum that represents the voices of all people in the organisation (the staff forum). Representatives come together to update the management team on the views of colleagues.

We regularly review our people management policies to make sure they meet best practice guidelines, reflect changes to the culture of CQC and enable us to support all colleagues to develop. We make sure that they are inclusive for people with different protected equality characteristics. In our reviews we always consult with representatives from the People directorate, the unions, the staff forum and the equality and diversity networks. During the year we agreed an allocation of protected time for the Chair and Vice Chair of each equality network to spend on network activities.

All CQC People Management policies are legally compliant and follow the Advisory, Conciliation and Arbitration Service (ACAS) code of practice and best practice. We are currently undertaking a review of our People Management policies which rechecks our adherence to the Equality Act 2010. Supporting all our employees is at the heart of our organisational approach, including those with a disability alongside other colleagues with protected characteristics. More specifically, Managing Sickness Absence, Critical Illness, and our Reasonable Adjustments policies all make reference to the support available to employees with a disability.

7. Health and safety

We have continued to invest significantly in health and safety during the year to make sure that our approach meets legislative requirements and supports colleagues to stay safe at work.

Our main focus has been consolidating personal safety standards to ensure that lone workers are properly protected while carrying out their duties. Building on our zero-tolerance approach to violence and verbal abuse towards our staff, we have developed a Personal Safety Register where all reports of violence and verbal abuse are logged, and red warning flags placed against those who abuse our staff to warn other colleagues.

We continue to provide Health and Safety Awareness training for all colleagues as well as online workstation safety and assessment and safe driving training. We also invested in Personal Safety in High Risk Settings training for all Inspection colleagues.

CQC’s Health, Safety and Wellbeing Committee met four times during the year and approved several health and safety codes of practice, reviewed progress of the flu vaccination programme, and considered reports on internal assurance audits. The Committee approved training for 30 Mental Health First Aiders to support new guidance developed to manage emotional experiences at work and to support the management of work-related stress.

The committee also monitored reports of accidents and incidents to employees which, during 2019/2020, comprised 81 minor accidents and incidents, such as slips trip falls and minor road traffic accidents, and five reportable incidents (under the Reporting of Injuries, Diseases and Dangerous Occurrences (RIDDOR) Regulations). This was an increase compared with 2018/19 following a concerted effort to raise awareness and encourage the reporting of all accidents, incidents and near misses.

At the end of this reporting period we started to implement our response to COVID-19 to support the safe operation of the business and staff and to allow us to respond quickly and effectively to new and emerging risks. Almost 1,000 office-based staff were assisted to work at home and were provided with furniture and peripheral IT equipment to do this safely. An Inspection risk assessment was developed to support the Emergency Support Framework to ensure that, if Inspectors did need to cross the threshold of a provider’s premises, they were fully assessed and safe. Alongside this Personal Protective Equipment was sourced and supplied in line with current infection control and protection procedures and training and guidance documents were developed to support and promote this. Work is currently ongoing to develop safe working procedures with a view to going back to CQC offices when the timing is considered right, ensuring that our offices are set up and equipped to promote safe working in line with Government guidelines.

8. Expenditure on consultancy

CQC spent a total of £66k on consultancy services during 2019/20 (2018/19: £293k) to support our change and transformation programme.

9. Off-payroll engagements

All off-payroll engagements at 31 March 2020, for more than £245 per day and that last longer than six months
Number of existing engagements as of 31 March 2020 4
Of which:  
Number that have existed for less than one year at the time of reporting 1
Number that have existed for between one and two years at the time of reporting 3
Number that have existed for between two and three years at the time of reporting 0
Number that have existed for between three and four years at the time of reporting 0
Number that have existed for four or more years at the time of reporting 0

All existing arrangements as at 31 March 2020 have received approval from DHSC.

Assurance that the right amount of income tax and national insurance is being paid has been received from the individual engaged off-payroll at 31 March 2020.

All new off-payroll engagements, or those that reached six months in duration, between 1 April 2019 and 31 March 2020, for more than £245 per day and that lasted for longer than six months
Number of new engagements, or those that reach six months in duration between 1 April 2019 and 31 March 2020 0
Of which:  
Number assessed as caught by IR35 0
Number assessed as not caught by IR35 0
Number engaged directly (via a Personal Service Company contracted to the entity) and who are on the entity’s payroll 0
Number of engagements reassessed for consistency or assurance purposes during the year 0
Number of engagements that saw a change to IR35 status following the consistency review 0
Number of off-payroll engagements of Board members and/or senior officials with significant financial responsibility during the year 0
Number of individuals on payroll and off-payroll that have been deemed Board members, and/or senior officials with significant financial responsibilities during the financial year 17

10. Exit packages

Redundancy and other departure costs have been paid in accordance with CQC’s terms and conditions following approval by DHSC’s Governance and Assurance Committee. Exit costs are accounted for in full in the year of departure. Where early retirements have been agreed, the additional costs are met by CQC and not by the individual pension scheme. Ill-health retirement costs are met by the pension scheme and are not included in the table.

No non-contractual payments (£nil) were made to individuals where the payment value was more than 12 months of their annual salary.

The Remuneration report discloses that no exit payments were payable to individuals named in that report.

Last updated:
11 February 2021