REWARD MANAGEMENT POLICY

PUBLIC SERVICE STAFF RULE F.II REWARD MANAGEMENT POLICY 1. PURPOSE The overall purpose of this policy is to ensure that the Public Service remains able to recruit, retain and motivate staff members at all levels and it does so through the application of job evaluation, grading and remuneration. 2. AIM The aims are twofold: 2.1. By applying job evaluation a systematic, fair and consistent means of measuring the relative value of functional levels within each job category in the Public Service is provided. Job evaluation measures the job responsibilities and not the incumbents of jobs. It also does not measure performance, volume of work or determine pay. 2.2. To ensure that the Public Service can recruit and retain personnel with appropriate competencies necessary to perform the responsibilities required in each job category. 3. REGULATORY FRAMEWORK These rules are issued in terms of Sections 5(2)(e) and 35 read in conjunction with Section 5(3) of the Public Service Act, 1995 (Act 13 of 1995) (hereinafter referred to as the Act). It is approved by the Prime Minister, on recommendation of the Public Service Commission. This policy also complies with the relevant provisions in the Labour Act, 2007 (Act 11 of 2007). 4. SCOPE OF APPLICATION This policy applies to a staff member appointed permanently, temporary or on contract, from outside or within the Public Service/Regional Council, transfer or promotion in an entry or promotion post, additional to the approved establishment or out of adjustment. 5. STAKEHOLDERS 5.1. Prime Minister determines the grading of posts, levels of pay and remunerative allowances in terms of Section 5(2)(b) and (e) of the Public Service Act, 1995. This includes any adjustment thereof or the measures governing its administration. 5.2. Public Service Commission recommends in terms of Section 5(3) of the Public Service Act, 1995, for approval by the Prime Minister the items mentioned in sub paragraph 1.1. 5.3. Adjustments to levels of pay, remunerative allowances and bonuses are done subject to negotiation with the recognised union(s). 1 PSSR F. II REWARD MANAGEMENT POLICY OFFICE OF THE PRIME MINISTER

6. REWARD MANAGEMENT 6.1. Reward management includes the following three key elements: 6.1.1. Internal relativity which is the process by which jobs are assessed and scored against job responsibilities applying the usual method for assessing the weight of each functional level within a job category through the use of an analytical job evaluation mechanism. The result is a rank order of all functional levels within job categories according to a grading structure. 6.1.2. External relativity which is the monetary value (level of pay) attached to each grade in the grading structure. The level of pay is determined by the ability by Government to pay compared to a benchmark. 6.1.3. Performance which relates to how the results of individual performance is assessed, whether through team, individual of the overall performance of the public service sector as a whole. 6.2. These three key elements of reward management are shown diagrammatically in the model below. Internal relativities (Job Evaluation and grading) Interdependencies External relativities (Remuneration) Performance Improvement (PMS) 7. INTERNAL RELATIVITIES 7.1. The internal relativities are determined through the application of job evaluation and grading. It ensures that functional levels are fairly and equitably graded. The following factors are measured: Knowledge which has a theoretical and organisational component Analytical skills Communication and interpersonal skills which has two components namely what is communicated and the application thereof. Physical skills Initiative and independence Policymaking with two components namely advice and impact 2 PSSR F. II REWARD MANAGEMENT POLICY OFFICE OF THE PRIME MINISTER

Physical demands Concentration and interruptions Emotional demands Management of people Development of people Responsibility of financial resources Responsibility of physical resources Working environment 7.2. Each factor has levels and a description for each level (Annex A). The job content and responsibilities of each functional level in each job category is measured using the factors. Each level within each factor has a score and the total score for all the factors indicate the grade attached to the functional level. The grading structure has 15 grades (Annex B) of which Grade 1 is the highest and Grade 15 the lowest. 7.3. All evaluations shall be coordinated and processed centrally by the Office of the Prime Minister, Department Public Service Management. 8. EXTERNAL RELATIVITIES 8.1. Attached to each of the 15 grade is a minimum and maximum salary level which constitutes the level of pay within the Public Service and therefore represents it remuneration policy. The remuneration policy is based on the following principles: 8.1.1. Remuneration is in exchange for work done and consistent with the grade of the post determined through the application of job evaluation and grading. 8.1.2. The payment of a living wage in meeting its Constitutional responsibility [Article 95(i) of the Constitution]. 8.1.3. Total cost to employer of remunerating staff members in the Public Service is limited to the amount Government can afford considering its stated fiscal policy and the services society is prepared to pay for. 8.1.4. That the Public Service occupies a respectable place in society. 8.1.5. Remuneration arrangements are simple and transparent in order for the integrity of the policy and its subordinate measures and systems to be easily understood. 8.2. Based on the said principles the policy aims to meet the following objectives: 8.2.1. The recruitment and retention of sufficient numbers and suitable (competent in terms of knowledge, skills and attitude) persons. 8.2.2. To such end, the maintenance of a reasonable relationship between public service remuneration levels and that applicable to comparable job categories in the labour market in Namibia. 8.2.3. Compatibility with Government macro-economic, development and employment policies. 3 PSSR F. II REWARD MANAGEMENT POLICY OFFICE OF THE PRIME MINISTER

8.2.4. The enhancement of the efficiency and productivity of staff members employed in the Public Service. 8.2.5. The establishment of a culture of professionalism. 8.3. In moving towards achieving the stated objectives, respecting the underlying principles, the review and determination of remuneration follows an annual cycle. Decisions are made in time for the finalisation of the budget proposals each year. In doing so an annual review is done by analysing the economic indicators and forecasts to determine the general relativity between public service remuneration, remuneration levels in the economy, government expenditure on remuneration in relation to GDP and the prospect of what Government can afford in the financial year to come. This is then used in order to come to a mutually acceptable arrangement with the recognised unions. 8.4. Factors influencing remuneration Because remuneration is one of the most important elements of a service benefit package, all factors which may influence it must be considered. In determining the remuneration policy due account is taken of inter alia the following factors: 8.4.1. Economic factors The determination of remuneration is inextricably linked to prevailing economic circumstances. As Public Service pay is paid from taxes, the level of such pay relate directly to what Government can afford to pay. 8.4.2. Demand and supply Pressure from the labour market cannot be ignored when determining salary levels. When higher salaries can be offered, more persons will be attracted to the Public Service and a better choice can be made. When there is an under-supply of persons with the right set of competencies, the Public Service may encounter problems to compete with other sectors in the economy. Incentives for recruitment and retention may then become appropriate. 8.4.3. Social and ethical values Social and ethical considerations necessitate a particular remuneration policy, such as a liveable wage which is calculated according to current norms. The remuneration policy therefore, is based inter alia on the acceptance that every person in a civilised community is entitled to maintain a living standard ensuring him/her of the minimum necessities of life in this environment. 8.4.4. Productivity/Performance Productivity is a non-quantifiable factor where staff members are concerned with the thinking processes and functional activities of administration. If productivity in the Public Service is to be measured or determined it will mean that the input (salaries, 4 PSSR F. II REWARD MANAGEMENT POLICY OFFICE OF THE PRIME MINISTER

wages and equipment) is to be measured in terms of the results (the effectiveness of the service). 8.4.5. Acts, regulations and other directives The remuneration policy is directly or indirectly influenced hereby. Direct control is effected by the acceptance of acts and regulations prescribing the minimum salary and wage and protecting the salary position of staff members. Indirect control is exercised through the fiscal and monetary policy which has an influence on the supply and demand situation. Income tax legislation also plays an important role. 8.4.6. Influence of trade unions Trade unions exert an external influence on the remuneration package as a result of their bargaining power. Certain needs that may exist are also brought to attention. 8.5. Remuneration policy A pay and grading structure (Annex B) applies which consists of two parts: 8.5.1. Grading structure There are 15 grades on the grading structure (Par 7.2). Each job category in the Public Service has one or more functional levels. A grade is allocated to each functional level. Posts are created on the establishment of an OMA based on such functional levels. The number of posts depends on the size of the function to be delivered, the complexity of the job content and the level of supervision required. 8.5.2. Pay structure Once posts are evaluated and graded, a salary scale is allocated to the grade. The pay structure consists of the following parts: (a) Key-scale The key-scale is a list of all the salary notches from the minimum to the maxim. It essentially represents the minimum and maximum salary paid in the Public Service and all the notched in-between (Annex C). The key-scale represents the pay policy in its broadest terms expressed in monetary value. When a general salary adjustment is approved, the key-scale is adjusted with the percentage agreed upon. (b) Salary scale A salary scale is developed from the key-scale. A minimum and maximum salary notch, with notches in-between (salary scale) is attached to each grade). This indicates the pay range for a post or a functional level, which represents the pay policy in its narrowest terms expressed in monetary value. It indicates what Government is prepared to pay for a post on that functional level in the given job category. The salary scale attached to each grade is adjusted in accordance with the key-scale when a general salary adjustment is approved. If a functional level(s) within a job category has been re-graded, the salary scale attached to the new grade 5 PSSR F. II REWARD MANAGEMENT POLICY OFFICE OF THE PRIME MINISTER

becomes applicable. Salary scales for Grades 15 to 13 consists of 14 notches. Grades 12 to 5 have 10 notches each. Grades 4 to 1 have 4 notches each. (c) Salary notch On appointment a person is given a salary notch on the salary scale attached to the grade of the post s/he is appointed in as his/her individual salary but may not move outside the boundaries of the salary scale. 8.5.3. Salary progression A staff member progresses on the salary scale (meaning from one salary notch to the next) on the incremental date until s/he reaches the maximum salary notch on the salary scale attached to the grade. 8.5.4. Personnel Administration Measures A Personnel Administration Measure (PAM) is developed for each job category which indicated in detail what the job category is about and has the following parts: (a) The job category description (b) Grade, post designation and functional levels (c) Description of the functional levels (d) Provision of posts (e) Salary structure and related measures which include the Salary scales Appointment requirements Basis for salary recognition Translation measures Recognition of higher qualifications 8.6. Remuneration structuring 8.7. Remuneration consists of the total value of all payments in money or in kind made or owing to the employee arising from the employment of that employee. Remuneration therefore includes the following: Basic salary Service Bonus Remunerative allowances Overtime Service benefits 8.8. Each is payable separately with its own set of rules. The Public Service offers a Total Fixed Remuneration package, meaning that each benefit is defined and payable separately. 6 PSSR F. II REWARD MANAGEMENT POLICY OFFICE OF THE PRIME MINISTER

8.8.1. Basic Pay Section 8(1)(b) of the Labour Act, 2007 (Act 11 o 2007), defines basic pay as follows: Basic wage means, for the purpose of calculating any basic condition of employment, that part of an employee s remuneration in money including the cash equivalent of payment in kind, if any, as calculated in terms of section 10, paid in respect of work done during the hours ordinarily worked but does not include - (i) allowances, including travel and subsistence, housing, motor vehicle, transport, and professional allowances, whether or not based on the employee s basic wage; (ii) pay for overtime, as defined in section 8(g); (iii) additional pay for work on a Sunday or a public holiday; (iv) additional pay for night work, as required in terms of section 19(1); or (v) payments in respect of pension, annuity or medical benefits or insurance. Basic pay is an annual amount. Depending on the employment status (permanent, temporary, contract or occasional) of a staff member, basic pay can be expressed in a monthly, weekly, daily or an hourly amount. The annual basic salary forms the basis and is calculated as follows: Monthly salary Annual salary 12 12 months per annum Weekly salary Annual salary 52 52 weeks per annum Daily salary Annual salary 260 260 working days per annum Hourly salary Annual salary 2080 2080 normal working hours per week x 40 weeks per annum Basic pay is taxable in terms of Section. of the Income Tax Act. The amount after pension is deducted is taxed. 8.8.2. Remuneration Remuneration is defined in Section 1(1) the Labour Act, 2007, as follows: Remuneration means the total value of all payments in money or in kind made or owing to an employee arising from the employment of that employee; 8.8.3. Service Bonus The service bonus constitutes one 12 th of the annual basic pay and is payable on the pay date of the birth-day month of the staff member. It is fully taxable but nonpensionable. 8.8.4. Remunerative Allowances The basic principle when creating/grading a job is that all aspects of the job must be considered during the job evaluation process in order to arrive at a correct value of the job which culminates in a grade. A salary scale is attached to each grade. In some cases there are circumstances/conditions that are not generic to all staff members in a job category. In such cases a remunerative allowance may be considered to cater for such 7 PSSR F. II REWARD MANAGEMENT POLICY OFFICE OF THE PRIME MINISTER

circumstances/conditions. Should the circumstances/conditions under which the allowance is paid cease for whatever reason, the allowance is suspended or discontinued. Remunerative allowances are reflected on the pay-slip, except those identified as compensatory for which receipts need to be submitted before payment. Remunerative allowances are considered income and therefore fully taxable. 8.8.5. Overtime Overtime is defined in Section 8(1)(f) of the Labour Act, 2007, as follows: Overtime means time worked in excess of the hours an employee ordinarily works in any ordinary working day but does not include any work done on (i) a Sunday, if it is not an ordinary working day for that employee; or (ii) a public holiday; Section 17 of the Labour Act, 2007, provides that a staff member be paid overtime when required or permitted to perform overtime duty. Overtime is payable at a rate of one and one-half of hourly basic pay for work on a normal weekday; and double the hourly basic pay for work on a Sunday or public holiday. Overtime is taxable but not pensionable. 8.8.6. Service Benefits Those benefits provided by the employer to cater to its social responsibility towards staff members. There are three types of services benefits: (a) Compulsory Retirement benefits for permanent staff members Pension gratuity for contract staff members (b) Voluntary Medical Aid Scheme (c) Defined Housing Allowance Home Owners Scheme Transport Allowance Motor Vehicle Allowance 8.9. Confidential nature of remuneration Every staff member is entitled to the confidential handling of his/her remuneration and benefits. The assurance that income from his/her occupation/job is not general knowledge generates confidence with the staff member and it is important that actions be avoided which can be damaging to this confidence. 8 PSSR F. II REWARD MANAGEMENT POLICY OFFICE OF THE PRIME MINISTER

8.10. Availability of remuneration and benefits information The following measures apply in the handling of information on remuneration and service benefits: 8.10.1. Directives relating to salary such as any other human resource matter must be treated as strictly confidential. It is only available to the Human Resources Practitioner concerned with it. However, staff a member must be kept informed as to his/her remuneration and benefits or any adjustment thereof. 8.10.2. Scales of salary attached to grades are indicated in advertisements outside the Public Service. 8.10.3. Brochures on careers in the Public Service may contain selected information. Information concerning conditions of employment and service benefits and directives must be readily available to staff members desiring information there-on. 8.10.4. Recognized trade unions may receive all information to which OMAs are entitled provided that it is regarded as confidential and use it only for official purposes. 8.10.5. All enquiries from institutions other than those mentioned related to remuneration and benefits must be directed to the Office of the Prime Minister Department Public Service Management. 9. PERFORMANCE IMPROVEMENT The third element of the Reward Management Policy is performance improvement. For this purpose, Performance Management (PM) as a systematic and evidenced based process, has been implemented. The purpose of PM is to enforce and support its implementation to instil performance culture in the Public Service. Currently it is not linked to monetary reward. 10. IMPLEMENTATION The Human Resource Office in each OMA is responsible for the administration of this policy in so far as implementation and provision of expert advice, guidance and support to staff members are concerned. 11. COMMUNICATION This policy is available on the EService. However, as not all staff members have access to the EService, HR Practitioners in each OMA must ensure that all staff members are informed of this policy and have access to a hard copy if required. 12. MONITORING As the need arises, stakeholders shall make proposals and suggestions to the Office of the Prime Minister regarding possible changes and amendments to this policy. 9 PSSR F. II REWARD MANAGEMENT POLICY OFFICE OF THE PRIME MINISTER