Principal Executive Office Background
Follow this link for a list of offices in the Principal Executive Office (PEO) structure
The Government first created the designation of Principal Executive Office (PEO) when it introduced reform measures for Government Business Enterprises (GBEs) in 1988. The designation of the Chief Executive as a PEO allowed the Board of a GBE to set remuneration for that office. Boards were expected, however, to consult the Remuneration Tribunal before any remuneration changes were implemented.
The Governor-General declared such offices to be PEOs by way of regulations. Subsequently these offices were listed in Part II, Section 3 of the Remuneration Tribunal Act 1973 (the Act) as meeting the definition of a 'principal executive office'.
The passage of the Public Employment (Consequential and Transitional) Amendment Bill 1999 provided for a decentralised wage fixing system for the Australian Public Service, allowing APS employers to negotiate individual employment conditions with employees.
However, remuneration (including some entitlements such as travel, annual leave and compensation for loss of office) for public office holders was still fixed by the central body, the Remuneration Tribunal. In moving to a decentralised remuneration system for some of these office holders, the Government saw the PEO designation as a suitable vehicle to effect the necessary reforms, with some amendments to strengthen the existing legislative framework.
In December 1999, the Remuneration Tribunal created a new PEO structure, in Determination 1999/15 - PEO Classification Structure and Terms and Conditions. In May 2001 the Act was amended to strengthen the integrity of the PEO structure and to ensure that employing bodies were bound to act within the parameters set by the Remuneration Tribunal. The current Remuneration Tribunal (Principal Executive Offices – Classification Structure and Terms and Conditions Determination (the PEO determination) is on the PEO page.
An office can be designated as a PEO through a declaration made by the Minister responsible for the administration of the Act (currently the Minister for the Public Service). Those offices suitable to become PEOs have been progressively moved into the structure.
The Act defines a 'principal executive office' to include certain named offices (the original GBEs) and 'any other office or appointment declared by the Minister'…' (section 3).
Role of the Tribunal
- to determine, and maintain, a classification structure for PEOs, the terms and conditions, and any other matter significantly related to the classification structure (sections 5(2A) and 7(3D))
- to provide advice to the Minister with responsibility for the Remuneration Tribunal Act (section 3A(6)) about:
- whether an office is suitable to be a PEO
- the Total Remuneration (TR) for the PEO; and
- the appropriate classification Band
- to make recommendations on any matters relating to PEOs (section 7(3E)).
Role of the Minister with responsibility for the Act
Under sections 3A, 3B and 3C of the Act the Minister may, after taking account of the Tribunal's advice, make the following declarations which will be published in the Commonwealth of Australia Gazette:
- an office is to be a PEO
- an office is to be assigned to a specified classification within the PEO structure. The assignment may be permanent or temporary (a special case may arise where an office holder receives a personal loading that will apply only to that person and not to successive occupants); and
- a specified person, authority or body is to be the employing body.
The Minister may also fix the commencing TR for the office by advising the employing body in writing. This is not published in the Gazette.
Role of the employing body
Under section 12C of the Act the employing body for a PEO may determine terms and conditions (including remuneration and allowances) applying to the office, providing that such terms and conditions are not inconsistent with the PEO framework determined by the Tribunal.
Employing bodies are required to advise the Tribunal of any change to a PEO's terms and conditions, including remuneration, within 4 weeks of the decision. They are also required to advise the Tribunal of the terms and conditions of their PEO by 1 December each year for the preceding financial year. The PEO - Notification of Remuneration Form (32kb) RTF (104kb) is used for this.
The Tribunal’s Guide to the Principal Executive Office (PEO) Structure includes guidance on performance-based payments for PEOs.
The general provisions for domestic and overseas travel by office holders are in the Remuneration Tribunal (Official Travel) Determination, (the travel determination). The Tribunal generally advises a travel tier for each PEO. If no advice is provided, offices in Bands A, B and C are eligible for Tier 2 travel and offices in Bands D and E are eligible for Tier 1.
Travel within Australia - for each travel tier, Schedule A of the travel determination sets out the travelling allowance rates payable for the various Australian cities and towns. There is no payment where the travel does not involve an overnight absence.
Overseas travel – the travel determination provides for overseas meals and incidentals rates to be paid in accordance with the rates published annually by the Australian Taxation Office (ATO) in its taxation ruling dealing with reasonable travelling allowance amounts. The Taxation Determinations can be found on the ATO website for the relevant year.
Motor vehicle travel - motor vehicle allowances are also contained in the travel determination.
The Tribunal has issued guidelines on relocation assistance which apply to PEOs who accept appointment to an office in a geographic locality different to their residential location.
Some provisions applying to leave are set out in the PEO determination.
Early loss of office
The Tribunal has determined a level of financial compensation for a holder of a public office where there is early loss of office (some exclusions apply). Where a term of appointment expires (i.e. there is no early termination) no termination payment is available.
PEO loss of office provisions are set out in the PEO determination.