Legal counsel

The Housing Corporation has been consulting over the issue to remunerating board members. The draft guidance principally considers the issue of pay for non-executive board members of registered social landlords (other than charitable trusts) and the proposal to permit an increase in the cap on their pay from £50 to £20,000.

The draft guidance is not intended to address the issue of pay for executive board members – such as chief executives or finance directors – but some important issues do nonetheless arise.

Schedule 1 of the 1996 Housing Act prohibits (save where permitted under a general or separate determination) an executive board member receiving any payment or benefit other than as permitted under the terms and conditions of their employment.

While the executive’s rate of remuneration should sufficiently compensate them for all the duties that he or she undertakes, both as an executive and as an office holder, where RSLs agree to pay non-executives, the temptation may be to use this as a justification to increase the rate of remuneration for executive board members. RSLs should take appropriate advice and consult with the Housing Corporation before doing this.

When recruiting executives, RSLs will need to consider carefully whether or not they should be required at commencement, or subsequently, to agree to accept an appointment as an office holder as a term of their employment. If so, the terms and conditions of employment will need to address two issues: what will happen to their employment if they are removed as a board member and what will happen to their appointment as a board member if their employment is terminated for whatever reason, whether by the RSL or indeed upon resignation by the executive.