Stop the fat cats getting the cream

The Housing Corporation is about to publish guidance on pay and conditions for senior executives – and, at first glance, it is sorely needed.

Large pay-offs to the bosses of registered social landlords are on the increase. Some have been paid in excess of £250,000 or even £500,000. The housing minster called for restraint in a recent Commons debate – it's a view that would be shared by most tenants.

The RSL board is primarily responsible for determining the pay and conditions of senior executives. The board must ensure that such issues are handled responsibly and that terms and conditions are reasonable for an organisation of its size and background, having regard to the sector as a whole.

Schedule 1 of the 1996 Housing Act – which, among other things, regulates the payments and benefits that can be paid to employees – does not prohibit payments and benefits that are contractual from being paid. However, if a board fails to handle such matters competently and is not able to objectively justify such terms, it will become a governance issue.

Large pay-offs to the bosses of RSLs are on the increase. Some have been handed in excess of £250,000

In such circumstances, the Housing Corporation could take regulatory action including the appointment of a special manager, appointments to its board or, in the most serious cases, a transfer of engagements to another RSL.

Boards must ensure that written contracts of employment and appropriate policies are put into place. The contract terms should cover pay, performance-related bonuses (if deemed appropriate), pensions, notice periods and severance terms.

In determining the detail of such terms, the board will want to consider comparators in other RSLs. However, given that some of these payments have been criticised, any benchmarking exercise needs to be handled with caution.