Policy on Salary Increases Under Contribution Agreements for the Delivery of International Development Assistance – Questions and Answers

1. Can the revised Policy on Salary Increases Under Contribution Agreements for the Delivery of International Development Assistance (afterwards referred to as the “Policy”) be applied retroactively to the previous years of a contribution agreement that will still be in operation when the Policy comes into effect?

The Policy cannot be applied retroactively to already approved salary increases from previous years of a contribution agreement. However, for operational projects as of April 1, 2021, the Policy can be applied to future salary increases that have not yet been approved. In such cases, the application of the Policy cannot result in an amendment to the contribution agreement or an increase to the salary budget of the project.

2. Does the Policy apply to foreign affairs and trade programming?

At this time, the Policy only applies to contribution agreements under the International Development Assistance Program; it does not apply to other Global Affairs Canada (GAC) grants and contributions programs. Should other programs choose to apply this Policy as a part of their programming activities (e.g., by referring to this Policy as a best practice in their business operational guides), the information contained in this Policy does not take precedence over the Treasury Board–approved authorities for the program.

3. Does the Policy apply to grants?

The Policy does not apply to grants; it applies solely to contribution agreements. A grant is an unconditional transfer payment that a recipient organization does not need to account for; it is not normally subject to an audit by the department. As a result, an organization that receives a grant is not required to abide by the same financial reporting requirements for contribution agreements. For grants, organizations are permitted to apply their internal policies where the department has reviewed and deemed them acceptable.

4. Why does the Policy not apply to contracts for professional services?

The Policy was developed specifically for contribution agreements. The department has a separate framework that governs contracts for professional services. For requests for proposals and contracts for professional services, annual fee increases have been replaced with all-inclusive multi-year pricing. Further guidance on contracting can be sought by contacting ContratSPBC@international.gc.ca.

5. How does the Policy take into consideration the different types of salary increase systems used by recipient organizations?

The Policy allows for salary increases to be provided in accordance with the organization’s internal personnel policies, collective agreements, board of director decisions, or an applicable country’s Consumer Price Index (CPI). The provisions of the Policy include any such increases and are not in addition to these increases.  For example, if a recipient organization’s collective agreement provides a salary increase of 2% for a given year, this is the maximum amount eligible as per the Policy, rather than a 2% increase based on the collective agreement plus an additional increase based on the Policy.

6. How does the Policy apply to the internal salary policies of recipient organizations that use different classifications, increments, scales or steps (similar to the Government of Canada)?

Some recipient organizations may implement salary increases based on a collective agreement or internal salary policies that include multiple classifications with different salary increments. In such cases, the Policy allows for pay increases in the salaries of employees working within GAC-funded projects according to the salary increments established by the recipient organization. However, it is important to note that the salary increases allowed under the Policy must be inclusive of, rather than in addition to, these increments or steps.

7. What are the exceptions for allowing a salary restructuring, and how are they applied?

A salary restructuring exercise undertaken during the course of normal operations is not an eligible expense as per the Policy. However, under exceptional circumstances (e.g., changes in a country’s economic and/or political situation, or hyper-inflation in a country), restructured salaries may be considered eligible expenses on a case-by-case basis, supported by satisfactory justification from the recipient organization, and with written approval from GAC’s project management team. It is important to note that any approved salary restructuration cannot result in an amendment to a contribution agreement or an increase to the salary budget of a project.

8. Could a recipient organization have higher salary increases in a given year – whether related to the CPI or for retention purposes – as long as they stay within the negotiated salary limits?

The recipient organization may approve higher salary increases in a given year for a variety of reasons. These increases can be allowed without requiring a one-time approval from GAC’s project management team, provided the increases remain within the pre-negotiated salary budget line item. In no case should such increases result in an amendment to a contribution agreement or an increase to the salary budget of a project.

9. What is the difference between lump sum payments or bonuses and higher salary increases for retention purposes?

The Policy allows recipient organizations the flexibility to determine acceptable salary increases for their employees. Under the Policy, recipient organizations can apply non-uniform rates of increases to their employees, including to provide certain employees with a higher increase for retention purposes. However, an organization cannot use any surplus funds in the existing salary budget of the project to provide one-time lump sum payments or bonuses to any employees. In contrast to higher salary increases for retention purposes, lump sum payments or bonuses are defined as one-time payments provided to one or more employees in recognition of high performance. Lump sum payments or bonuses provided more than once are still considered to be one-time payments or bonuses, and are ineligible under the Policy.

10. Are recipient organizations required to submit detailed salary reports even though annual pre-approval from GAC is not necessary?

Recipient organizations are not required to submit detailed salary reports.  However, GAC reserves the right to question variances, as well as to request the breakdown of salary increases, with supporting documentation, to support its understanding of the increases and the sound financial management of project budgets.