Policy on Salary Increases Under Contribution Agreements for the Delivery of International Development Assistance

1. Objective

1.1 The objective of the Policy on Salary Increases Under Contribution Agreements for the Delivery of International Development Assistance (afterwards referred to as “the Policy on Salary Increases”) is to provide parameters for the application of salary increases relating to positions (in Canada and abroad) assigned by recipient organizations (afterwards referred to as “organizations”) to projects funded by ¶¶ÒùÊÓƵ (“the department”). 

1.2 The Policy on Salary Increases intends to ensure organizations are accountable for respecting approved salary increases on ¶¶ÒùÊÓƵ-funded projects while maintaining a level of control on a position-by-position basis. It also outlines the application, accountability, monitoring, and compliance requirements.

2. Application and effective date

2.1 This policy is effective as of April 1, 2021 and applies to all new contribution agreements approved by the department that are associated with international development assistance projects.

2.2 The policy also applies to existing contribution agreements active on the effective date and to the remainder of their duration to the extent that project budgets can absorb the increases. The policy does not apply retroactively to salary increases already approved by the department.

2.3 This policy does not apply to:

  • subcontracts that organizations enter into under the contribution agreements; annual increases are to be managed as agreed upon by the organizations and subcontractors; and
  • organizational restructuring and salary-review exercises that organizations decide to undertake during the life of a contribution agreement, except for any salary revision exercises due to uncontrollable circumstances (for example, hyperinflation in the project country); such exercises will be assessed on a case-by-case basis and will require pre-approval from ¶¶ÒùÊÓƵ. 

2.4 The policy prohibits the provision of lump sum payments or one-time bonuses. These types of increase are the sole responsibility of the organizations.

3. Parameters

3.1 Salary increases for positions assigned to ¶¶ÒùÊÓƵ-funded projects must be reasonable and reflective of current market rates in Canada and abroad.

3.2 Salaries of organizations’ employees who are working on ¶¶ÒùÊÓƵ-funded projects must be sustainable after the project end date; therefore, the organization must have the capacity to maintain salary increases.

4. Accountability

4.1 Organizations are accountable for, and shall abide by, the following in determining the salary increases of their employees on positions already agreed upon and assigned to ¶¶ÒùÊÓƵ-funded projects:

  • Organizations can provide annual increases based on their collective agreements, the decisions of their boards of directors or the applicable country-specific consumer price index without annual approval from ¶¶ÒùÊÓƵ.
  • Annual salary increases must be consistent with organizations’ internal policies and be based on their regular salary-increase cycles and not on the anniversary dates of their signed contribution agreements.
  • Salary increases can be provided on a non-uniform basis; in such cases, the savings realized on certain positions may be redirected to reward certain employees for retention purposes. However, such increases must be reasonable and must not result in lump sum or one-time bonuses at any point during funded projects.
  • In no case shall salary increases be used to justify requests to increase the ¶¶ÒùÊÓƵ-funded portions of contribution agreement budgets.
  • The application of annual salary increases shall be justified and documented by the organizations in the event of audit.

5. Monitoring and compliance

5.1 The department reserves the right to assess salary increases and to audit any ¶¶ÒùÊÓƵ-funded project that has a contribution agreement to ensure compliance with this policy and, if deemed necessary, to reintroduce additional controls, including annual approvals, as the situation may require.

5.2 In case of non-compliance, the department reserves the right to invoke measures in line with the terms and conditions of a signed contribution agreement. The department also reserves the right to proceed with one or a combination of the following actions:

  • requiring the recipient to pay the amount owing
  • withholding amounts from any future payment
  • terminating the agreement or modifying its terms 

6. Definitions

Consumer Price Index: The consumer price index (CPI) is an indicator of the rate of inflation in an economy because it measures changes in the cost of maintaining a particular standard of living. The CPI is a computation made and issued by an official statistics bureau. 

Contribution: A contribution is a transfer payment subject to performance conditions specified in a contribution agreement. A contribution is to be accounted for and is subject to audit.

Recipient organization: A recipient organization is an organization that has signed the financial instrument, that is, it is an entity that either has been authorized to receive or has received a transfer payment.

Subcontract: A subcontract is the contract agreed to and signed by a recipient organization and a subcontractor.