Response to consultation Paper on draft RTS on revised identified staff for remuneration purposes
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Example: Within the HR function, there can be managers heading units responsible for managing of general, ongoing and rather technical support in employees' matters; such as issuing work certificates, facilitating onboarding procedure, preparing documentation on job promotions/salaries, etc. Such managers report to the institution's HR director, so due to the art. 2 and art. 6, they will be classified as "identified staff", even though their professional activity does not directly affect the risk profile.
For these reasons, we believe that basing solely on the hierarchical position and reporting lines (described as option B in the Accompanying documents) with regard to staff members heading subordinated units is not the best solution. EBA could consider, for example, mixing the Option A and Option B in this respect to avoid classyfing staff members as "identified Staff" only due to their "formal" postion in a given institution. As a result, with regard to the heads of subordinated units, art. 2 could contain criteria related to both i) hierarchical position and ii) performed tasks.
Alternatively, art. 6 could be changed in order to list more specific areas of responsibility than "dealing with human resources", "performing economic analysis", "legal affairs" etc.
If necessary, we are happy to discuss the exact wording if any of our proposals is considered interesitng.
However, we would like to propose to exclude from calculation of art. 8 point 2 retention bonuses (and similar payments) that are awarded due to the exceptional situation of a given institution (e.g. due to the restructuring process). Such payments are usually awarded only once to retain key employees when a given institution faces difficult times. As a result, such staff members may become "identified staff" only in the year when the retention payment is awarded, whereas in the following years, he/she will not meet the quantitive criteria. Consequently, they should be covered by the CRD remuneration regime for this one year and uncovered in the following years. To our mind, it is over-complicated and disproportionate to cover such employee with CRD remuneration regime (and consequently change his/her employment terms and conditions, apply deferral, etc.) due to such one-time remuneraion rise.
If necessary, we are happy to discuss the exact wording of our proposal
For example, falling within the scope of the "identified staff" affects the essential contractual terms and conditions between the staff member and the institution. In other words, usually if employee is the "identified staf" he/she should sign the new contract or amend the old one. If the competent authority decides whether the staff member is classified as the identified staff, the intitution and the staff member should hold off on signing/amending the contract until the authority issues its decision. It impedes or even paralyses the negotiation and recruitment process with the staff member. Moreover the delay and uncerteinity in contracting an important staff member is usually unbeneficial for the institution.
Instead, we propose that competent authorities to perform "ex post" control whether the exclusion was proper and justified. If the exclusion was not proper and justified, the competent authority may impose its administractive sanctions. Such solution will be less intrusive for institutions.
If necessary, we are happy to discuss the exact wording of our proposal
We do not have comments regarding other provisions of the art. 7.
Question 1: Are the Subject matter, scope and level of application within Article 1 appropriate and sufficiently clear?
NA.Question 2: Are the definitions within Article 2, 3 and 4 appropriate and sufficiently clear?
Basically yes. However, regarding the definition of "managerial responsibility" (art. 2, particularly point (b)), in our opinion, the definition is to too general and thus too wide. Consequently, there are managers that, in fact, do not have impact on risk profile due to the purely technical scope of their responsibilities, but they will be classified as "identified staff".Example: Within the HR function, there can be managers heading units responsible for managing of general, ongoing and rather technical support in employees' matters; such as issuing work certificates, facilitating onboarding procedure, preparing documentation on job promotions/salaries, etc. Such managers report to the institution's HR director, so due to the art. 2 and art. 6, they will be classified as "identified staff", even though their professional activity does not directly affect the risk profile.
For these reasons, we believe that basing solely on the hierarchical position and reporting lines (described as option B in the Accompanying documents) with regard to staff members heading subordinated units is not the best solution. EBA could consider, for example, mixing the Option A and Option B in this respect to avoid classyfing staff members as "identified Staff" only due to their "formal" postion in a given institution. As a result, with regard to the heads of subordinated units, art. 2 could contain criteria related to both i) hierarchical position and ii) performed tasks.
Alternatively, art. 6 could be changed in order to list more specific areas of responsibility than "dealing with human resources", "performing economic analysis", "legal affairs" etc.
If necessary, we are happy to discuss the exact wording if any of our proposals is considered interesitng.
Question 3: Are the qualitative criteria within Article 6 appropriate and sufficiently clear? Having in mind that the qualitative criteria are comparable to the ones included in the RTS currently in force, respondents are asked to focus on the amended criteria within points 1 and 6.
NA, but see our comments to the Question 2, as art. 2 and 6 are closely related.Question 8: Do respondents with the findings of the impact assessments? Where respondents have comments on the additional cost and benefits created by the consulted RTS, comments are most helpful if they detail the costs and the responsible drivers as well as the challenges when applying the criteria set out within the RTS. Where respondents find that the criteria lead to an identification of staff that does not have a material impact on the institutions risk profile, comments are most helpful if they detail the numbers of staff identified under the criteria and the main reasons why those staff members would systematically not have a material impact on the institutions risk profile.
NAQuestion 7: Considering that the RTS will apply to all credit institutions, are there specific provisions within the RTS that would not be appropriate to be applied to small and noncomplex institutions and should be replaced by different provisions? Where this is the case, respondents are provided to make concrete examples of issues created and alternative approaches that would ensure that all staff whose professional activities have a material impact on the risk profile of the institution are identified.
NAQuestion 6: Are the provisions within Article 8 appropriate and sufficiently clear?
The provisions are sufficiently clear.However, we would like to propose to exclude from calculation of art. 8 point 2 retention bonuses (and similar payments) that are awarded due to the exceptional situation of a given institution (e.g. due to the restructuring process). Such payments are usually awarded only once to retain key employees when a given institution faces difficult times. As a result, such staff members may become "identified staff" only in the year when the retention payment is awarded, whereas in the following years, he/she will not meet the quantitive criteria. Consequently, they should be covered by the CRD remuneration regime for this one year and uncovered in the following years. To our mind, it is over-complicated and disproportionate to cover such employee with CRD remuneration regime (and consequently change his/her employment terms and conditions, apply deferral, etc.) due to such one-time remuneraion rise.
If necessary, we are happy to discuss the exact wording of our proposal
Question 5: Are the provisions within Article7 appropriate and sufficiently clear?
In our opinion, the mechanism of art. 7 points 3-5 could be unworkable from the operational perspective. The necessity to get prior approval from the competent authority in order to exclude the staff member significantly limits the flexibility of institutions and can prolong the identification procedure in institutions. It also may have repercussions for the employment (or similar) relationship between a given institution and a given staff member.For example, falling within the scope of the "identified staff" affects the essential contractual terms and conditions between the staff member and the institution. In other words, usually if employee is the "identified staf" he/she should sign the new contract or amend the old one. If the competent authority decides whether the staff member is classified as the identified staff, the intitution and the staff member should hold off on signing/amending the contract until the authority issues its decision. It impedes or even paralyses the negotiation and recruitment process with the staff member. Moreover the delay and uncerteinity in contracting an important staff member is usually unbeneficial for the institution.
Instead, we propose that competent authorities to perform "ex post" control whether the exclusion was proper and justified. If the exclusion was not proper and justified, the competent authority may impose its administractive sanctions. Such solution will be less intrusive for institutions.
If necessary, we are happy to discuss the exact wording of our proposal
We do not have comments regarding other provisions of the art. 7.