Insights 5 minute read

NHS pay framework for very senior managers

15 May 2025

This briefing provides a summary of the framework, highlighting the most significant areas and giving our view.

Workforce

On 15 May 2025, NHS England (NHSE) and the Department of Health and Social Care (DHSC) published an updated Very Senior Manager (VSM) pay framework and its supporting operational guidance.

This long-awaited publication is designed to help trusts manage the salaries of their most senior roles. The framework provides guidance on setting and approving pay levels for these positions, and aims to ensure fairness, consistency and transparency across very senior pay. It aligns with recommendations from the Messenger Review (2022), the Kark Review (2019) and the Darzi Review (2024).

The plan to develop this new framework was announced by Wes Streeting at the NHS Providers Annual Conference and Exhibition in 2024. This framework differs from previous iterations by focusing on performance-related pay (based on organisational segmentation in the NHS Performance Assessment Framework (NPAF), and removing pay differentiation between trust types.

This briefing provides a summary of the framework, highlighting the most significant areas and giving NHS Providers’ view. If you have any comments or questions on this briefing, please contact Laura Turner, Policy Officer (Workforce), laura.turner@nhsproviders.org.

Key points

The framework applies to chief executives, directors that report to chief executives, and all other designated VSMs in ICBs, NHS trusts and NHS foundation trusts.

This framework aims to standardise remuneration for VSMs in NHS trusts, foundation trusts and ICBs. Provider trusts and ICBs have different pay ranges and the framework considers pay for VSMs working in more than one organisation and in group structures.

For VSMs in provider trusts, remuneration is based on turnover. For VSMs in ICBs, remuneration is based on weighted population.

The framework is effective from 1 April 2025. It will not be applied retrospectively, although remuneration committees are expected to ‘adopt a system-wide approach’ to any VSMs whose pay is currently below the range of their assigned pay band.

VSMs already in post, who earn above the revised pay band, are not expected to have their salaries reduced to meet the framework’s parameters.

Compliance with the framework is not mandatory, but all organisations are expected to comply or explain why not in their annual reports.

Remuneration committees remain responsible for setting the pay of VSMs. VSM remuneration should be based on specific organisational circumstances and the complexity of the role.

All salaries above £170,000 will require central approval from NHSE. NHSE may then send the pay case onto DHSC for further approval if deemed necessary.

All newly appointed chief executives who were previously on a medical contract should transfer to a VSM contract. For medical directors, there will be local flexibility around how to manage contractual changes.

A pay premium of up to 10% of one’s base salary may be awarded if a VSM takes on additional responsibilities, works across multiple organisations, or performs exceptionally well.

The annual pay award may be withheld for a VSM if they are subject to internal performance management processes (conduct or capability) and/or fail to meet appraisal objectives.

Annual pay awards will be withheld for all VSMs of organisations in segment 5 and the recovery support programme under the NPAF, unless they have been in role for less than two years.

There will be a 15% salary incentive for a period of up to 24 months for VSMs moving to challenged organisations.

Framework overview

Aims of the framework

The framework aims to:

Align the approach towards remuneration for VSMs across NHS trusts, foundation trusts and ICBs.

Ensure the total reward package for VSMs remains attractive.

Ensure that experienced VSMs are incentivised to work in challenged trusts.

Align remuneration to operational performance.

Align other national frameworks - such as the recently published board member appraisal guidance - with individual VSM performance.

Support the government in reforming the NHS.

NHSE is responsible for providing oversight and consistent reviews of this pay framework. In future, this responsibility will be passed onto DHSC.

Equality impact assessments

All organisations covered by the framework are expected to complete an equality impact assessment (EIA) on local implementation. All VSMs should be assessed against protected characteristics and remuneration equalised where possible.

Pay setting

The framework acknowledges that each VSM role is unique, and it is the responsibility of each organisation to ensure the remuneration agreed is fair, justifiable, and in line with local arrangements. VSM remuneration should be based on specific organisational circumstances and the complexity of the role, and not subject to automatic increases.

Remuneration committees

VSM salaries are set by their local remuneration committee. The remuneration committee should complete a pay case and justification template when setting pay. This template will be subject to inspection by bodies such as the CQC.

Remuneration committees will need to include a clear rationale for how they have decided to remunerate a VSM in their annual accounts and report. They will also be required to submit an annual pay report to NHSE.

The approval process

All VSM salaries (other than ICB chief executives) above £170,000 will require central approval from NHSE’s pay and approvals team. This is a change from the previous framework where £150,000 and over required central ministerial approval. NHSE will submit any pay cases which do not seem to comply with the framework to DHSC.

For ICB chief executives, central approval by NHSE will be required when the salary exceeds the ‘operational maximum’ as set out in the pay ranges. As with all other roles, the pay case will be sent onto DHSC for approval if the proposed salary does not comply with the framework.

Pay bands and ranges

VSM pay will be determined via pay bands. These will be updated annually in line with government pay awards:

For ICBs, there are four pay bands (A to D). These are determined by weighted population.

For trusts, there are five pay bands (A to E). These are determined by turnover.

Within each band, there is a minimum and maximum range, as well as an ‘exception zone’ to allow for some discrepancy where deemed necessary and appropriately justified. Salaries awarded in the exception zone appear to require central approval, even where the salary falls below £170,000.

The pay ranges are set out in the additional pay ranges document. Where VSMs work across multiple organisations, base pay will be awarded following a review of combined turnover (for provider trusts) or weighted population (for ICBs).

Local factors can be taken into account when setting base pay, including geographical recruitment challenges, and an applicant’s current salary and experience.

Medical VSMs

Chief executives who are also medically qualified, and are appointed after 1 April 2025, should be appointed on VSM terms and conditions.

There is local flexibility when setting pay for new medical directors and applicants can choose whether to move to a VSM contract or retain their current medical terms and conditions. If a medical director chooses to remain on their medical contract, any pay withheld (see page 5) will only apply to their management allowance. They will still be entitled to their annual Doctors’ and Dentists’ Remuneration uplift.

Pay premia

The new framework introduces pay premia of up to 10% of base pay as a financial incentive for trust leaders. This may apply where:

VSMs take on additional responsibilities across two or more roles within their trust.

VSMs undertake a role that spans multiple trusts.

VSMs perform exceptionally well.

Withholding pay awards

In certain circumstances, a VSM may be denied an annual pay award.

For trusts in segments 1, 2, 3 and 4 of the NPAF the annual pay award will be withheld if a VSM does not meet their individual appraisal objectives or is undergoing performance management. The framework states that further guidance may set out different conditions for those in segments 3-4 from 2026/27.

For trusts in segment 5 of the NPAF:

Any VSM currently in an organisation in segment 5 (recovery support programme) will not be entitled to a pay award for 2025/26.

VSMs newly appointed to an organisation in segment 5 will be entitled to pay awards for the first two years of their appointment.

Remuneration committees may be entitled to deviate from the framework in specific circumstances, for example, if a VSM in segment 5 is on maternity leave.

Challenged organisations

The final section of the framework is dedicated to incentivising appointments to challenged organisations (those in segment 5 of the NPAF and in the recovery support programme).

The new framework introduces a non-pensionable recruitment premium of 15% for those moving to challenged trusts. The premium will be paid for up to two years – with the possibility of a further two-year extension if appropriately justified.

Organisations seeking to advertise a VSM salary with a challenged organisation premium must contact NHSE before doing so, to ensure full transparency in the process. Local remuneration committees still have discretion to consider pension and non-pay benefits as part of the overall offer where applicable.

NHS Providers' view

Publication of the new VSM pay framework is long overdue given the importance of ensuring VSM pay remains fair, transparent, and consistent.

Incentivisation and challenged organisations

We welcome the framework’s appreciation of the difficulties trust leaders face, for example by introducing incentives to work in challenged trusts. We welcome the recognition that two years is the minimum time in which it is likely a challenged organisation may be improved. The potential extension of this for a further two years is also sensible.

It is also positive to see that local considerations – such as geographical challenges – can be taken into account when determining pay for very senior managers and some local flexibility within pay ranges is available. We are also pleased to see a standardisation of VSM pay across mental health, community, ambulance and acute sectors.

However, we remain sceptical on whether pay incentives will improve the executive pipeline. Aspirant executive directors are more inclined to cite1 working conditions, levels of stress, lack of autonomy, and a wish to retain a decent work-life balance as the main reasons they do not wish to move into executive positions, rather than pay. This is therefore a critical juncture for the wider reforms to address the conditions and culture of VSM roles: to streamline oversight, reduce duplication, and empower leaders to lead, and succeed in creating an NHS where people aspire to executive positions.

Pay setting and approvals

The increase to the threshold for the central approval of VSM salaries is a welcome step-forward, bringing trust VSMs in line with their ICB counterparts. However, we would prefer to see the central sign-off process removed altogether, or else see an increase to the threshold so that it sits above the highest end of the VSM pay scale, ensuring central sign-off is required only for the most exceptional cases.

We have long argued that turnover should be de-emphasised when determining the pay of trust leaders. Trusts significantly vary in size and function, and turnover is very often affected by systemic challenges. The role of the trust leader in every trust is different and complex, and using annual turnover as a metric to determine success is simplistic. Further, using turnover as a metric to determine pay disadvantages providers with a large geographical reach but smaller annual turnover, such as ambulance trusts.

We are pleased the framework recognises foundation trusts’ legal powers around setting executive terms and conditions.

Performance-related pay

We remain concerned about the principle and practice of introducing performance-related pay in the NHS, and withholding pay for poor performance. There are several reasons for this, including:

Unitary board accountability may be undermined. Rewarding or penalising the executive members of a board when the performance of an organisation is the responsibility of a unitary board (of executives and non-executives) undermines both the important principle and legal position of collective accountability.

Poor behaviours may be incentivised. For example, we know that non-punitive improvement approaches encourage openness and transparency. Aligning executive pay to performance does not incentivise transparency. Indeed, in a recent member survey, one member noted that this proposed direction of travel will only “create [the] wrong behaviours”.

Ambition may be stifled. Executives that take on ambitious objectives are more likely to fail to deliver.

Teamwork may be undermined. When NHS staff at all levels face daily pressures, it may be hard for any remuneration committee to award, or any executive to accept, a bonus.

According to our recent member survey on the financial reset taking place in the NHS, only 20% of trusts agree that withholding pay awards is a good idea. In the comments, one trust noted that “poorly performing trusts are usually the result of a legacy of poor management and culture, which takes years to reverse”, with another stating that “punitive, blame performance management has been proven not to work”.

We were pleased to have had the opportunity to engage with NHSE on aspects of the framework’s content prior to its publication. We hope that there will be future opportunities to engage with the government on further development and the effective implementation of this framework, to ensure further feedback from trusts and ICBs charged with implementing it can be considered.