Updated DfE Guidance on Setting Executive Salaries in Academy Trusts

The Department for Education (DfE) has released updated guidance for academy trusts on determining executive pay, reinforcing expectations around accountability, governance, and the responsible use of public funds. 

The revised guidance builds on existing requirements within the Academy Trust Handbook, with a clear focus on ensuring that executive pay decisions are both transparent and defensible. Trusts are reminded that remuneration must reflect the complexity, scale, and responsibility of each role, and should not be benchmarked solely against other sectors or inflated by market competition. 

Key themes within the updated guidance 

1. Strong governance and decision-making.Trust boards remain accountable for setting executive pay and must demonstrate that decisions are made through a robust, evidence-based process. The DfE expects boards to ensure that executive pay aligns with the trust’s values, public expectations, and the principles of fairness. The DfE expects boards to regularly review executive pay arrangements to ensure they remain appropriate and sustainable.
2. Evidence and benchmarking. While benchmarking can be a useful reference point, the guidance cautions against relying solely on comparisons with other trusts or external organisations. Instead, boards should assess the specific context of their trust, including performance, pupil numbers, geographic factors, and leadership structure. 
3. Evidence and benchmarking. While benchmarking can be a useful reference point, the guidance cautions against relying solely on comparisons with other trusts or external organisations. Instead, boards should assess the specific context of their trust, including performance, pupil numbers, geographic factors, and leadership structure. 
4. Transparency and public accountability. The DfE emphasises the importance of publishing executive pay details as part of the trust’s annual report and ensuring that remuneration decisions can withstand external scrutiny.  
5. Managing pay restraint and value for money. Trusts are reminded that executive pay should demonstrate value for money and align with public sector pay restraint principles. The DfE continues to challenge trusts where pay levels appear disproportionate or inconsistent with performance outcomes. 

What this means for academy trusts 

This update reinforces the need for boards to approach executive pay decisions with transparency, evidence, and strong governance. Trusts should review their remuneration processes, committee terms of reference, and decision-making documentation to ensure compliance with the latest DfE expectations. 

Trusts may wish to consider whether commissioning external advice or benchmarking of their executive roles would provide additional assurance and objectivity, particularly where roles are complex or remuneration levels are under scrutiny. Trustees should consider whether internal HR teams are sufficiently objective in this regard.  

For expert advice on how Edwin People can support your Board with an external executive pay review, please contact us at [email protected] for a confidential discussion with our senior team.