I thank Deputy Munster for this question, which was due for a run at the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach recently but which for legal reasons was not. I am happy to answer as far as I can here and hope the reply will be full and adequate.
The remuneration of chief executive officers of commercial State bodies had historically come within the remit of the Review Body on Higher Remuneration in the Public Sector established in 1969. A major feature of the review body's Report No. 37 in 1996 was its recommendations for the introduction of new remuneration arrangements predicated on the introduction of a fundamental change in the nature of the contracts, including tenure, for such positions.
As a result of the above, the policy adopted by the Government was that statutory positions such as CEOs of State bodies should serve for a limited term, thereby ensuring that top management in the body benefits from fresh perspectives and new thinking. Arising from this, Government policy was that CEOs of State agencies should be engaged on contracts not exceeding seven years. Initially, the standard CEO template contract, which is drawn up by the Department of Public Expenditure and Reform, was an annual rolling contract for a maximum term of seven years. Subsequently, based on legal advice provided to the Minister for Public Expenditure and Reform, the standard template for CEO contracts in commercial State companies was changed to provide for an initial contract period of three years and on expiry, at the discretion of the board, a further single contract period of up to four years.
With regard to the CEOs of agencies within the remit of my Department, there have been a number of challenges taken under the Protection of Employees (Fixed Term Work) 2003 Act, or assertions of a right to a contract of indefinite duration as a result of that Act, which have resulted in a contract of indefinite duration being confirmed. Where CEOs have challenged or threatened to challenge the nature of the fixed-term contracts, it is ultimately a contractual and legal matter between the board and the CEO. My role and that of the Department is to provide the shareholder view. In the addition to these CEOs, there are also two CEOs who are on contracts to retirement age.
The 2003 Act does not come within my statutory functions but my Department has highlighted previously the potential conflict between the Act and the nature of the contracts concluded with CEOs. This has been taken on board and the standard template contract currently provided to new chief executives is for a single fixed-term contract of not more than seven years and not normally less than five years.
