Part of Pay directives

Market modifier directive

Provides details on applying temporary market modifiers to Alberta Public Service management, and opted out and excluded positions.

About this directive

HR Directive No.03/2023
Reference to applicable legislation (act or regulation):Part 1, Section 13, Public Service Act
Part 7, Section 49, Public Service Employment Regulation

Management and opted out and excluded employees appointed or employed pursuant to the Public Service Act.

Note: employees in bargaining unit classifications (position exempt or bargaining unit positions) align with modifiers negotiated within the Collective Agreement.

Last updated:March 2023
Last reviewed:March 2023
Amended by:Alberta Public Service Commission:
Strategic Services and Public Agency Secretariat, Workforce Policy, Compensation and Job Evaluation Policy


To provide clarity, consistency and transparency on applying temporary market modifiers to Alberta Public Service management, and opted out and excluded positions.


This directive describes how temporary market modifiers are applied to address retention and attraction concerns when there is a considerable market gap with compensation for comparable positions, or where there are compression or inversion issues.

Definition of terms

Disclaimer: If there are any discrepancies in how the terms are defined below and the Public Service Act and Public Service Employment Regulation, the act and regulation supersede.

Classification: distinct kind (stream of work) and level of work (level 1, 2, 3) allocated to a position based on the nature of work, responsibilities, scope and complexity.

Deputy head: chief officer of a department, as well as various positions including clerks, officers, and commissioners as prescribed in section 1(d) and section 1(d)(viii)(B) of the Public Service Act.

Management: employees appointed to a position in the Management Job Evaluation Plan, and paid in accordance with Schedule 2, Management Official Pay Plan, as included in the Public Service Employment Regulation.

Maximum salary: the highest rate of a salary range, pay band, pay zone or pay grade.

Notice period: the period of time in which an employee’s salary, classification, etc. are maintained as a result of the Employer providing notice to an employee of a significant change to terms and conditions of employment, the expiry of which corresponds to the implementation of the noted change.

Opted out and excluded: employees in a classification not included in the bargaining unit, who are appointed to a position in the Point Rating Evaluation Plan, and paid in accordance with Schedule 1, Part 1-A, Part 2-A and Part 2-B of the Opted Out and Excluded Official Pay Plan in the Public Service Employment Regulation.

Pay band: a salary range assigned to a management classification [Manager (Band 1), Senior Manager (Band 2), Executive Manager I (Band 3), and Executive Manager II (Band 4)] in Schedule 2 of the Management Official Pay Plan within the Public Service Employment Regulation.

Pay zone: an established boundary, within a pay band, for the Manager (Manager Zone 1, Manager Zone 2) and Senior Manager (Senior Manager Zone 1, Senior Manager Zone 2) classifications.

Salary compression: a situation in which a subordinate’s salary is within 3% of their direct supervisor’s salary.

Salary inversion:a situation in which a supervisor’s salary is lower than their direct subordinate’s salary.

Salary range: a range that includes set minimum and maximum salaries, which are assigned to opted out and excluded, and management classifications that are identified in the Official Pay Plans.


The market modifier is a temporary salary modifier used in exceptional situations when it is demonstrated that a higher salary, beyond the maximum of the assigned classification, is critical to attract or retain employees, or to address compression or inversion. Application of a market modifier is to address a considerable market gap with compensation for comparable positions. The following circumstances are considered when assessing if a market modifier is required:

  • considerable gap with relevant market compensation for comparable positions, or
  • skills shortage for a particular type of position, or
  • exceptional salary compression or inversion between a supervisor and subordinate

A market modifier is only considered for positions in management classifications (contained within Schedule 2, Public Service Employment Regulation), or opted out and excluded classifications (contained within Schedule 1 Part 2-A, Public Service Employment Regulation).

The market modifier shall be applied to the employee’s bi-weekly salary and is pensionable.

Approval process

In accordance to the HR Decision Matrix and the approval level outlined below, a deputy head may request a temporary salary modifier, beyond the maximum of the salary range, pay band or pay zone, to a position in a management or opted out and excluded classification.

*Upon review of the business case, the Commissioner may direct the deputy head to present the business case to the Deputy Ministers’ Human Resource Integration Committee for approval.
Approval processApproval levelTemporary market modifier

Deputy head submits business case to Public Service Commissioner (Commissioner)*.

Commissioner provides advice to Deputy Minister of Executive Council (DMEC).

DMEC approvalUp to 20% beyond the maximum of the salary range, or for 10 or less positions

Deputy head submits business case to Commissioner*.

Commissioner provides advice to DMEC.

Upon concurrence of the Commissioner and DMEC the Minister of the requesting department takes business case to Treasury Board.

Treasury Board approvalBeyond 20% of the maximum of the salary range, or for more than 10 positions (regardless of the temporary market modifier percentage)

In consultation with Compensation Service Delivery (CSD) within the Public Service Commission, a deputy head is required to submit a business case to the Commissioner outlining the justification for a temporary salary modifier and the relevant documentation to support the market modifier request. The following (if applicable) pieces of information should be included as part of the submission:

  • relevant market data demonstrating a market gap with compensation for comparable positions
  • evidence that the particular skill-set required is in high demand and in short supply
  • trending information on attraction or retention issues for the position with historical data on:
    • competition statistics indicating that the department has been unable to fill the position, and the reason given when successful candidates turn down the job offer
    • voluntary turnover rates for the position, and reason for departure collected from the exit interview
  • demonstrate that strategies outside remuneration have been employed without success, such as:
    • approaches to building capacity (for example, internal development, succession planning, partnership/collaboration with educational institutions, etc.)
    • targeted recruitment strategies beyond the standard job posting
  • impact of the recruitment or retention challenge
  • evidence of an exceptional compression or inversion situation based on reporting structure, and requirements of the role
  • number of positions (incumbered and vacant) affected
  • estimated costs

Review process

Market modifiers are temporary in nature, as the initial reason for the approved temporary salary modifier may change as a result of market conditions, organizational and reporting structure changes, classification, or compensation structure changes (structural adjustments, general increases, etc.).

CSD will report annually to the Commissioner and DMEC on the status of all approved market modifiers, by December 31 of each year.

Commissioner and DMEC approval is required for the continuation, increase or decrease, or removal of a market modifier, based on the following information:

  • review of the original documentation with an assessment of any changes that have occurred since initial approval, and
  • rationale and recommendation for continuing, removing, reducing, or increasing the market modifier

The deputy head may initiate a review at any time, with CSD support, if it is known that the initial reason for the temporary salary modifier has changed or is no longer required, and inform the Commissioner and DMEC of the outcome.

Removing or reducing a market modifier

When the review confirms that the temporary salary modifier is to be removed or reduced, the Commissioner will advise the deputy head to inform the employee of the removal or reduction of the market modifier.

The market modifier will be removed or reduced when the original business case and justification for the temporary salary modifier has changed or no longer exists. In these circumstances, employees will receive a notice period of 12 months before the temporary salary modifier is removed or reduced. If the market modifier has an expiry date, the temporary salary modifier will end on the expiry date and the employee will not receive a notice period.

In cases where employees leave the position, due to disciplinary action, common law duty to accommodate, or on a voluntarily basis, the temporary salary modifier will be immediately removed.

Salary treatment (acting versus promotion)

Acting pay situations are intended to be short-term in nature as outlined in the Salary Determination Directive. The employee will maintain their market modifier while receiving acting pay as the employee remains in their base position.

An employee with a market modifier appointed to a position with a classification that has a higher maximum salary, will have the promotional salary increase applied to the employee’s base salary, exclusive of the market modifier in accordance to the Salary Determination Directive, the market modifier will be removed immediately upon promotion. In these situations, the promotional salary increase may be less than what an employee received during an acting assignment as they would have received the temporary salary modifier (acting pay), in addition to the market modifier of their base position.