17 Circled") until an adjustment in the salary structure or a promotion to a higher-level position brings their rate within the established range for the position. "Red Circling" an employee's compensation does not apply when an employee is transferred from a position of higher salary grade to one of a lower grade. In such cases, the employee's compensation will be adjusted downward as appropriate to preserve internal equity with other incumbents and the value of the person's skills within that new job. COST-OF-LIVING ADJUSTMENT Cost of living adjustments may be made at the sole discretion of the City Council, based upon the recommendation of the City Administrator. Such adjustments depend on factors including the overall financial health of the City and are neither automatic nor granted on any regular basis. STARTING SALARY New employees will generally be hired at rates within the first half of the applicable Salary Range (between the Minimum and the Mid-Point). Determination of the specific starting salary will be based on previous experience, knowledge, skills, abilities and education. Consideration must also be given to current employees in the position, their experience, qualifications and pay. Internal equity is important, to reflect comparable pay for comparable skills, responsibilities and objectives. Starting salaries will be determined in consultation with the Human Resources Manager prior to making the job offer. PERFORMANCE BASED MERIT INCREASE Performance based Merit Increases are related to the achievements and contributions of the employee as determined during the annual performance evaluation along with business considerations and conditions; budgetary constraints and other factors will also affect such decisions. Merit Increases, if awarded, are generally provided for in amounts determined through the City's annual budgeting process. When budgeted funds are available, the Director may recommend a salary increase by completing a Personnel Action Form and submitting it along with a copy of the employee's Performance Appraisal to the City Administrator for approval. Compensation changes will generally be effective on the first pay period following the City Administrator's approval. Merit pay increases shall not be granted automatically, but will be based on work performance that meets or exceeds expectations. The performance of an employee shall be evaluated not less often than annually by the employee's supervisor or Department Director prior to the employee being considered for a merit pay increase. PROMOTIONAL INCREASES When an employee is transferred or promoted, salary changes associated with the move are generally granted immediately upon the effective date of the change of position (See Transfers and Promotions Section). The amount of a compensation adjustment is determined by the appropriate placement in the Salary Range, comparison to other incumbents for internal equity and the budget for compensation approved for the Department concerned. Section 2. Employee Performance Appraisals It is the policy of the City that each employee's job performance will be evaluated formally on an annual basis; using the employee's anniversary date as the point of reference to conduct the evaluation. Evaluations are conducted by the employee's supervisor. The performance evaluation will be conducted objectively and constructively on the basis of department and City mission, goals and objectives, position responsibilities and the employee's Annual Performance Plan. The employee's performance evaluation is the most important consideration when decisions regarding
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