With more information readily available than ever before, employees expect transparency around salary not just at the outset but throughout their employment. So it’s well worth thinking through the questions your employees might ask about their pay before you get caught off guard. By preparing in advance for some of the more awkward conversations, you are paving the way for a positive outcome – employees that feel listened to and valued.
- Am I being paid fairly?
This is tricky as the instinct is to say yes to avoid any requests for salary adjustment, but it’s best not to answer until you are armed with facts. Show you take the question seriously by suggesting a time to discuss, and do your homework ahead of that meeting. Be open when you speak, and provide details benchmarking where they should be salary-wise for the role they are currently doing. What you decide to do next will depend where they sit on that range.
If they are on the lower end, either address it immediately or agree a plan to review over the coming months. It may be that their performance needs to improve before their pay can be increased. If this is the case, be honest about it and set SMART objectives linked to the company’s objectives.
If they are on the mid to upper end of the range though, and therefore being paid at the correct level in the current market, let them know but perhaps take this time to look at areas where they could take on more responsibility and progress to a more senior role, at which point their compensation level would be revisited.
- Why don’t I earn as much as…?
Employees will inevitably find out how much their colleagues are making, and will be keen to discuss it with you if they discover there’s a negative discrepancy between their wage and that of a peer. In these situations, it’s a good idea to move the focus away from any other individual and back onto the employee in question. Setting up a time to discuss their salary is the first step and it would definitely be advisable to arrive at that meeting with the necessary information to assess whether they are being fairly paid for the actual role they are doing, or if any salary adjustments are needed.
There could be reasons for the difference in pay between two similar roles, such as one requiring more qualifications, or if the skills needed for one of them are harder to recruit. If this is the case, it’s crucial to advise the employee clearly but with sensitivity.
As recent case law shows us, who the employee compares themselves to is vitally important. Shop workers and warehouse staff working for the same company could argue that they are doing work of equal value, but skills, location and experience may all be relevant factors when comparing pay between two people (or two groups of people).
- Can I have a pay rise?
The answer to this completely depends on employee performance, the timing of their question, and the financial situation of your business. If they’re doing a great job, have made it through any initial probation period, and there’s budget available for a pay increase then it makes absolute sense to discuss what level of pay increase may be merited. However if the funds aren’t available or there are questions around performance, it’s important to be open and honest about it, perhaps putting a plan in place to revisit the conversation in, say, six months.
Whatever you decide to do in relation to pay, you must ensure you are not exposing your business to discrimination claims in the employment tribunal. Pay decisions should be made on transparent criteria and not involve anything which could be seen to be sex, age or race discrimination. Someone cannot be worse off because of a period of maternity leave or shared parental leave. They cannot be automatically excluded from pay increases due to long term sickness or absence.