As an employer, you will likely face the delicate situation of employees asking for pay rises.
With the cost-of-living crisis and rise in inflation, these requests will have become more frequent as people look to keep up with spiralling living costs.
Each month, the Office for National Statistics (ONS) surveys collect the salaries of 12.8 million workers to produce the median salary for the UK.
The latest data from the ONS indicates that the median average salary is estimated to be £31,772.
However, how much a person earns often depends on their age, skill and where they live.
When it comes to pay rise requests, employers need to tread a thin line between granting requests and retaining talented staff you cannot afford to lose, while keeping an eye on employment costs in what is still a tough financial climate.
Handling these situations correctly and professionally is crucial to keeping employee morale high and your business running smoothly.
Encourage open communication
Asking for a pay rise can be an awkward, uncomfortable experience for employees, so it is important to make employees feel comfortable discussing their salary expectations.
Encourage open and honest discussions about pay and make it a regular part of performance reviews.
This helps to prevent surprises and ensures that both parties have a clear understanding of the expectations.
Align pay with performance and evaluate requests objectively
Regularly evaluate your employees’ performances, acknowledge their accomplishments, and align their pay accordingly.
This approach encourages productivity and gives employees a clear understanding of how they can increase their earnings.
When requests for pay rises are made, objectively evaluate the requests based on performance and the last time the employee was given a pay rise. Try and avoid an instant response that may not be in line with objective thinking.
Consider the business’s financial position
While it is important to reward deserving employees, you must also consider your business’s financial situation.
Can your business afford the requested pay rise? If not, it’s important to communicate this openly to the employee while also discussing potential prospects.
It is better to delay a pay rise than to overstretch your finances and potentially jeopardise your business.
If a pay rise is not feasible, consider other alternatives. This could include additional benefits such as more flexible working hours, opportunities for training and development, or an enhanced bonus scheme.
Sometimes, non-monetary rewards can be just as effective in demonstrating that you value your employees.
Communicate your decision clearly
Once you have made your decision, communicate it clearly and respectfully. If you approve the pay rise, be sure to highlight the employee’s achievements and contributions. If you decline, explain your reasons, and provide constructive feedback on what the employee can do to improve their chances of a pay rise in the future.
All pay rise requests should be dealt with fairly and consistently. Inconsistent treatment can lead to discontent within the workforce and possible breaches of UK employment laws.
Are you unsure about how to deal with a pay rise request, or have other remuneration questions? Contact us today.