Employment News

News added on 30.09.2019

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Pay and conditions

Do you have to grant a request for a pay rise?

A new survey by Totaljobs and Robert Walters suggests that 54% of female employees are unsatisfied with their pay, yet 57% have never attempted to negotiate an increase in their salary. If an employee does ask you for a pay rise, what do you need to be aware of?

Over 9,000 UK professionals took part in the survey on “driving diversity and inclusion in the workplace - the strive for gender parity”. The results also reveal that men are 23% more likely to negotiate a pay increase than women, and that confidence pays a part in this - twice as many women than men cite a lack of confidence as a stumbling block to their career progression. Where a pay rise is negotiated, on average men negotiate a 12% increase in their salary versus women who negotiate a 10% increase. As a result, men tend to receive an 8% increase in their salary following negotiation, whereas women typically receive 6%.

Pay rises are generally a contractual matter, subject to your obligation to comply with the national minimum and national living wage rates which increase on 1 April each year. Most employment contracts provide for the employer to review salary on an annual basis, but with no contractual right for the employee to receive a pay increase. If you have that clause in your employment contracts, it means that you could review staff salaries and decide to award no increase in a particular year. Alternatively, you might decide to award the same percentage increase to all staff across the board, e.g. in line with inflation, regardless of individual performance or productivity levels.

Where an employee (whether female or male) approaches you for a pay rise outside your annual pay review exercise, do have a conversation with them to see if they’re raising some valid points in support of their request, e.g. their pay isn’t a fair reflection of what they do, they’re paid less than a work colleague who does the same work, they’ve excelled in a particular work project, etc. That salary discussion can then result in your agreeing to grant them an individual pay rise. If you do so, ask them to keep it confidential to avoid upsetting anyone else, but be aware that you can’t prevent pay discussions between staff which are aimed at establishing the existence of unlawful pay discrimination relating to one of the Equality Act 2010’s protected characteristics.

However, it’s not quite as simple as that when it comes to salary levels as between men and women. The Equality Act 2010 gives women (or men) a right to equal pay for equal work, by giving the right to equality in the terms of their employment contracts. The Act makes it unlawful to offer different pay and terms and conditions where women and men are doing the same or broadly similar work, work that’s been rated as equivalent or work that’s of equal value in the same or associated employment. So, if they find out about the pay increase, an employee of the opposite sex who’s doing broadly similar work, or work of equal value, to the rewarded employee may allege that you’ve breached the Act. Therefore, given that more men than women ask for a pay rise (and tend to ask for more money), do be conscious that any individual pay increases granted aren’t perpetuating existing salary imbalances. You could also take the initiative and analyse how you pay men and women for comparable work, so you can assess whether you need to proactively address any pay disparities, rather than waiting for employees to come forward and ask for pay rises themselves. Employees can also allege unlawful pay discrimination based on the other protected characteristics, e.g. race, age, etc.

There’s a defence to equal pay claims where you can show that the difference in pay between the man and the woman is because of a material factor that doesn't amount to sex discrimination and that factor is a material difference between the two employees’ cases. If you can factually demonstrate, with evidence, that a pay increase awarded was entirely because of that employee’s unique skills, extra efforts or achievements which didn’t apply to the other employee, that should be enough to raise the defence.

Subject to minimum wage compliance, pay rises are generally a contractual matter and employment contracts tend not to guarantee annual salary increases. If an employee asks for a one-off pay rise, it’s acceptable to award this, say, for their extra efforts or achievements but, if challenged, you’ll need to be able to demonstrate that it wasn’t discriminatory towards your other staff. Consider being proactive by analysing how you pay men and women for comparable work, so you can assess whether you need to address any pay disparities.

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