What is a reasonable salary increase?

Showing appreciation to employees is a crucial part of cultivating a productive and positive workforce. One of the most obvious methods of acknowledging and rewarding an employee’s achievements is by increasing their salary, but it can be difficult to know when to do this and how much an appropriate pay rise would be.

Each case will depend on the individual employee and how they have performed in their role.  You might choose to offer a larger or smaller pay rise depending on the level of progression of the employee. As a very basic guide, it’s worth noting that the Office for National Statistics quoted an average pay rise of 3.3 per cent for most of the UK’s full-time employees over the course of 2018.

From an employer’s perspective, the main considerations would be around what the best time to offer a pay rise would be, how much this rise should be, whether multiple employees deserve the same level of pay rise, and what the best way to reward individual employees would be.

Handling salary increase requests is a sensitive subject too, as there will be times where you need to decline a pay rise request. Although these moments can be upsetting for the employee, it’s possible to turn them into a positive if you set goals towards achieving their desired raise over the coming months.

Is a verbal pay rise legally binding?

Working relationships with employees can be ruined by promises that were broken by the employer. Promising pay rises, bonuses and promotions and then refusing to follow through with them is not a wise or fair way to treat your workforce, as it will only lead to growing frustrations from members of staff who feel let down.

Verbal promises from employers can be problematic for employees, as there’s nothing written in black and white, meaning there’s nothing to back up any claims that something is owed to them. However, employers must be wary of making verbal promises as an employee could be given the benefit of the doubt, even if there’s no evidence of a promise ever being made.

In some instances, employees have stood a stronger chance of being able to successfully challenge their employer into living up to promises they made verbally, with it being regarded as a legally binding agreement. A promise made privately between employer and employee is difficult to prove, but if it’s not met, it could be enough to lose the trust of the employee, which by itself is damaging enough for the employer.

 

What is a salary expectation?

A salary expectation is something that people have in mind when they are looking for a new job. Experienced workers are likely to base their salary expectations on the amount they were earning at their previous employer and the development they’ve gone through during their career so far. It’s also a common occurrence for them to look for a slight increase by moving jobs, but it’s extremely likely that they’ll be at least expecting to maintain their current salary.

Employers typically set a salary bracket for each job role which determines the minimum and maximum wage offered. It will often be referenced in the job advert, but if it isn’t, potential candidates can question what this is in order to avoid blindly making an unrealistic salary request of their own. A lot of factors go into an employee’s salary expectations aside from what they think they’re worth, with things like rent, bills and travel expenses all play a part. For example, a larger salary may be required if their new job is further away from where they live than their previous job.

What is a consolidated pay rise?

There are many different terms used for salary with or without bonuses, tax, student loan repayments and any other inclusions and exclusions. One frequently used term is a consolidated salary, where all of these extras are left out, leaving the salary without any tax deductions included.

A consolidated pay rise would be a permanently increased salary, often without any mention of how it affects tax, bonuses or any other responsibilities. A non-consolidated pay rise would be temporary and refer to a bonus of some kind.

What are pay structures?

It’s the duty of the employer to understand how different types of pay rises work and when they need to provide salary increases to chosen members of staff. Refusal to honour a verbal pay rise agreement could result in friction between the employer and employee, and failing to acknowledge a pre-arranged consolidated pay rise is likely to lead to a similar outcome.

The safest way to avoid any issues with employees regarding pay rises – as well as any potential lawsuits that could arise from not honouring a salary increase – would be to set up a pay structure prior to hiring any staff. A simple pay structure would see employees reaching a salary increase depending on time or specific targets being met.

By doing this, you should be able to decrease the risk of a disagreement with your staff, promote your company as being a worthwhile place to work, and boost efficiency and productivity by there being an incentive for every member of staff.