Eight in 10 of us are currently facing rising energy bills, while a whopping nine in 10 are carrying pricier shopping baskets.
And with National Insurance hikes still to come, your employees may be feeling more than just a pinch. Meaning you could soon hear the question: “can I have a pay rise?”.
From benefits to contract considerations, here’s what you need to know…
First, check you’re ready for rises in April first
With National Minimum and Living Wage changes due in April, you may need to adjust your staff pay anyway. Here are the new rates:
It’s important to check you’ve got the right pay before the April deadline. So if you usually pay staff on the 15th of each month, staff will need to receive their new pay from 16th April onwards.
Consider whether your staff work overtime or irregular hours – if so, make sure their average hourly pay doesn’t slip below the new rate.
Also, bear in mind any costs you deduct from staff salary, like uniform. This could mean your employee’s take-home pay dips below the legal minimum.
Then consider your pay policy
You should have a policy that outlines how (or when) you award staff pay increases.
This could include factors like:
- Performance i.e. meeting or exceeding certain objectives.
- Length of time i.e. contractual or annual pay rises.
- To match living costs or adjust around inflation.
If your policy does promise a rise to match living costs, then you need to adjust staff pay. Otherwise, you’d be breaching your contract and could face grievances.
However, if your policy doesn’t include this, staff aren’t automatically entitled to a raise if living costs rise. It’s a choice you need to make – but it’s well worth considering. Here’s why…
The benefits of increasing pay…
Even though it’s not a legal requirement, increasing staff pay will bring a host of benefits to your business:
- Staff retention – if your staff are facing financial hardship, they may apply for a better-paid role elsewhere. So to prevent your employees from jumping ship, consider increasing their pay.
- Employee morale – when you take away your employee’s financial worries, you support their emotional wellbeing. This allows them to give their full attention to their role.
- Your reputation – if you offer rises in line with inflation, you can offer this as a company perk – making attracting new hires easier for you.
So, how much more should I offer?
First, consider how much the cost of living has risen.
According to studies, inflation has pushed prices up by 5.4% within the past year. Have you increased staff salaries within that time? If not, consider increasing wages by 5.4% to help your employees enjoy the same standard of living.
Ideally, this should be on top of any performance-based or contractual raises.
Plus, it’s worth doing your research to find the average rate for your employee’s role. Take a look at competitor job postings and see whether you’re offering a similar rate. If you can, match it or offer a little more. This should prevent your staff from searching for a rise elsewhere.
If you can’t offer pay increases right now…
You might still be paying the price of costly lockdown measures. In that case, company-wide salary increases could be out of the question.
But that doesn’t mean you can’t still support your employees’ financial health. You can help your staff save money in other ways – without increasing their wage. Here’s how:
- Introduce hybrid or remote working – this means you take away the cost of train tickets or petrol fees, lunches on-the-go, and more.
- Offer subsidised benefits, like a reduced gym membership, employee counselling, or free eye tests. This helps staff save money on their existing bills or one-off costs.
And remember, you can support your staff in other ways. Since COVID first hit, many workers are now searching for a better work-life balance.
So if you offer generous entitlement, like annual leave or enhanced parental leave, you can still hold onto your team – even if you can’t afford raises right now.
Set up regular pay review sessions
Regular salary reviews gives both you and your staff a chance to discuss pay. So if staff are worried about price hikes, they have a dedicated window to air their concerns.
This means staff won’t need to feel awkward about bringing up concerns about pay – because you’ve already booked in an allotted time to discuss this.
Remember to add any regular pay reviews to your staff contracts.
Want to do more to hold onto your staff?
With upcoming price hikes, a lower-than-average pay could drive your staff to apply elsewhere…
So if you’re concerned about rising living costs, speak to Peninsula. You’ll get expert advice on how to talk to staff about pay, update employee contracts, and more.
And if you can’t afford pay rises right now, you’ll enjoy expert advice on how to hold onto your staff with other company benefits.
Call now on 0800 028 2420 or discover unlimited HR support today.
