How to do a Pay Review

NMW continues to increase year on year which means that you need to be doing an annual pay review of all staff to ensure their pay rates remain competitive. But where to start?

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Gather everyone's current pay

Hopefully you have a fabulous system like Breathe HR or a great payroll team to help you with this first step. To get you started with your pay review, we need to know who is being paid what right now.


Highlight NMW earners

You will want to highlight who earns NMW and map out what their next NMW increase looks like because they will automatically receive an increase each year.


Calculate the gap between NMW earners & everyone else

It's really important to maintain the right gap between skill levels & roles in the business. For example, if you pay NMW for wait staff but never increase the Chef's pay, the wait staff will soon catch up and be earning the same as the Chef and your Chef will probably leave. So you need to understand the level of gap between the skill roles and the associated pay so you can maintain the same gap as NMW increases.


Calculate the % increase for NMW

Once you can see the % increase that NMW has implemented, you can then asses whether this percentage increase is also suitable for all other roles in the business and apply the same level of increase across the board. This is known as a cost of living increase.


Benchmark your new pay rates

Before you press GO, do your research to make sure that your new rates of pay put you where you want to be in the market. Pay too low and you'll struggle to attract staff, but pay too high and you might not make much of a profit. Remember that your favourite HR Consultants can do this for you with our fancy Salary Checker tools!


Write to your staff

Remember than any change you make to the contract of employment you gave to your staff when they joined must be agreed and documented in writing to be valid. So ensure you send a letter to confirm that you're changing their rate of pay, what the new rate is and when it takes effect.


Need help with your pay review? Give Lilac HR a swirl!


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