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How to conduct a pay review

Author: Sarah Welfare


Click on any of the hyperlinks to go to more detailed guidance below.

  • Decide objectives for the pay review, its scope and timescale.
  • Plan well in advance and ensure that the responsibilities and roles of the pay and benefits team, HR, finance and the organisation's leadership in carrying out the review are clear.
  • Check procedures where an agreement is being negotiated with a trade union and try to avoid surprises by having regular contact beforehand.
  • Gather and analyse information on factors relevant to the pay award such as inflation, market rates or comparable pay awards.
  • Work with finance colleagues to agree an outline budget for the settlement.
  • Decide the types of pay review that will be made.
  • Where a performance-based-settlement is being made, ensure that there is a robust method of assessing employee performance and support line managers in carrying out assessments and recommending awards.
  • Check the wording of employee contracts where a pay freeze is being proposed.
  • Check that the pay award does not lead to or perpetuate discrimination.
  • Pay attention to employee communications throughout the process and agree consistent messages about the pay review to employees throughout the process.
  • Ensure that the process is as transparent as possible.
  • When the pay award is finalised, write to employees to inform them of their pay increase and new salary from the effective date.
  • Review the process in order that it can be improved next time.