Pay rise - percentage

[spottedinthewilds]

What is considered a decent pay rise amount if you get one each year?

Rate or inflation or more/less?

I am an employer and one of my employee has had a number of pay rises over the years that I feel are far above inflation and now I need to rein it in a bit for the sake of the business.

I know he will ask for another rise in the new year.

Work load or responsibilities haven't increased. So, just a cost of living rise really.

Any advice please?

Too many unknowns to advise.

It's your business and your employee, what are they worth to you, what would it cost you if they left over a pay rise lower than they expected? Do you generally use pay rises to track the cost of living or do you also link them to rewarding advancement and improved performance? Do you always give an annual pay rise or are is it normally a bit more ad hoc as to when you adjust pay? What have you budgeted for next year? (do you do budgets?)

This year's ours were between 1.5 and 3%.

You need to weight up what the competition for your employees services are paying. What it would cost you to replace them if they jumped ship. So the value of the actual role, and then any additional value (or not) that an individual employee brings.

Well this is it. They have demanded so many pay rises over the past 5 years that I feel I am over paying. I could replace them for far less to be fair. (I wouldn't tell them this though).

The things is, I've not given percentage pay rises in the past. They get paid an hourly rate so have raised the rate by £1 here £2 here etc.

They have also been quite demanding on other benefits.

I know I'm going to get asked again so want to be sensible and offer a yearly percentage rise going forwards.

I'm also aware of the NI changes in next year and need to speak to the accountant to see how much that will cost.

Look at the going rate for the job, if they’re being overpaid explain that to them - apart from anything else you’ll be stuck with them because they won’t be able to leave for a similar salary.

I usually get somewhere between 4.5-4.8 annually and 8% bonus

Well this is why I want to try and work out a fair percentage that is quite normal. I was thinking about 3 or 4 percent yearly.

They get other benefits. A 5% bonus that isn't linked to performance or anything. Just a gesture.
Good rate of holiday plus other things.

We aren't taking big bucks. The salary is about £32k (not in a high wage area - in fact one of the lowest in the country so it's a good salary).

You don't have to give a pay rise.

Just a bit concerned that you're even asking this here before speaking to your accountant, and that you haven't already determined the impact of the NICs changes on your budget and forecasts for next year.

I would simply state 'we are not in a position to offer a wage rise given the forthcoming NI rise'

We are a tiny business to be fair with just 3 staff.

I know I don't need to give a pay rise but I know I will get asked as they are very pushy, I just want to be prepared that's all. I also don't want to give a flat no as I think it will cause bad feeling.

I'm only asking as it was a thought on a Sunday afternoon when my accountants aren't working and wanted to gather some info that's all.

You can always give a holding response, "I'm reviewing the budget and forecasts with the accountant in January and I'll get back to you on that".

No matter how small the company, budgets, forecasts, and management accounts are pretty basic and important things to have in place.

Inflation plus 0.5% with a cap of 3.5%

You can always give a bigger bonus if you and the employee are doing really well.

Well I got exactly nothing for about 12 years thanks to organisational changes and the previous government.

There is no normal. But in this case, it sounds like he's done well up to now so you're within your rights to freeze his pay for the coming year or so.

He'll whine and moan and threaten to go elsewhere but it sounds like he won't be able to get a better deal than what he's currently on. But if he does leave, how much of a problem will it be for you?

You could freeze his pay unless he actually gets his other job and then consider increasing his salary to keep him, if you want to that is.

How does this employees role/pay compare to the other two? I would consider doing a flat pay rise where all 3 get the same monetary increase or same percentage.

Have you increased the other two staff in relation to his pay rises?

The other staff are new and less experienced.

They have different roles too.

This is part of it, I want to get a figure and apply it to all staff going forwards.

I don’t think anyone can say how much you should give without knowing what you can afford.

I would go with percentage increase to match inflation if you can afford it, otherwise something previous poster said capped to a certain % would be good.

Do your staff have anything in their contracts about pay rises?

Rather than plucking a figure out of the air have a look at what the business can reasonably afford across the board. It may be worth you telling staff that salaries will be reviewed at the end of each financial year for the year ahead that way you won’t be dealing with multiple requests from staff.

Do you have a pay review cycle? It sounds like he just asks for more money every so often and you give him a raise. If he normally gets a raise at this time of year then I could understand him feeling aggrieved if you haven't already had a conversation.

Where I work there are half yearly appraisals and monthly 121's, so everyone should know their progress. If pay rises aren't happening, or will be rubbish, there would be an all of company email a few months beforehand. Rises happen once a year and people would only get more at other tines of year if they were promoted.

Thanks all for the advice. Lots to think about.

We are a small business that is growing and I'm looking to put things into place for them to be fair across the board.

Nothing in the contract for now but we are in the process of getting new contracts written up for future employees.

You need to get a benchmark for the role. If you Google you'll find websites you can get one from. You might need to pay for some of them but honestly it sounds like it might be worth it just to get you on track for what your staff should be paid right now and you can then temper any increases going forward.