Increasing someone's pay because of benefit cuts

[buckingfrolicks]

My company employs a small number of people, all paid well above the living wage and in line with SE England national averages for the jobs.

One person has 4 children all at school and a spouse who doesn't work.

This person has asked for a pay rise because their family has had a significant (several hundreds) cut in benefits as per the Government changes.

This person has asked for a pay increase as a direct result.

Would it be unreasonable to say no? The employee is a good worker and not one we would want to lose. However, no one is irreplaceable!
If the job had, say, an increase of 6K a year (what the person is asking for), then we would be able to recruit someone on that salary with more experience, qualifications and skill, than the current post holder.

As an employer we are generally left of centre and in favour of supporting people, including our employers - we aim to be a good employer and keep good staff.

So WIBU to say no to a pay increase?

They can't afford Christmas and got themselves in debt

That may be so, but it's not their employers responsibility to fix it.

I'm a single parent on benefits through no fault of my own (Ill health and in and out of hospital), I've had cuts to my benefits (bedroom tax) and have to attend a medical assessment again next week. So I understand the impacts the cuts can have. Even so, I was working before I fell ill and if I discovered a colleague had been granted a payrise because they'd had a cut in their benefits I'd be bloody furious.

The employee hasn't "sold" themselves very well or tackled this request in a professional way.

I would ask the employee to have an interim review if their "work" and work only, to ask them to prepare me a pie e on why their work and work load suggest a pay rise. Explain from the outset you can't take into account their personal financial circumstances, but are more than willing to negotiate on there performance. Point out any rise would be as a % increase and the parameters wouldn't be large.

Hand it back to them on a work basis and see what they come forward with?

There's no law that says you have to pay two people doing the same job exactly the same salary

While there are no laws that state exactly that, there are laws around equal pay do pretty much do just that to an extent.

This is why pay policies and rationales are so important to ensure a fair wage is paid for the job because one little anomaly can potentially have big implications. Nobody wants to do one person a favour and then find themselves defending an equal pay claim or increased attrition rate.

CIPD explain the legal situation about equal pay better than I can for the nerds like me amongst us:

The law on equal pay in the UK was introduced by the Equal Pay Act 1970 and is now contained within the Equality Act 2010.

The law gives a woman the right to be paid the same as a man (and vice-versa) for:

• like work- two employees who are doing the same or very similar roles, or

• work rated as equivalent by analytical job evaluation study - could be totally different jobs which have been given the same rating as the result of an analytical job evaluation scheme, or

work of equal value - when there are two jobs that are very different, but the employee claims that they require a similar level of skill and ability. For example, a female cook comparing her work to that of painters, insulation engineers and joiners who work for the same organisation.

The right to make a claim under equal pay legislation applies to employees, and also to anyone with a contract personally to carry out any work or labour.

To bring a claim before an employment tribunal for breach of the equal pay legislation, an applicant must point to a ‘comparator’. A comparator is a person of the opposite gender, working for the same employer, doing like work (or work rated as equivalent, or work of equal value) who is paid more or has more beneficial terms and conditions of employment, than the person bringing the claim.

The comparator can be someone working for the employer at the same time or in the past (a predecessor) but not someone employed afterwards (a successor). A comparator may even work for another employer as long as the inequality in pay is attributable to a single source (for example, in the public sector where there are employees doing similar work in several different locations). Under the Equality Act, if a woman cannot find an actual comparator, she can consider a sex discrimination claim instead.

The law doesn't allow a contract of employment to be considered as more or less favourable as a whole than that of a comparator – so it's not a defence to a claim to say that a lower hourly rate of pay for one person is compensated for by, for example, a better annual holiday entitlement. The contracts of employment of the claimant and the comparator need to be compared side-by-side and clause by clause. The claimant can effectively ‘pick and choose’ the most beneficial provisions from their own and the comparator’s contracts.

The Equality and Human Rights Commission has published a range of guidance on all aspects of the Equality Act on their website.

But uou clearly can pay more based on performance or length of service.
I realise that the equality act prevents discrimination but apart from where there is discrimination according to a protected characteristic it us not illegal to pay different amounts to people doing the same job.

I job share. My job share gets paid more pro rata than me.

Of course, so long as there's a clear, fair and lawful rationale. Sometimes people have "legacy" salaries if they have moved from a more senior or specialised post and there is provision within existing legislation for that or where employers have found upon recruiting there has been an increase in the market rate for a role. What's not ok is where things "just worked out this way". There does not have to have been conscious discrimination or direct discrimination to end up with equal pay claims.

I'm not sure I'd be happy to be paid less than my job share though, unless that person is doing a particularly skilled role that I was not expected or able to do and it was a tiny part of the duties. That's very unusual ime. I'm guessing you're both women because if one of you was a man that would be likely to meet the comparator requirement of an Equal Pay claim.

The points I was raising were mainly to the person who claimed you have to pay the salary for a role and take no account of the performance of the person in it

That's no way to go about asking for a payrise.

Good post on unconscious discrimination there MovingOn :)

I understand Stealth. I just picked up on the bit about the law because I'm nerdy like that and I like the fact Equal Pay legislation is relatively well defined which is unusual for laws about discrimination that are usually fairly broad. I think it's interesting but I appreciate it's a minority interest

Thanks Trills :)

This kind of logic used to use to justify paying men (who "had a family to support") more than women (who were working "for pin money"). Don't go there OP

This is another one of those threads where I wonder how many of the people posting have any real experience of employing someone or working themselves.

Asking for a pay rise is not "cheeky" and granting a pay rise to one person doesn't mean you need to grant all employees pay rises

It seems like the employee has not positioned their request well, although to be fair when it comes to retention it doesn't really matter why employees need/want extra money.

If they have a need and think they can get more elsewhere then they'll go. Your job as an employer is to assess the impact that will have on you and your business.

No one is irreplaceable but recruiting can be a costly and time consuming affair with no guarantees you will get someone of the current employees standard. It makes sense to hang on to good employees if you can.

I agree with PPs that people can be paid different amounts for the same job, and everyone is entitled to negotiate their salary.

I don't agree that OP alone is culpable to fix the current tax credit system by paying more than the market rate.

OP, if you're the owner of the business, your job is to act on what is in the best interests of the business. You don't act based on what's in the best interests of a single employee, especially when it could have negative repercussions with the rest of the work force.

That said, maybe just reply and say something like '(Employee), if you'd like to discuss your salary, how about we have a meeting on XYZ. We can talk about how you meet or exceed the expectations of your role, and the reasons why you think you bring this additional value to the business.'

Don't humour the benefits arguement, that's not your problem.

I think this may be the start of more people asking for pay rises following benefit cuts, there was a thread on here recently about the cost of living and how more families have to rely on these then say 10 years ago when a single person could support themselves and their children on a part time wage, I still cant get my head around the fact that benefits are propping up alot of workers. While I understand a jobs market value, employers should also be aware of the rise in living costs, 6k may seem alot, but compared to the rise in transport fares, and not to mention rent increases it would barely keep up.

Ldnmum good points there. It should never have got to where big highly profitable companies (which I'm not saying the ops business is) could get away with paying low wages knowing they'd be subsidised.

A raise in wages across the board would mean employees have less stress, are happier and more productive, less sick days, can more easily afford transport to work spend more therefore boosting the economy etc

I wonder how many bosses could manage on what they pay their employees?

The spouse needs to pull his/her finger out if they're skint.

This is not your problem. Only offer a pay rise if it's deserved.

Can't see how it makes good business sense to pay someone because their benefits have been good. You pay the market rate for the role, or slightly above it , or slightly below it based on whether you want mediocre, good or great candidates to apply.

good? cut

But the market rate has been forced down or rather failed to rise with the cost of living because of the subsidisation by in work benefits including tax credits.

Also op hasn't said that the employees partner is able to work they may not be, they may have been working and taken ill/been in an accident.

cost of living = pay cost of living is getting higher wages are not rising with that, loosing benefits due to restructuring is pushing families into debt working and having to claim any benefit seems wrong so employers should be working out what it costs to give someone a living wage or rebate the taxpayers credit payments to the gov the government should actually give tax breaks to those companies who's workers do not need to claim benefits due to lack of a living wage

I don't think it is really relevant regarding her partner or any of her personal life, there are lots of families in the same position where one partner ends up being the breadwinner, i was trying to stress the point that a wage of 25k is still a low wage compared to wages offered only a few years ago in line with the cost of living, while tax credits are great as they fill the gap, they will at some point be a collapse! Employers feel they cant bridge the gap due to whatever valid reasons and the cost of living exceeds. I sm not blaming the op, but i think that the roll out of universal credit and caps will make employees evaluate their wages v cost of living more

25k isn't a bad wage. They are in a position where the other parent can look for work during school hours, evenings or night work, unless this parent is disabled obviously.

But she's not just getting a £25k wage though, this is being topped up with benefits. How I don't know. When my sister started working, she was on minimal hours and was on her own, she was advised to apply to HB. The top up they decided she was entitled to was £3.00 a week! She didn't bother. She's now working full time and is doing okay.

It sounds horrible I know but the benefit cuts are not the OPs problem. I'm sure this employee isn't the only one that's had to adapt in the current economic climate. Most of us have had to in one way or another. I'd also think it unfair if the employee threatened to leave over not being granted her, Imo, unreasonable request, you only have to visit your local jobcentre to see there are people more than willing to replace her.

How can it be unreasonable for the employee to say they will leave? If they've got bills to pay and £25k isn't enough then they will have to look for something better paid!

Because she's getting topped up with benefit payments. The OP says the employee said she'd had her benefits cut. Not stopped altogether so she's presumably still getting some sort of semblance of a good top - up. £25k is not all she is getting to survive on.

it may be legal to not pay people the same rate for doing the same job but usually there is some justification for it - been working there a while, taken on extra responsibilities, performed well in some way, etc. It would be very rare to ask for a payrise 'just because.'

OP's employee's only reason is because additional money coming from another source may have ended.

If this is the case, OP should be prepared for similar requests from employees who have lost money on house sale, or whose parents who previously provided childcare, died, so now they have to pay for a nursery, or an employees partner loses their job elsewhere so now the family as a whole has less money coming in.

If these suggestions sound ridiculous then don't give the employee the raise.