Set the right pay rates

Reviewing pay rates and systems

You should review your business' pay systems on an ongoing basis. It is also important to check at least annually that pay rates are competitive.

By having regular reviews you can evaluate the system to check whether it is achieving objectives such as cost control, team working and increased productivity.

Other benefits of regular reviews are that you can:

• address the effect of outside factors such as regional changes, changes in the industry or skills shortages
• incorporate the impact of new machinery or technology on your business, such as new skills requirements and new roles
• review hiring and training policies - see our guides on recruiting and interviewing and how to fit the training to your needs
• prepare for changes required by legislation such as revisions to National Minimum Wage rates
• review feedback from your workers on whether the pay rates and system are fair and motivational for both full time and part-time workers
• incorporate changes on employment contracts
• act on decisions from collective bargaining - see our guide on how to work effectively with trade unions
• ensure you are keeping in contact with people on a break such as maternity leave
• find and close any loopholes that might otherwise have led to equal pay claims or employment tribunals on grounds of discrimination

You can follow the guidance on equal pay reviews at the Equal Opportunities Commission website. Make sure that your pay systems don't discriminate on other grounds, eg race or against part-time workers or fixed-term employees.

You may consider involving workers' representatives in your pay reviews. This encourages feedback and helps you to hear of any problems they are facing. You may wish to set up a pay review committee, which may or may not include workers' representatives, that meets regularly and also considers how to address issues.

Subjects covered in this guide

• Introduction
• Pay rate systems
• Setting up a new pay rate system
• Making pay comparisons
• Equal pay for work of equal value
• Reviewing pay rates and systems
• Commission, bonuses tips and gratuities

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