Managing Pay Increases
Conversations with employees about pay and pay raises can be tricky, especially in tough economic conditions. We get a lot of questions from employers about pay increases and handling salary discussions, so we’ve put together this page to answer them.
What Is Remuneration and How Is It Different To Pay?
Remuneration refers to how you recognise, pay, and reward your people, and is a broad package that includes salary or wages, bonuses, and Kiwisaver contributions, as well as any other compensation, benefits, allowances, or incentives they receive for their work.
Pay is more simply what an employee is paid for their work, e.g. an annual salary, wages (usually payment by hourly rate), rate per piece, or commission.
How Much Should I Be Increasing My Team's Pay?
We typically advise businesses to keep pay in line with market rates and to regularly review salaries so your rates stay in touch with that of your competitors. There’s nothing stopping you from offering less than market rates - so long as you meet legal minimum entitlements - but you may have to accept unhappy employees or high turnover. You could also increase your pay to above-market rates if you really want to keep and attract talented staff, but it can be costly.
What Should I Say If Someone Asks For More Than I Can Afford?
These sorts of issues can be tricky to deal with, as you don’t want to damage a person’s motivation, especially if they are a highly-valued team member. However, if the business is not in a financial position to be able to increase salaries or wages, you only have so much wriggle room. You can always look at what else you can do for people by way of perks or benefits, and keep the conversation open, so that when things pick up, you can explore higher remuneration.
If The Minimum Wage Increases For Low-Pay Employees Should Everyone Else Get An Increase?
There is no legal obligation to pay people more than the minimum wage or what is contained in their employment agreement. However, an increase in the minimum wage may be a good time to review remuneration across the company, to ensure your pay scales are fair, relative, and competitive.
Do I Have To Increase Someone's Pay?
So long as you meet minimum wage rates or a higher rate set in the person’s employment agreement, you don’t legally have to increase anyone’s pay.
Do I Have To Increase Someone's Pay If They Aren't Performing?
So long as you meet minimum wage rates or a higher rate set in the person’s employment agreement, you don’t legally have to increase anyone’s pay.
We always advise keeping pay and performance discussions separate, to improve objectivity and transparency. If your performance review system is effective it should be able to quickly identify when a person isn’t meeting their agreed objectives, so you can help rectify the situation before the pay conversation comes up.
What Is Remuneration and How Is It Different To Pay?
Remuneration refers to how you recognise, pay, and reward your people, and is a broad package that includes salary or wages, bonuses, and Kiwisaver contributions, as well as any other compensation, benefits, allowances, or incentives they receive for their work.
Pay is more simply what an employee is paid for their work, e.g. an annual salary, wages (usually payment by hourly rate), rate per piece, or commission.
How Much Should I Be Increasing My Team's Pay?
We typically advise businesses to keep pay in line with market rates and to regularly review salaries so your rates stay in touch with that of your competitors. There’s nothing stopping you from offering less than market rates - so long as you meet legal minimum entitlements - but you may have to accept unhappy employees or high turnover. You could also increase your pay to above-market rates if you really want to keep and attract talented staff, but it can be costly.
What Should I Say If Someone Asks For More Than I Can Afford?
These sorts of issues can be tricky to deal with, as you don’t want to damage a person’s motivation, especially if they are a highly-valued team member. However, if the business is not in a financial position to be able to increase salaries or wages, you only have so much wriggle room. You can always look at what else you can do for people by way of perks or benefits, and keep the conversation open, so that when things pick up, you can explore higher remuneration.
If The Minimum Wage Increases For Low-Pay Employees Should Everyone Else Get An Increase?
There is no legal obligation to pay people more than the minimum wage or what is contained in their employment agreement. However, an increase in the minimum wage may be a good time to review remuneration across the company, to ensure your pay scales are fair, relative, and competitive.
Do I Have To Increase Someone's Pay?
So long as you meet minimum wage rates or a higher rate set in the person’s employment agreement, you don’t legally have to increase anyone’s pay.
Do I Have To Increase Someone's Pay If They Aren't Performing?
So long as you meet minimum wage rates or a higher rate set in the person’s employment agreement, you don’t legally have to increase anyone’s pay.
We always advise keeping pay and performance discussions separate, to improve objectivity and transparency. If your performance review system is effective it should be able to quickly identify when a person isn’t meeting their agreed objectives, so you can help rectify the situation before the pay conversation comes up.
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