Discussing pay can feel awkward for both employees and organisations, but transparency can help employees understand why their wages are at the level they are and how recent national insurance changes affect them, writes Tanya Jansen.
The government recently raised the starting national insurance threshold from £9,568 to £12,570, a move that it claims will improve the financial situation of 70% of UK workers.
It comes following a 1.25 percentage point increase in national insurance contributions from April 2022, with the additional revenue raised going directly to support the NHS and social care bodies across the UK. However, from April 2023 onwards, NI rates will revert back to last year’s levels and a new 1.25% Health and Social Care Levy will be introduced .
Employees will need direction about what it means for them specifically. If they haven’t already done so, employers should support their employees’ financial literacy by explaining how their take-home pay will be affected.
Recent research from beqom has shown that workers struggle to decode their salaries on their own and need proactive support. Its survey of 1,000 UK workers found just 42% are aware of their total remuneration package and 39% want to understand their total salary.
Help staff understand pay
Although discussing their salary at all can feel awkward for some workers, and employers may feel it could open up pandora’s box, most would welcome the opportunity to be informed.
The research showed one-third of employees would feel more comfortable discussing their salary with a colleague. However this comes with its risks as it may prompt concerns over fair pay if an employee discovers a colleague is on a higher salary than them.
Instead, employers should lead the conversation to demonstrate they are being fair when it comes to compensation. The research by beqom found that 75% of those surveyed would be happy to discuss their pay with their manager or team lead.
Help staff understand pay
When discussing pay, employers should be fully transparent but also factor in some contextual sensitivities.
The way in which advice is delivered is very important. More than two-thirds (68%) of employees would choose to discuss their salary with their employer face-to-face in an office, compared to only 15% who would like to do so over the phone or via video chat.
Secondly, employers need to be conscious of generational preferences. Younger workers are more willing to discuss their salary, but employers will have to approach the topic delicately with the older employees. The research found that Gen Z (78%) and Millennials (67%) are more comfortable discussing pay with their colleagues than their Gen X (57%) and Baby Boomer (62%) counterparts.
Thirdly, more than a tenth (11%) of workers simply aren’t comfortable discussing pay at all. To successfully engage with this section of the workforce, organisations will have to identify the reasons behind this reluctance, explain why it’s important for people to understand their pay, and try to address some of the reasons why they might feel uncomfortable. This would also help to calm the fears of the 17% of employees who are too nervous to raise financial matters at work because they’re worried about losing their job.
Benefits of pay transparency
Openly discussing pay allows organisations to demonstrate that they are committed to pay transparency. This is important because a genuine or even perceived lack of pay transparency breeds suspicion about unfair pay practices.
More than a third (37%) of their employees don’t think their company pays its workers fairly. Nearly one in 10 (8%) say they have no insight into why they’re paid their current salary, while almost a fifth (18%) point to deliberate secrecy around the disclosure of pay and/or bonuses.
By walking their employees through their take-home pay and encouraging them to ask questions, employers can demonstrate a willingness to both clarify financial matters and banish pay secrecy.
In a competitive recruitment marke, employers need to focus now more than ever on establishing pay transparency. This will allow them to reap the rewards including h as increased employee motivation and performance, and a reduced likelihood of losing top talent.
Responsible employers will start these conversations now. Employees need to feel supported during what is likely to be a period of sustained economic hardship.