Public sector pay rise: What does it mean?

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​The end of the 1% pay cap places new obligations on managers in the public sector

Since the 2010 Budget, which promised significant austerity for the foreseeable future, public sector employees have been subjected to a pay freeze. A 1% cap on public sector pay rises has been in place since 2013 and has significantly restricted average salary increases for workers throughout the country. As inflation levels and cost of living rates have gone up, annual salaries have either remained the same or changed minimally.

On 24 July the Treasury announced that specific workers in the public sector would receive their much sought-after pay rise, ranging from 2% to 3.5%. Though the deal does not cover all public sector employees, it does provide the following:

  • A 2.9% increase for the armed forces
  • 3.5% for teachers
  • 2.75% for prison officers
  • 2% for the police
  • At least a 2% increase for junior doctors, specialist doctors, GPs and dentists

While these provisions do not currently extend to Scotland or Ireland, managers operating in affected departments in England and Wales are now legally bound to implement these changes. Failure to do so could give rise to claims of unlawful deductions of wages. Therefore employers in the public sector need to ensure they are fully prepared to implement this pay rise correctly.

Companies will now have to work closely with HR and relevant payroll departments to identify what individual salaries should now be, and ensure that all contracts are properly updated to reflect this. If necessary organisational policies should also be updated to reassure staff that all salaries will be structured in accordance with the legal requirements outlined. Any benefits that are aligned to pay will also need to be reviewed.

The news of the pay increase is likely to be a hot topic among colleagues. Maintaining strong levels of communication with the workforce is important for employers in this situation to clearly outline the impact it will have. One option is holding pay review meetings with staff to ascertain the exact increase that they are entitled to. This will help to avoid any confusion that could potentially arise from the news and ensure all employees know how the changes will personally affect them.

Understandably employees will probably still wish to discuss their individual salary increases among themselves. While existing company policies may try to prevent staff from talking about their wages, it may be difficult to enforce these because of the exemption that allows such conversations where the aim is to discover whether there are any discriminatory pay practices.

Although pay increases are a key factor in employee engagement, employees may also seek reward and recognition in other ways. A pay review meeting will offer a convenient opportunity for employers to thank people for their hard work. Remember that the meeting is not an appraisal – the aim is to convey the news of the pay increase – so no other issues should be raised.

Pay increases should be confirmed in a letter to employees, including the date on which they will take effect. You may wish to hand the letter over at the meeting or shortly afterwards.

Suzanne Tanser is reward business manager at Croner

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