Promotions and pay rises: an employer’s guide to the risks
Clear pathways and opportunities for promotion and pay rises may help to improve performance, keep staff motivated and committed to your organisation.
“These, along with fair and consistent practice, should reduce the risks of discrimination and an equal pay claim”, says Sam Welham, an Associate Solicitor in the Employment Team at Barker Gotelee LLP.
There are a number of ways to mitigate against the legal risks, that may arise when deciding upon promotion or a pay rise.
Discrimination risks
Unlike most claims for unfair dismissal, employees do not need two years’ service to bring a discrimination claim. Where conscious or unconscious bias is at play in deciding who to promote, employers may be at risk of a claim for discrimination. For example, if the stronger female candidate is overlooked for a more senior management role, because the manager believes the team will respond better to a man, the woman may be able to establish a claim for discrimination.
Employers are exposed to discrimination claims if they do not consider part-time employees, for a more senior role, unless the decision can be justified objectively.
Employers need to ensure that decisions about promotions and pay rises are not influenced by discriminatory factors. For example, an employee taking family-friendly leave, whistleblowing, or being pregnant. That could lead to an expensive employment tribunal claim, and serious reputational damage.
Hybrid and remote employees
Hybrid and remote working may influence the decision to promote. Employees who work day-to-day in the same building as their manager, might be more likely to have their work recognised, and build rapport with their manager. Remote workers may end up being less prominent in the mind of their manager, when promotions are considered.
In this situation, discrimination may occur if remote workers are more likely to be female or disabled. Similarly, employers must not forget about employees on family leave when considering promotions.
Equality of opportunity
Equality of opportunity is not just about the decision regarding who to promote. This principle should inform day-to-day decisions. For example, the allocation of work, training opportunities, access to clients, and allocation of corporate entertainment budgets. These can be crucial opportunities to allow employees to shine, and stand out as suitable for promotion or pay rises.
Equal pay
Men and women are entitled to receive equal pay for equal work. Most equal pay claims involve public-sector workers. But the private sector is not immune.
The employer is at risk of an equal pay claim, where an employee compares their position to a current or former employee of the opposite gender, who receives (or had received) greater pay or benefits.
Employers may be able to defend the claim on the basis that there is a non-discriminatory material factor, that accounts for the differences. This could be because of seniority, past performance, recent experience, or a skills shortage.
Employment tribunals do sometimes accept market forces as a sound reason for differences in pay. But this is not going to stretch to the argument that: ‘I paid him more because he asked for more’.
Keeping pay confidential
Older employment contracts might include a clause that prohibits the employee discussing pay with colleagues. But these pay secrecy clauses are now unenforceable, where they stop an employee from sharing information about pay with colleagues concerning unlawful pay differences.
Where these clauses are now included in contracts, they are usually drafted carefully to allow employees to discuss pay for this purpose. Employees who do engage in these discussions are protected from victimisation. For example, being excluded from meetings they would usually attend, or denied promotion opportunities.
Reducing risks
Consistency across the business avoids damage to employee morale. Using a fair assessment and decision-making processes should reduce the risk of a legal claim.
How can we help
We can help you navigate all aspects of these challenges, from defending an equal pay claim to drafting policies on promotion and pay rises.
For further information, please contact Sam Welham in the Employment Team on 01473 617 348 or email [email protected]
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.
