Running a pay review: data, rules, checks and letters

Start with the data

One row per person: reference, name, salary, contracted hours, grade, performance rating, date of birth and start date. Mark starters, leavers and anyone on long-term absence, so you decide how they're treated rather than finding out afterwards.

Set the rules before the numbers

• the budget, as a percentage of the pay bill
• who is eligible, for example everyone who joined before a cut-off date
• the award for each rating or position in the pay range
• how part-time pay is treated: usually the same percentage on the full-time equivalent

Check the minimum wage

From 1 April 2026: £12.71 an hour for 21 and over, £10.85 for 18 to 20, and £8.00 for under 18s, and for apprentices under 19 or in the first year of their apprenticeship.

Check hourly pay after salary sacrifice and for every hour actually worked, not just contracted hours. Salary sacrifice for pensions or benefits can take someone below the minimum without anyone noticing.

Check it's fair

Compare awards for men and women doing like work, and for part-time and full-time staff. Write down the reason for any gap. If you have 250 or more employees, the outcome will feed into your gender pay gap report.

Know the full cost

A pay rise costs more than the rise itself: employer National Insurance, pension contributions and, for larger employers, the apprenticeship levy all go up with it. Cost the whole award before it's signed off.

Tell everyone in writing

Each person should get a letter with their new salary and the date it applies from. A change to pay is a change to the written statement of terms, which must be confirmed in writing within one month of the change.

Check a filled-in sample of every version of the letter before anything is issued. One wrong salary in the wrong envelope is the letter everyone remembers.