Hi all,
I am finalising my department pay reviews for April. We do a merit and inflation pay rise
I was asked the question, "Are my inflation pay increases pro-rata"?
I don't usually pro rata inflation raises. Does anyone have any input on this?
Should they be pro-rata?
thanks for any help you provide
Chris
Assuming the Rate of Inflation raise is a %age, why would it need to be prorated?
Let's say the CPI is at 5% and I earn £50,000 per annum before my rise. I would get a 5% pay rise and get a salary of £52,500.
If I work 0.5FTE, then before the pay rise I get a salary of £25,000. After the pay rise, I get £26,250, which is *still* a 5% pay rise even though it's half as much.
So the answer should be "RoI pay rises are applied as a percentage increase to your whole-year, full-time salary value and therefore the same percentage rate is applied to all staff irrespective of FTE or the proportion of the year worked. As it is a percentage of total salary, the exact end-of-year value of pay rises will vary depending upon actual salary, FTE and the proportion of the year worked".
If they struggle with this idea then I assume they work in Marketing.
I agree with Robey about the maths in applying to part time workers.
However, are you talking about people who joined or are leaving you you mid-year? We have a policy that people have to have joined us at a certain part of the pay cycle to be eligible and similarly if people are in their notice period at the point pay increases are applied they may not be eligible. This is pretty typical.
It is a %age. This is what confused me. As i said, I've never done this in the past. So when it was questioned i was a bit surprised/confused. I just wanted to double check for my own sanity.
"If they struggle with this idea then I assume they work in Marketing." - this did make me laugh! and you are not wrong!
Thank for your reply. So if an employee started October 2023 and an inflation pay increase of 5% was implemented in April 2024 - would that employee get 2.5% under your policy?
I think, in Gemma's case, the employee would get a 0% increase, eligibility being based on whole-year service. This isn't uncommon and the argument basically goes that the employee agreed to their level of compensation within this tax year, indicating that it was considered adequate to their needs and appropriate to the level of work.
Of course, although to be fair this is usually because it takes the government a long time between "yes, you can all have a pay rise" and "we've now decided, six months later, how much that pay rise is going to be". If a government were to implement legislation that just said "all public sector pay will go up on 1 April every year, based on the CPI rate on 1 January the same year" life would be a lot easier.
We have cut off dates - if they've started in the six months before the effective date of the increase they receive nothing (on the basis they accepted the job on those terms), if they start between 6 - 12 months before the date they get half the increase. Our pay structures are not very sophisticated (we have rough bands).
