At the start of a new financial year many practices are reviewing their pay structures and asking some familiar questions. Can salaries be increased to retain key staff? Will the budget stretch to giving all employees the same pay rise - or will tough decisions need to be made?

The objective for many primary care managers may simply be to match pay rises as closely to cost-of-living increases as possible, or to set pay rates at a competitive level in the healthcare sector or local labour market. But where should you begin?

Looking to the long-term future of your practice

The best starting point is to plan early and think about how the process and outcome will be communicated.  It may actually be worth considering a longer-term pay deal covering 2-3 years, which will save time reviewing and negotiating salaries year-on-year. 

It can also help practices to know in advance what wage costs will be over the longer term.  Some practices award a basic, across-the-board pay increase at their annual pay review, but may also have a system of progression-related, incremental pay rises throughout the year. 

Non-consolidated payments can also be considered in lieu of a percentage rise where it may not be affordable year-on-year. Practices need to check employee contracts to establish whether or not there is a contractual entitlement to a pay review or a pay rise.

Measuring your pay rates against other businesses

Most employers compare their pay rates with their competitors’ at some point, often doing so each year to inform the annual pay review.  When setting a pay award, it’s common for employers to take note of the "going rate" of pay awards nationally and/or in their industry, region or relevant occupational groups.

Where individual pay rises are related to performance, employers should make sure that they have an effective way of measuring this factor. Line managers will need guidance on conducting performance assessments in an objective and consistent way.

Sometimes a pay review will not result in a pay rise at all, with the employer deciding that they cannot afford a pay rise in a particular year. This means that wages will be frozen at the previous year's rates, usually for the length of the pay settlement.  

The importance of transparency

Where allocated pay rises vary in value or some employees do not receive a pay rise, the practice must not unlawfully discriminate on the grounds of sex, race, sexual orientation, disability, religion or belief or age.

Once the pay award has been finalised and agreed, employers should confirm the outcome of the annual pay review in writing to each employee. This should cover the value of the pay increase, the new salary and the effective date.

One last point to be aware of - a lack of transparency in the pay review process can lead to employees becoming mistrustful of the process, disengagement and perceptions of unfairness. Employees will more readily understand and support pay review decisions where there is transparency surrounding how they have been evaluated - and the process itself should stand up to this scrutiny.

FPM members can send specific questions about employment issues to HRhelp@firstpracticemanagement.co.uk. Your questions will be treated in confidence and will normally be answered (by email) within two working days of submission.