Handling Employee Pay Rise Requests

Employees asking for a pay rise is no longer an occasional, awkward conversation. With rising living costs, talent shortages and a more transparent market for pay information, HR and business owners are facing more frequent, more assertive pay discussions. If those conversations are handled inconsistently or without a clear framework, they quickly spill into grievances, allegations of unfairness or even discrimination complaints.

What this article is about
This article is a practical guide for HR professionals and business owners on how to handle employee pay rise requests in a structured, lawful and commercially sensible way. It explains the legal framework around pay and equal treatment, how to prepare for and conduct pay discussions, how to assess requests fairly and consistently, and how to minimise the risk of disputes, discrimination claims, whistleblowing detriment and constructive dismissal allegations. The focus is not on how employees should ask for a pay rise, but on how employers should respond when they do.

Many managers still approach pay conversations as a purely discretionary, “take it or leave it” decision. In UK employment law, there is usually no statutory right to a pay rise and no general obligation to increase pay annually. However, that does not mean pay decisions are risk-free or beyond scrutiny. Contractual pay review clauses, equal pay rules, discrimination law, national minimum wage requirements and protections for whistleblowers all shape what employers can and cannot do. HR’s role is to ensure pay decisions are taken with those constraints clearly in view.

From an employee relations perspective, how you handle a pay rise request matters almost as much as the outcome. A well-prepared meeting, evidence-based reasoning and clear communication of the decision can preserve engagement even where the answer is “no” or “not yet”. By contrast, a poorly managed conversation — rushed, defensive or opaque — can damage trust, trigger grievances and push valued employees to look elsewhere. For smaller employers in particular, that loss of goodwill can be more costly than the pay rise itself.

At the same time, agreeing to a pay rise for one employee can have knock-on implications across your workforce. If an increase is granted without reference to internal comparators, objective performance evidence or market data, you risk creating unjustified pay gaps that are hard to unwind later. Those gaps can come under scrutiny in equal pay or discrimination claims, especially where patterns emerge linked to gender, ethnicity, age or other protected characteristics. A structured approach helps you justify why one request is accepted, another is deferred and another refused.

This article takes a process-driven view. It assumes that an employee has either asked for a pay rise directly or has raised concerns about their pay in a one-to-one, review or informal setting. It then walks through what HR and managers should do before, during and after that conversation: from reviewing contracts, role profiles and performance data, to benchmarking pay and recording a clear rationale for the decision. The aim is to give you a repeatable framework that you can apply across teams and over time.

Finally, the guide recognises that budget constraints are real. Employers cannot grant every pay rise request, even where there is a strong case on performance or market grounds. The key is to separate “cannot” from “will not”, to be transparent about the constraints you are working within, and to manage expectations about future reviews or alternative forms of recognition. Throughout, we highlight where the legal pinch points lie — and how HR can help operational managers navigate them without turning every pay conversation into a legal dispute.

If you are responsible for pay decisions, or for advising those who are, this article is designed to give you a legally informed, practical structure so that employee pay rise requests are handled consistently, lawfully and in a way that supports long-term retention and workforce planning, rather than undermining it.

Section A: Legal framework for pay rise requests

Employee pay rise requests sit within a defined legal context, even though UK law does not guarantee any automatic entitlement to an increase in salary. HR professionals and business owners need to understand what the law requires, what it prohibits and where the risk areas lie. A structured approach to pay decisions depends on knowing which factors genuinely constrain an employer’s discretion.

A pay rise request is, at its core, a contractual matter. Unless a contract expressly entitles an employee to a particular salary increase or a formula-based uplift, pay reviews remain discretionary. But that discretion is not unfettered. Decisions on pay must comply with equality legislation, minimum wage law, protections for whistleblowers and the implied contractual duty of trust and confidence. Pay decisions can therefore be scrutinised in grievances and, in some cases, employment tribunal claims.

1. The employer’s legal position

Most employment contracts will include either a fixed salary or a salary with a discretionary annual review. A review clause does not create a right to an increase. It simply requires the employer to consider whether an increase should be granted. However, where the contract promises a pay review, the employer is expected to carry out that review genuinely and in good faith. Failing to conduct the review at all, or conducting it in a purely token way, can amount to breach of contract and undermine trust in the process.

Even in the absence of a review clause, employers must exercise their discretion in good faith. Pay decisions that are arbitrary, punitive or applied inconsistently without justification can breach the implied duty of trust and confidence. That risk increases where the decision appears connected to a previous disagreement, whistleblowing, trade union activity or other protected conduct. HR should ensure managers understand that pay must never be used as a vehicle to penalise employees for raising concerns or asserting their rights.

2. Equality Act considerations

Equal pay and discrimination laws are critical in any pay-related discussion. Equal pay rules apply to men and women performing like work, work rated as equivalent or work of equal value. A pay rise decision that increases an existing pay gap without justification can be challenged, even where the gap arose inadvertently. Employers may rely on a genuine “material factor” defence to justify a difference in pay, but that factor must be unrelated to sex, based on objective criteria such as experience, performance or market conditions, and applied consistently.

More broadly, any pay decision must not be tainted by discrimination on grounds of a protected characteristic such as age, sex, race, disability, religion or belief. HR should be vigilant where patterns emerge, for example if pay rise requests from part-time workers (often women) are refused consistently while full-time employees are rewarded more generously. Transparent criteria and documented reasoning help demonstrate that decisions are based on objective factors rather than unlawful considerations. Where employers rely on market data, performance or experience to justify different pay outcomes, they should ensure those justifications do not simply mask unjustifiable pay gaps.

3. National Minimum Wage compliance

Regardless of performance or internal benchmarking, an employee’s pay must never fall below the National Minimum Wage or National Living Wage. This becomes relevant where salaries do not increase at the same pace as statutory minimums. HR should monitor upcoming NMW/NLW rises to ensure that declining a pay rise does not inadvertently result in non-compliance.

For salaried hours workers, employers must also ensure that contractual hours and actual working patterns do not cause a salary to fall below minimum wage thresholds in practice. The risk is greater for lower-paid employees working additional unpaid hours or absorbing increased workload without corresponding pay adjustments. HR should also be mindful of the impact of salary sacrifice arrangements, such as pension salary sacrifice, which can reduce an employee’s cash pay; employers must check that any such arrangements do not push pay below the relevant minimum wage rates.

4. Documenting the decision

Every pay rise decision should be backed by a clear audit trail. Documentation is not a legal requirement in itself, but it is an important safeguard. Records should reflect what the employee requested, the evidence considered, the comparators reviewed, the manager’s reasoning and the final outcome. This becomes crucial if the employee later raises a grievance, alleges discrimination or challenges the fairness of the decision.

From a managerial perspective, documented reasoning also ensures consistency in future decisions. HR can look back at how previous requests were assessed to ensure alignment and avoid creating unjustifiable discrepancies. At the same time, records must comply with data protection obligations: notes should be factual, proportionate and retained in line with the organisation’s HR retention schedule. HR should assume that pay decision records may be disclosable in a subject access request and ensure that managers do not include inappropriate commentary or personal opinions that cannot be justified.

Section A Summary
The legal framework for handling pay rise requests is shaped by contract terms, equality laws, minimum wage obligations, whistleblowing protections and the requirement to act reasonably and consistently. While employers are not required to grant pay rises, they are required to make decisions lawfully, carry out any contractual reviews genuinely and explain outcomes coherently. A clear understanding of these obligations enables HR teams to guide managers through pay conversations with confidence and minimise legal exposure.

Section B: Managing the pay rise conversation

Once an employee has requested a pay rise, the way the employer handles the conversation can determine whether the issue resolves smoothly or escalates into dissatisfaction, grievance or legal challenge. HR’s role is to ensure that managers approach these discussions with preparation, clarity and consistency. A pay discussion is not just a financial decision; it is a communication and employee-relations exercise that requires structure.

A poorly handled meeting — rushed, dismissive or emotionally charged — creates immediate risk. Employees may feel undervalued, misled or unfairly treated. Conversely, a well-prepared conversation, grounded in facts and delivered with transparency, helps maintain trust even where the outcome is not the increase the employee hoped for.

1. Preparing for the meeting

Preparation is the most important stage of any pay rise discussion. Before meeting the employee, HR should ensure the manager has reviewed:

• the employee’s role profile
• current and historic performance data
• recent one-to-one notes and appraisal outcomes
• internal pay comparators
• market benchmarking data

If the contract contains a pay review clause, that should be checked to ensure the manager understands what is and is not promised. Where the contract requires a pay review to take place annually, that review must be carried out genuinely rather than as a formality. Preparatory work should also include checking for any existing concerns that may influence the conversation, such as a recent grievance, capability process or change in duties. None of these factors should be used unfairly, but managers must approach the meeting with full context.

This preparation prevents decisions being made on the spot or emotionally. It also avoids the error of agreeing to a pay rise simply to defuse tension, without considering the wider impact across the team or the potential equal pay implications.

2. Structuring the discussion

The meeting itself should follow a clear structure. The manager should begin by acknowledging the request and explaining that pay decisions are based on objective criteria, not personal favour. It is good practice to set out how the discussion will run, what information has been reviewed and what the employee can expect.

During the conversation, the manager should invite the employee to outline their reasoning. This gives the employee space to express concerns and provides insight into whether the request is driven by performance, workload, market comparisons or personal financial pressures.

Managers should avoid reacting defensively. Instead, they should respond with factual information: evidence of performance, the organisation’s pay approach, benchmark data and current business constraints. Where inconsistencies or misunderstandings arise, these should be addressed directly and respectfully. HR may attend the meeting or provide managers with talking points to ensure the tone and structure are consistent across the organisation.

3. Responding to requests

Employers generally have three possible outcomes: agree, decline or defer. Each outcome has its own risks and should be communicated with clarity.

Agreeing to a pay rise requires clear justification based on performance, market rate or increased responsibilities. HR should check for equity across teams to avoid creating unjustified gaps.

Declining a request should be handled sensitively. The manager should explain the reasons plainly, referencing the evidence considered. Where performance is a relevant factor, this should not be raised for the first time at a pay meeting; doing so risks breaching the expectations set out in the ACAS Code of Practice, undermines confidence in the process and increases the likelihood of grievances or constructive dismissal claims. Where appropriate, managers can highlight development steps or future review points. Vague reasoning should be avoided, as it encourages misunderstandings and disputes.

Deferring a decision can be appropriate where more information is needed or where business conditions may change. However, deferral should include a clear timeline. An indefinite postponement creates frustration and risk.

4. Communicating outcomes

Regardless of the outcome, the decision should be confirmed in writing. The written record should summarise what was discussed, the evidence the employer considered and the final decision. This written confirmation helps maintain consistency, reduces scope for misunderstanding and is a key protective step if the employee raises the issue later.

Where the decision is a refusal or deferral, the written communication should reinforce the rationale discussed in the meeting. HR should also ensure managers are using consistent language across teams to avoid the appearance of arbitrary decision-making. Written outcomes should be drafted with the possibility of a subject access request in mind, meaning only factual and defensible commentary should be included.

Section B Summary
Managing the pay rise conversation requires preparation, structure and clarity. A well-handled discussion can preserve engagement and avoid disputes, even where the outcome is not what the employee wanted. HR should equip managers with the tools, evidence and language needed to approach these conversations consistently, lawfully and in line with the ACAS Code of Practice.

Section C: Assessing pay rise requests fairly

A fair, evidence-based assessment process is central to defensible pay decisions. HR and business owners must ensure that each request is considered against objective criteria rather than personal preference, emotion or expediency. This section sets out what that assessment should include and how to avoid creating inequities or legal risk. A well-designed assessment process also strengthens organisational credibility, as employees can see that pay decisions follow a consistent logic rather than hidden rules or reactive judgments.

Fair assessment does not mean every request results in an increase. It means employees understand the reasoning behind the decision and that decisions align with organisational standards, market conditions and legal obligations. The goal is to create a clear, repeatable framework that supports retention without inflating payroll unnecessarily or exposing the organisation to discrimination risk.

1. Performance-based criteria

The starting point for most pay rise decisions is performance. HR should ensure that performance data is objective, recent and consistent across the organisation. Appraisal outcomes, KPIs, competency frameworks and behavioural assessments should all be considered.

A performance-linked increase must be supported by evidence. Weak or poorly documented performance reviews can undermine the justification for either granting or refusing a pay rise. If performance metrics are absent or inconsistent, the decision becomes harder to defend and easier to challenge.

Where performance issues exist, the discussion should not come as a surprise. Previous one-to-ones and reviews should have clearly flagged concerns. A pay rise meeting is not the place to raise new performance criticisms for the first time and doing so risks breaching the ACAS Code’s expectations around early, clear communication.

2. Market and benchmarking data

Employees increasingly rely on publicly available salary data when forming expectations. Employers should not base decisions solely on external surveys — which vary widely in accuracy — but market benchmarking remains an important part of a fair assessment.

HR should review trusted salary surveys, recruitment data, internal job architecture and how comparable roles are paid within the organisation. Where employers rely on market forces to justify a higher or lower salary for one role, they must ensure this does not inadvertently widen unjustifiable pay gaps between men and women performing equal work. The “material factor” defence may justify a market-driven pay difference, but only if it is applied transparently and consistently.

Market movement is particularly relevant in skills-short sectors where salaries can rise quickly. Ignoring these market forces can lead to retention issues, especially for high-demand roles. HR should ensure that any market benchmarking used for one employee is applied consistently to comparable roles to avoid claims of unfair or discriminatory treatment.

3. Financial considerations

Budget constraints are a legitimate part of any pay rise decision. Employers are not required to grant increases that the business genuinely cannot afford. However, financial considerations must be applied consistently and transparently.

If a request is refused on financial grounds, HR should ensure that the rationale aligns with decisions made for other employees. Selective use of “budget constraints” for some individuals but not others creates discrimination risk and undermines trust.

Where affordability is the primary issue, employers may consider time-bound deferrals or phased increases to balance financial pressures with retention needs. HR should also prepare managers to explain business constraints clearly to avoid employees interpreting them as personal or arbitrary.

Employers should also be wary of repeated annual increases becoming an assumed contractual entitlement. If managers routinely award yearly increases without explanation, employees may argue that a contractual right has arisen through custom and practice. HR should ensure that decisions — including refusals — are communicated transparently to avoid inadvertently creating implied terms.

4. Alternative options

A pay rise is not the only way to recognise an employee’s contribution. When budgetary, structural or legal constraints prevent an immediate increase, HR can explore alternatives such as:

• additional training or development opportunities
• expanded responsibilities with a future review date
• one-off recognition payments where appropriate
• flexible working arrangements
• role re-scoping or progression pathways

These options do not replace pay rises but can help maintain engagement while preparing for a future increase. Employers should avoid offering alternatives that imply increased workload without corresponding compensation unless this is part of a transparent and agreed progression plan. Imposing additional duties without pay may amount to an unlawful change in contract terms and could contribute to discrimination or constructive dismissal risks if applied inconsistently.

Section C Summary
Fair assessment of pay rise requests requires objective performance evidence, consistent use of market data, transparent financial reasoning and consideration of alternative forms of recognition. By applying a structured and equitable framework, HR can support managers in making lawful, consistent and commercially balanced decisions that reinforce retention and credibility.

Section D: HR risk areas and how to avoid them

Pay rise decisions carry several HR and legal risks when they are handled inconsistently, inadequately documented or communicated poorly. For employers, the danger is not only the immediate employee relations impact but also the longer-term legal exposure created by unjustified pay disparities or poorly evidenced reasoning. This section outlines the key risk areas and how HR can mitigate them through structured processes and clear communication.

HR plays a central role in spotting patterns, challenging inconsistent decisions and ensuring managers do not approach pay discussions casually. A fair process protects the organisation from claims, preserves trust and prevents avoidable grievances. It also ensures that the business does not inadvertently create pay gaps that are costly to resolve later.

1. Discrimination risk

The Equality Act 2010 applies directly to pay decisions. Discrimination can occur where an employee with a protected characteristic receives a less favourable outcome than a comparator and the employer cannot justify the difference.

Common examples include:

• women being refused increases more frequently than men
• older employees receiving smaller uplifts than younger employees
• part-time employees, often women, being overlooked in pay reviews
• disabled employees being assessed unfairly due to absence patterns linked to disability

In addition to direct and indirect discrimination, employers should also be alert to:

• victimisation – treating an employee unfavourably because they raised or supported a discrimination complaint
• harassment – inappropriate comments made during pay discussions creating unwanted conduct related to a protected characteristic

HR must monitor decisions across teams to identify trends and ensure that managers can justify differences with objective evidence. A simple test is whether the employer would be comfortable defending the decision in an employment tribunal. If the rationale is vague or subjective, the risk is higher. Employers relying on market forces must be sure these do not entrench unjustifiable gender pay disparities and should ensure any “material factor” is evidence-based and consistently applied.

2. Grievance escalation

Pay disputes often escalate into grievances when employees feel the process was unfair, rushed or dismissive. Even if the organisation has acted lawfully, poor communication creates unnecessary friction.

Typical triggers for grievances include:

• unclear reasoning for a refusal
• inconsistent treatment compared with colleagues
• lack of evidence or explanation in meetings
• delays in communicating the decision

HR should ensure managers understand how to explain decisions confidently and transparently. Employers must also follow the ACAS Code of Practice on Disciplinary and Grievance Procedures, as unreasonable failure can lead to a tribunal increasing compensation by up to 25%. Clear, evidence-based reasoning and timely communication reduce the likelihood of grievances and reinforce confidence in the fairness of the process.

3. Constructive dismissal risk

Constructive dismissal risk arises when the employer’s behaviour breaches the implied term of trust and confidence, and the employee resigns in response. Pay decisions alone rarely meet this threshold, but the way they are handled can contribute to claims.

Risk increases where:

• the refusal appears punitive following a protected act, such as whistleblowing
• the employer raises new performance concerns during a pay discussion
• decisions are applied arbitrarily or without explanation
• the employee is singled out or treated markedly differently from others

It is important to note that whistleblowing protections also cover detriment short of dismissal. A refusal of a pay rise because of a protected disclosure may itself give rise to a detriment claim even if the employee remains employed. HR must guide managers to keep the conversation focused on evidence, avoid personal judgments and never use pay as leverage in unrelated disputes.

4. Managing expectations

Many pay disputes stem from a mismatch between what employees expect and what the employer is prepared to do. Without a clear framework or policy, employees may assume annual increases are guaranteed or that strong performance automatically equates to more pay.

HR should ensure that:

• the organisation has a communicated pay review policy
• employees understand how pay decisions are made
• managers are trained to set expectations early
• pay discussions are separated from unrelated issues such as performance warnings

Employers should also be aware that repeated annual increases can, over time, create an implied contractual entitlement if consistently applied without explanation. To avoid this, decisions — including refusals — should be communicated transparently and linked clearly to the organisation’s wider pay approach. Managing expectations proactively reduces conflict, avoids misunderstandings and creates a more transparent pay culture.

Section D Summary
Pay rise decisions can expose employers to discrimination claims, grievances, whistleblowing detriment, allegations of constructive dismissal and long-term internal pay inequities if handled poorly. HR’s role is to ensure that pay conversations are consistent, evidence-based and transparent. A structured approach protects the organisation legally and reinforces trust across the workforce.

FAQs

1. Can an employee legally demand a pay rise?
No. UK law does not give employees a statutory right to a pay rise. They can request one, but employers are not legally required to agree unless a contractual entitlement exists. However, employers must handle requests fairly and lawfully to avoid discrimination, whistleblowing detriment and employee relations issues.

2. Can refusing a pay rise lead to a grievance?
Yes. Employees can raise a grievance if they believe the decision was unfair, inconsistent or discriminatory. Employers must also follow the ACAS Code of Practice on Disciplinary and Grievance Procedures, and failure to do so may result in a tribunal increasing compensation by up to 25%.

3. Do employers need to justify a pay rise refusal in writing?
There is no statutory requirement to provide the rationale in writing, but it is strongly advisable. Written confirmation ensures clarity, reduces misunderstandings and provides an audit trail if the decision is later challenged, including in a subject access request.

4. How often should employers review employee pay?
Most employers conduct annual pay reviews, but the frequency depends on contractual terms, business needs and market conditions. If the contract includes a review clause, employers must carry out the review genuinely, even if it does not guarantee an increase.

5. Can a pay rise be linked to new responsibilities?
Yes. Pay rises can be justified where an employee has taken on additional duties or moved into a higher-value role. Employers should document the change in responsibilities and ensure that similar cases are treated consistently to avoid discrimination or equal pay issues.

Conclusion

Pay rise requests are now a routine part of workforce management, but the way employers handle them has a direct impact on legal risk, employee morale and organisational credibility. The absence of a statutory right to an increase does not mean employers can treat pay discussions casually. Every decision must be grounded in evidence, applied consistently and communicated clearly to avoid misunderstandings, grievances, whistleblowing detriment or discrimination claims.

HR’s role is to equip managers with clear guidance, transparent criteria and strong documentation practices. A structured process—covering preparation, evidence gathering, internal benchmarking and communication—ensures that decisions support long-term retention rather than undermine trust. Even where the outcome is a refusal or a deferral, a well-reasoned explanation preserves dignity and reduces the likelihood of disputes.

A disciplined approach to pay rise management also protects employers from creating unintended pay disparities. By monitoring patterns, challenging inconsistencies and ensuring decisions align with organisational policy and UK employment law, HR can maintain fairness across teams and avoid legal exposure.

Handled well, pay rise conversations can strengthen engagement and reinforce the organisation’s values. Handled poorly, they can escalate quickly into avoidable conflict. This guide provides HR professionals and business owners with a repeatable, defensible framework to manage pay rise requests with confidence, compliance and clarity.

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