Date: 25 January 2016

More of the same for pay awards in 2016

The first pay awards to be made in 2016 indicate that employees are in for more of the same in 2016 when it comes to their annual pay review.

Just as 2015 was dominated by pay awards worth 2%, employers have predicted a similar outcome for their 2016 pay reviews. Indeed, analysis of the first 2016 pay awards shows that the median payment so far this year is 2%. However, half of all pay awards already concluded in 2016 are worth between 1.1% and 2.8%, indicating a wider spread of awards than seen during 2015.

These latest figures are in line with the pattern of pay awards over 2015 as a whole. Based on XpertHR’s sample of 1,255 basic pay awards, the median award across the whole economy during 2015 was 2%. The figure recorded for the private sector was also 2%, while it stood at 1.5% for the public sector.

XpertHR’s latest full analysis covers the three months to the end of December 2015. Known for being the quietest period of the year for pay awards to take effect, we nonetheless see a repeat of the pattern seen throughout the rest of the year, with pay awards recorded at a 2% median. Both the manufacturing and production, and services arms of the private sector have also recorded pay awards at this level.

A key issue for employers on the pay front this year is the national living wage, due to come into effect on 1 April 2016 at £7.20 an hour for employees aged 25 and over. Research by XpertHR suggests that just under half of employers will be affected, with a median 11% of their workforce entitled to a pay rise. Employers estimate that it will cost just under £600 per affected employee in the first year, but with the Government’s target of the rate being £9 an hour by 2020, employers will be looking at pay rises of around 6% each year for the next four years for employees paid at this new minimum rate.

XpertHR pay and benefits editor Sheila Attwood said:

“Employers are not showing any signs of wanting or needing to award higher pay rises in 2016. Many will be affected by the introduction of the national living wage in April, and will have to find ways to fund bringing all eligible employees up to the new minimum rate.”
Note to editors

  • In the latest quarterly analysis, details of 66 pay awards effective in the three months to the end of December 2015 that provide an identifiable increase in the lowest adult rate of pay have been recorded. These cover the pay awards of almost 600,000 employees.
  • All XpertHR press releases can be viewed here. The next press release on pay settlement trends will be released on 18 February 2016.
  • XpertHR is the UK’s most comprehensive online source of legal compliance, good practice and benchmarking information made available to HR professionals as a single subscription service.
    The median increase by number of pay reviews is the midpoint in the total spread of basic pay awards – i.e. the percentage at which half the pay reviews are at the same or higher value and half are at the same or lower value.
  • The basic pay award measured is the annualised percentage increase received by the lowest adult grade. It excludes any additional payments over and above the basic rise such as bonuses, consolidation, increments and performance-related pay.
  • XpertHR offers detailed statistics and analysis of pay settlements across the UK. The research is based on the largest sample of pay deals collected in the UK – XpertHR collects details of pay settlements for around 1,600 employee groups each year. Its database contains more than 38,000 pay settlements dating back to 1984.

Sheila Attwood
Managing Editor, Pay and HR Practice

Tel: 020 8652 2251
I am in the office Monday to Thursday

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