Business-owners always need to have a sharp focus on the bottom line, seeking to reduce costs and increase profits, but there are very good reasons why employers might want to pay their staff more.

Whilst no one is automatically entitled to a pay rise each year (unless it were written in the contract), it is generally expected that employers will give an increase annually and we’ve seen from the public sector pay freeze that workers do grumble when this does not take place.

You might want to offer a conditional pay-rise to change some onerous terms of your staff contracts. If, for example, an employer inherited a contract that awards generous sick pay and this is being abused by some workers, you could offer a pay rise in exchange for relinquishing the sick pay entitlement. If you identify staff who have become increasingly important to your business, you might want to extend their notice period or impose restrictive covenants and need to provide some consideration for this - a pay rise conditional on their agreement would suffice.

It can be a way to improve the quality of your team. It also enables you to recruit the best staff from lower-paying competitors and more generally, it is a way of improving workforce morale. Essentially, if someone is doing a tough job, earning minimum wage and they can get the same wage from a competitor or by working in a different sector, what incentive do you have for them to stay?

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