Pay bands in the UK

As a company or organisation, having a salary band helps you to create a consistent and reasonable pay structure. A salary band (or pay band) creates a link between pay and performance, and so should be a key aspect of your compensation strategy. As it depends on the nature of your employee’s role in the organisation, this will also create employee opportunities for career progression and help you to make your pay more competitive in the jobs market. This guide shows you how to use a pay range and pay band effectively, keeping your current staff motivated and making you an attractive prospect to future employees in the hiring process.
 

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What is a salary band?

  Salary bands should be part of your overall compensation strategy as an organisation. Jobs that are of a similar nature are grouped together in a salary band; you should look at which jobs in your organisation have crossover attributes. Ideally, you will have a salary band that covers all of the jobs in your organisation; for instance, it should be based on:

  • The experience of the employee;
  • The job specification;
  • Their education;
  • Where in the UK the employee is working;
  • The nature of the hours they are working, such as if they are working ‘unsocial hours’.

  For example, your employees in an administrative role may have differing levels of experience and authority; so they would each be part of salary bands corresponding to the work that their role entails.
 

Establishing pay ranges for a role

  Next, you should consider establishing a pay range for each pay band. Salary bands have potential to offer a great deal of flexibility, as each band has a minimum and maximum wage range. They are usually offered during the hiring process, but can be adjusted during any given time.   You might also want to establish pay ranges based on your current budget, and the philosophy of your company. If your business is new, and you have an income that is variable, you might want to have a narrow base salary that you adjust once your income is more stable, with any additional benefits such as bonuses included to incentivise staff. There is a good chance that you will want to offer employees a pay raise after becoming more experienced in that role.   There is a lot of room for growth in the tech industry. A back-end developer starts on a salary of around £28,000, but their base salary can reach £65,000 or more. The classification of this job is very wide; which means that although an experienced and inexperienced back-end developer might have the same core skills, an experienced back-end developer will know more about programming languages, for example. The average salary of an experienced back-end developer is £53,936 a year. The pay range for a back-end developer is a lot wider than with some professions as there is a lot of room for development. Broad banding in this way means that there is less hierarchy and allows for more flexibility. In this case, you might also want your salary bands to overlap somewhat.   Roles in less competitive industries, or jobs that are overall less specialised, will usually have a much narrower pay range. This is the more traditional route for businesses, as it creates a more stratified relationship between the different roles in a company. This kind of banding is often found in public sector roles, but is useful in that it preserves salary equity and is easily adjustable to the market. A newly qualified teacher at a comprehensive school might earn between £25,714 and £32,157 based on location (whether they are based in London or other parts of the UK), but an experienced qualified teacher can earn between £25,714 and £41,604. Unqualified and supply teachers also earn slightly less. Although there is not such a wide salary band as in tech roles, there is still some incentive for progression.   There are often high-cost area supplements to those working in London. You may wish to increase an employee’s pay without giving them a promotion, and you can do this within the range of their salary band.
 

How to use pay ranges when hiring

  When hiring, it is important to understand that the pay ranges you offer should correspond to the current job market. This is because the job market sets benchmarks in terms of salary; having a current pay range will enable you to compare salaries of employees who are doing a similar job to ones currently in the job market. It is important to stay updated with the recent market data before specifying a pay range, in order to gain perspective of the current ranges that are on offer. Even after hiring, you will want to assess your salary bands every one to two years, to keep in line with the market. After all, you will want your position to stand out to future employees, making it clear that you offer good compensation for their hard work.   If you work in a highly competitive, specialist industry such as the tech industry, it is worth making your offer competitive with lots of perks, such as flexibility and overtime pay. The average salary of a software engineer is £43,322 a year, but you may want to somewhat adjust their pay depending on which programming languages they know, such as Python, JavaScript or SQL. It is also worth tailoring their salary to the cost of living where your tech hub is based.   A software engineer role calls for a niche skill set, and so developing specialised skills in this profession will make this employee very desirable in tech start-ups. For employees in the tech industry, a wide salary band can be incredibly motivating, and it means that you have a better chance of holding on to staff as they become more experienced.
 

Using salary bands in career progression

  Salary bands allow managers to control their budget, while being able to compensate or reward employees that are performing well, or are now taking on a more specialised role within the organisation. As salary bands correspond with the responsibility, specialisation and experience of each employee in your organisation, so you can use them to more easily assess whether an employee has progressed in their role. Employees with larger workloads or more responsibility or skill receive higher pay. For instance, imagine that a healthcare assistant is working for your healthcare firm. It is time for them to receive their annual appraisal, during which their experience is reviewed. If they are experienced enough, you might give them the opportunity to move up a pay band based on this assessment. The staff member moves up the pay band, but their responsibilities in the healthcare firm increase, or become more specialised. Senior roles that have a higher pay range are usually part of the highest salary bands; a chief nurse can earn an average of £76,231. If an employee moves up a salary band, it is important to note this does not always result in an increase in salary; rather it will increase the maximum of their salary potential.

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