Fair Pay at Work: Is Your Business Getting It Right?

3rd October 2024

By Laura Weston MCIPD  |  5 minute read

Next Generation. Asda. Tesco. Three of the biggest pay claims in UK history, all of them ended up the same way. An organisation that thought its pay was fair found out it wasn’t, the hard way.

You might not be a national retailer, but the legal test is the same. If two people are doing work of equal value for your business and they’re paid differently, you’ve got a problem.

Most SME owners don’t see themselves as being in the equal pay firing line. The reality is a lot more of them are.

Key facts at a glance

  • The National Living Wage increased to £12.21 per hour for workers aged 21 and over from April 2026. Employers must make sure payroll reflects this.
  • Holiday pay for workers on variable or irregular hours must be calculated using the 52-week average earnings method from April 2026.
  • HMRC can investigate employers who are underpaying workers and can name and publicly shame non-compliant businesses.
  • Most underpayment is unintentional. The most common cause is outdated payroll systems or incorrect calculations of holiday pay for part-time staff.

The quiet cost of getting pay wrong

A single tribunal claim for unequal pay can run into tens of thousands before you add legal fees, management time and the hit to your employer brand. And those are just the quick ones. The retail cases have shown how long pay disputes can drag on.

The cost you notice sooner is the one that shows up on your team. When people feel pay is unfair, they stop going the extra mile. They start looking elsewhere. They tell their friends not to apply.

What fair pay actually means

Fair pay isn’t about paying everyone the same. It’s about being able to explain, clearly and honestly, why people in your organisation earn what they earn.

Two tools do most of the heavy lifting. Job evaluation looks inside your business and asks how much each role is worth relative to the others. Market pricing looks outside and benchmarks similar roles in your sector and region.

Used together, they give you a pay structure you can defend. To your employees, to a tribunal, and to yourself.

Article

  • Need Help Getting Your Pay Right?

    Limelite HR & Learning are expert HR professionals, supporting you with practical, people-focused HR and training services in the Midlands and across the UK. We provide friendly, tailored HR support, employee relations and leadership development to help organisations like yours thrive.

    Limelite HR supports UK employers with:

    ✔ Managing people issues
    ✔ HR policy and contract reviews
    ✔ Manager training
    ✔ Outsourced HR support

    If you need help reviewing your pay rates or auditing your HR, we can help, check out our HR Support Pricing.

    Or book a 30 minute discovery call here:

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Three signs your pay structure is out of date

Your longest-serving employees earn less than your newest hires. Loyalty has quietly been punished.

Pay rises happen based on who asks. The confident people get more, the quiet ones get left behind.

Two people doing the same job earn different amounts because that’s what they came in on. Nobody ever circled back to fix it.

If any of that sounds familiar, you’re not alone. And it’s fixable.

How we help you get pay right

We work with SMEs, charities and values-led organisations across Worcestershire, Birmingham and the wider West Midlands to build pay structures that are fair, transparent and commercially sensible. That usually means:

  • A full job evaluation of every role in your organisation
  • External benchmarking against credible market data
  • A clear pay framework your managers can explain
  • A plan to fix any gaps without blowing the budget

It’s the kind of work that sounds painful and turns out to be a relief. Once it’s done, pay conversations get easier for everyone.

What you can do this month

Pick one role and write down, honestly, why that person earns what they earn. If you can’t, you’ve found your starting point.

Ready to sort the people stuff?

If unfair pay is a risk you’d rather get ahead of, we’d love to talk. Book a free 30-minute discovery call and we’ll walk through what a fair pay review could look like for your organisation.

 

If you’d like help auditing your pay arrangements to make sure they are compliant, get in touch.

Book a free 30-minute discovery call

About the author

Laura Weston MCIPD, Senior HR Consultant at Limelite HR & Learning. Laura specialises in employment law, HR compliance, change management and policy support. Connect on LinkedIn.

FAQS

  • What does fair pay mean for employers in practice?

    Fair pay means paying people consistently for work of equal value, regardless of their sex, race or other protected characteristic. It also means being able to explain and justify pay decisions if challenged. Many businesses think they pay fairly but have never formally reviewed whether pay levels and increases have been applied consistently across comparable roles.

  • What is an equal pay audit and do I need one?

    An equal pay audit compares the pay of employees doing equal or comparable work and identifies unexplained gaps. It is a legal requirement for some public sector organisations but best practice for all employers. You do not need a formal audit to check your pay practices are defensible, but if you have not reviewed pay decisions systematically, it is worth doing before a claim arises.

  • What are the risks of getting pay wrong?

    Equal pay claims carry no cap on compensation and can go back six years. Claims can be brought on behalf of multiple employees simultaneously. The reputational damage of a high-profile pay claim can also be significant. Proactively reviewing your pay structure is significantly less expensive than defending a tribunal claim.

  • Can Limelite HR help us review our pay structure?

    Yes. We can review your pay practices, identify potential equal pay risks, and help you put a defensible pay framework in place. Get in touch to find out more.

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