One of our HR Experts from Beyond Rewards Inc., answered the following question from one of our Employer members:
Recently, a couple of our employees found out that a new hire, with equal experience but less education, is making more money than they are. This was an oversight on our part, but now we have to deal with it – and we’re unsure of the best way. If we raise all the salaries it will cost us a lot of money; decreasing the salary that was promised to the new hire could appease the current staff members but could potentially cost us the new hire; and doing nothing will not be acceptable. How should we proceed?
By: Brandy Douglas
Beyond Rewards Inc.
As stated you have three options: decrease the new employee’s salary, increase the salary of the other employees or do nothing at all. We agree that doing nothing at all about this situation will not be acceptable; however, you must use caution when moving forward with the other two options.
Decreasing the new employee’s salary may appease the other employees; however you run the risk of losing the new employee. There could also be legal consequences for decreasing the salary promised in the offer of employment and, ultimately, it could result in a constructive dismissal. We advise that should you choose this solution that you approach it very carefully and only do so after getting legal advice and if your legal counsel agrees this is a viable option.
Understanding that raising salaries will cost a lot of money, you may want to look at another way to compensate the other employees. You could provide them with extra vacation time, and/or gradually bring them up to the same wage. Either way, you must address this oversight in a manner that will not only appease the other employees, but be done in a manner that is affordable to the company and not enforce a precedent for future hires to the organization.
It is also important at this time to stress confidentially around compensation amongst the staff and look at why this oversight occurred. You may want to reevaluate the compensation structure and process at your organization and develop pay scales for each position so this is less likely to occur again in the future.
Brandy Douglas is a Human Resource Management Consultant based in Guelph, Ontario.
Beyond Rewards Inc.
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