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Salaries

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While organisations in the voluntary sector may not be able to pay the highest salaries, you still need to make sure you adhere to the law and that your pay system is both fair and seen to be fair by your employees.

Determining pay rates and national minimum pay rates

In determining pay rates in your organisation, you will need to balance a number of factors:

  • Affordability
  • Internal fairness, where more responsible jobs are paid at a higher level
  • External competitiveness, so that you can recruit and retain

In addition, you will need to meet the legal National Living Wage (NLW) and National Minimum Wage (NMW)requirements. You should note that the NLW and NMW are statutory rights that cannot be waived.

Volunteers are not entitled and neither are genuinely self-employed people. Many charities pay, or aim to pay, the ‘voluntary living wage’ recommended by the Living Wage Foundation (this is different from the National Living Wage, which is a legal minimum).

Reward strategy

Whether your organisation is small or large, it’s a useful exercise to consider how your reward strategy aligns with your wider HR and organisational strategies. What you need to achieve in organisational terms will impact on how you pay people, the levels at which you pay people, and the benefits you offer.

Salary policy

You should consider developing a salary policy, so that all staff and managers are clear about how pay is reviewed.

Your salary policy could include:

  • a statement of intent, explaining the organisation’s commitment to an open and fair pay system
  • the normal pay review date
  • a statement that rates of pay are reviewed annually without any obligation on the employer to increase them
  • how jobs are evaluated
  • what salary progression, if any, exists
  • the criteria for pay increases
  • the process that staff can follow if they feel that their pay is unfair.

Ranking jobs and job evaluation

The level of formality in your salary structure is likely to depend on the size of your organisation.

If you are a small voluntary organisation, with, say, under 10 employees, you may be able to set salary levels in the following way:

  • Determine a reasonable rate you can afford and that allows you to attract external recruits. You can determine this rate by looking at local advertisements for similar jobs and by checking with local contacts.
  • Keep job descriptions up to date and review them regularly, so that you can make sure that they reflect the actual jobs done and responsibilities held.
  • Review salary levels each year, to ensure they continue to be fair relative to other jobs in the organisation and that they reflect external market rates.

Once your organisation gets bigger, you are likely to need a form of job evaluation. For a small organisation, a simple classification system, such as the one below, may be sufficient. As organisations grow, they are more likely to need what is called an ‘analytical’ job evaluation scheme, where the job is broken down into ‘factors’ and points are allocated to these factors. You can find out further information about job evaluation from the Acas job evaluation handbook (pdf, 350KB).

Simple job classification system – example

Level

Definitions

Assistant

The job involves a range of routine and predictable tasks, carried out under supervision

Officer

The job involves a range of tasks, carried out with limited supervision in a variety of contexts. Some tasks are complex or non-routine and there is some personal responsibility or autonomy. Working in a group or team may often be a requirement.

Senior Officer/Supervisor

The job involves a defined occupation or a range of jobs where there is a broad range of varied tasks carried out in a wide variety of contexts. Most tasks are complex and non-routine, and there is considerable personal responsibility and autonomy. Supervision or guidance of others is often required.

Manager

The job involves a broad range of complex, technical, or professional work tasks, carried out in a variety of contexts. There is a substantial degree of personal responsibility and autonomy. Responsibility for the work of others and the allocation of resources is often required.

Senior Manager

The job involves work at a professional level or equivalent, requiring the mastery of a range of relevant knowledge and the ability to apply it at this level. There is very substantial personal autonomy. Significant responsibility for the work of others and for the allocation of substantial resources is often required, as are personal accountabilities for analysis and diagnosis, design, planning, execution and evaluation.

Salary structure

You should determine your salary structure to reflect the outcome of your review of jobs or job evaluation. You should also take into account market rates of pay, because if you are paying below the market, it may be difficult to recruit and retain staff.

You can find out about market rates of pay by participating in or purchasing salary surveys, or by collecting information on salaries from adverts. Be aware that market rates of pay do not give you the ‘answer’ - they are simply a guide and can sometimes be misleading. Where possible, you should use more than one salary survey or source of data.

On occasions, you may find that you need to set a salary at a higher level than indicated by your job evaluation and salary setting process, due to difficulties in recruiting.  If this is the case, one approach is to pay a basic salary, plus a separate market supplement. This sends a clear message as to why additional pay is being made and will remind you to review the payment against the market in the future.

Salary progression

You will need to consider whether you wish to have single (‘spot’) rates of pay or to allow for salary progression and if so, in what form (eg based on length of service or performance). Consider all options and choose the most appropriate for your organisation.

If you decide to set salaries based on a scale (eg five points, each three percent apart), it is recommended that it be made clear to staff that incremental salary progression each year is not guaranteed, but dependent on affordability and is at the organisation’s discretion. 

Some charities have performance-related pay schemes. Such schemes are intended to give most reward to those who contribute most. There are downsides of performance-related pay schemes – they can be time-consuming to operate and have the potential to cause more demotivation than motivation. For further information, see the Acas booklet on appraisal-related pay (pdf, 154KB).

Equal pay and fair pay

Equal pay legislation stipulates that men and women are entitled to equal pay. Equal pay includes basic pay as well as other contractual conditions of employment, such as hours of work, bonuses and pension contributions.

The Equal Pay Act requires that employers must pay men and women an equal wage when the work they do is:

  • the same or like work
  • of equal value
  • rated as equivalent via a job evaluation scheme.

Employees who believe they haven't received equal pay compared with someone of the opposite sex may take their case to an employment tribunal.

An employer may sometimes be able to justify differences in pay on objective grounds that are unrelated to gender, such as geographical differences.

The best way to avoid unequal pay is to adopt a structured approach, as outlined above.

The gender pay gap

The gender pay gap is different from equal pay in that it is concerned with the differences in average pay between men and women over time no matter what their role is. If your organisation has 250 or more employees, you must report annually on your gender pay gap.

The Acas website has further information on gender pay gap reporting

If your organisation has fewer than 250 employees, you may voluntarily report on gender. You may wish to refer to the Think-Act-Report website.

Further information

Page last edited Jun 28, 2018

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