Can an employer refuse to backdate payrise for employee in notice period?

pensionpawn

A colleague handed their notice in early May and departs soon. The company recently told all staff that it is still trying to agree this years cost of living pay rise (effective from 1st April) with the unions and will pay the backdated amount in the month the rise percentage is agreed. My colleague contacted HR to remind them not to forget to pay him after departing (as he worked April, May and most of June) and they advised him that they don't have to as the pay award hasn't been agreed yet and he is in his notice period. That sounds illegal. He did the same job as the rest of us and should be paid at the same rate as the rest of us. Anyone encounter something similar / have an opinion?

lincroft1710

Employers do not have to pay employees who do the same work, the same pay.

400ixl

It is often the case that employment contracts have clauses that once under a period of notice that the employee no longer qualifies for any discretionary payments such as pay rises and bonuses.

People do the same work as their colleagues for different levels of pay in many industries and get different pay rises to each other all the time.

You colleague is likely not eligible for the backdated pay rise. 

Annisele

That's certainly how my employer does things. I accept that "my employer does that" doesn't prove it's legal - but I tend to take the view that a large employer with qualified HR staff is more likely than not to get that sort of thing right.

I don't see why it would be illegal. It'd be illegal to pay your colleague less than minimum wage, and it'd be illegal to pay him less than others because of a protected characteristic. I suspect there are a few other things I don't know about that would make the difference illegal - but "pay rises are largely about retaining my staff, and I don't care about retaining the people who have already resigned" sounds like a fair reason to me.

Marcon

pensionpawn said:

A colleague handed their notice in early May and departs soon. The company recently told all staff that it is still trying to agree this years cost of living pay rise (effective from 1st April) with the unions and will pay the backdated amount in the month the rise percentage is agreed. My colleague contacted HR to remind them not to forget to pay him after departing (as he worked April, May and most of June) and they advised him that they don't have to as the pay award hasn't been agreed yet and he is in his notice period. That sounds illegal. He did the same job as the rest of us and should be paid at the same rate as the rest of us. Anyone encounter something similar / have an opinion?

Depends entirely on the wording of his contract if he's a private sector employee.

400ixl said:

It is often the case that employment contracts have clauses that once under a period of notice that the employee no longer qualifies for any discretionary payments such as pay rises and bonuses.

People do the same work as their colleagues for different levels of pay in many industries and get different pay rises to each other all the time.

You colleague is likely not eligible for the backdated pay rise. 

Might be if he works in the public sector: https://www.communitycare.co.uk/2022/11/04/councils-asked-to-fund-backpay-for-recent-leavers-following-deal-on-1925-boost/

pensionpawn

So if this is legal, I suppose there's nothing to prevent a company from delaying to agree a pay rise, even one where they are happy with the percentage increase, until into the autumn as in addition to gaining interest on the back pay, if employees become impatient and leave, they also save on the (considerable for some) back pay of those departing employees.

Savvy_Sue

I know we did once make a payment to someone who'd already left for a backdated pay rise but it seemed surprising at the time. 

Especially as they didn't know it was coming!

If in a union, speak to them.

TELLIT01

Entitlement depends on the contract of employment.  Many have content to the effect that a person must still be in employment on the date payment is made.

Undervalued

pensionpawn said:

So if this is legal, I suppose there's nothing to prevent a company from delaying to agree a pay rise, even one where they are happy with the percentage increase, until into the autumn as in addition to gaining interest on the back pay, if employees become impatient and leave, they also save on the (considerable for some) back pay of those departing employees.

Nothing illegal about it unless an employee's pay dips below the national minimum wage. Outside of that there is no "right" to a pay rise ever unless there is a contractual agreement guaranteeing one. Otherwise they are purely a matter for negotiation.

Similarly, there is no right to interest on back pay unless that too has been agreed along with the pay rise.

pensionpawn

TELLIT01 said:

Entitlement depends on the contract of employment.  Many have content to the effect that a person must still be in employment on the date payment is made.

Even if they were still employed for months after the date the pay rise is effective from? Call me cynical, however I'm convinced that my company is exploring strategies for effectively avoiding a pay rise for a considerable number of the workforce next year. There are reasons why staff may start to leave next summer and it now looks like that the longer they wait to award the cost of living rise, the more money they will save. Morally corrupt.

Undervalued

pensionpawn said:

TELLIT01 said:

Entitlement depends on the contract of employment.  Many have content to the effect that a person must still be in employment on the date payment is made.

Even if they were still employed for months after the date the pay rise is effective from? Call me cynical, however I'm convinced that my company is exploring strategies for effectively avoiding a pay rise for a considerable number of the workforce next year. There are reasons why staff may start to leave next summer and it now looks like that the longer they wait to award the cost of living rise, the more money they will save. Morally corrupt.

It may well be but that doesn't mean it is unlawful.