Around one in five employers have made a one-off payment to some or all staff in 2022, according to IDR’s latest research on prospects for pay and reward. In nearly all cases these payments were made on top of – either in addition or subsequent to – any consolidated salary increases awarded under usual pay reviews. Most of the survey respondents making such lump-sum payments (around three-fifths) did so due to the higher cost of living currently. Several other reasons were cited by participants for making the payments, including recruitment or retention. In a small number of cases, the one-off payments were specifically negotiated as part of annual pay reviews to accompany percentage pay increases.
The methods to determine the value of the payment varied, with 58% of the sample of employers deciding on a fixed sum. The typical value of such payments made by participants in the study varied. Nearly half (46%) were worth up to £500 and around a quarter (27%) of payments were worth between £501 and £1000. The remaining proportion of employers (also 27%) made payments worth more than £1,000. The second most popular method was to pay a one-off sum as a percentage of salary, typically worth 5% while one employer paid a lump sum equal to eight weeks’ pay.
Such payments provide workers with what is likely to be a welcome boost to earnings during a time of sharply rising inflation. Partly as a result of higher inflation, the median pay award across the economy has continued to rise, reaching 4.0% in June. Along with a much tighter labour market than previously, these factors have combined to increase pressure on employers to boost staff pay and remain competitive in the labour market.
Another approach to coping with higher inflation and tighter labour markets is to implement an interim pay rise, whereby pay is increased ahead of or in addition to the usual pay anniversary period. Nearly a fifth (19%) of survey respondents have taken this approach to either provide an additional pay increase for some or all staff, or to bring forward the effective date of a pay rise. We have observed the implementation of such interim awards across the economy, particularly in financial services and retail. High-street banks Barclays and NatWest both awarded their lowest-paid staff a second consolidated pay increase in 2022, worth £1,200 and £1,000 respectively. These were in addition to their annual pay reviews that took place in the spring. Elsewhere, supermarket Aldi will implement a 40p uplift to its rate for hourly-paid store staff from September 2022. This increase of 4% (3.5% in London) follows the pay rise of 5.8% that took effect on the company’s usual pay anniversary on 1 February 2022.
About the survey
IDR’s survey received responses from 121 UK organisations, together employing nearly one and a half million workers. Further findings will be published in our upcoming Pay Planning for 2023 report, more details below.
