The pay rise conversation I got wrong

The first time someone asked me for a pay rise, I said: 'Let me see what I can do.'

It sounded reasonable. It sounded like a yes forming. What it actually was is the single worst sentence available in that conversation, and it took me losing a genuinely good employee to understand why.

What actually happened

She'd been with us a bit over two years. She'd taken on things nobody asked her to take on, she was the person clients rang first, and she'd quietly become load-bearing in a way I'd noticed and never once said out loud. She asked for a meeting, was visibly nervous, and made a well-prepared case for a rise that, looking back, was entirely fair.

I wasn't ready. Cash was tight that quarter, I hadn't looked at anyone's salary in a year, and I had no framework at all for what people should be paid. So I stalled: let me see what I can do. She thanked me. Nothing was agreed, no date was set, and the meeting ended with both of us relieved it was over.

Then I did the thing that turned an awkward meeting into a resignation — I didn't come back to her. Not out of malice. The month got busy, the answer was going to be difficult, and every week that passed made it slightly easier not to raise it. Six weeks later she handed in her notice for a job paying a bit more than she'd asked me for.

Why 'let me see what I can do' is the worst answer

Because it isn't an answer. It's a delay dressed as goodwill, and it hands all the discomfort back to the person who was brave enough to ask.

Asking for more money is genuinely hard. Whoever is sitting across from you has probably rehearsed it, likely for weeks. What they need is a clear response — yes, no, or a specific date by which you'll answer and exactly what you'll be weighing. What they get from a vague maybe is a fortnight of wondering, then another, and the slow realisation that they'll have to raise it again themselves. Most people won't. They'll do the far easier thing and let the market answer for them.

Silence after a pay conversation isn't neutral. To the person who asked, it reads as a no delivered by someone who couldn't be bothered to say it.

A worked example

Owners talk themselves out of a rise because they compare it to nothing. Compare it to the alternative and the arithmetic usually settles the argument in about five minutes. The figures here are illustrative, but every rate in them is a real 2026-27 one.

Say someone on £32,000 asks for £36,000. The rise is £4,000, but that isn't what it costs you. Employer's National Insurance runs at 15% on earnings above the £5,000 secondary threshold, so the extra salary adds £600. Employer pension at the 3% auto-enrolment minimum adds another £120, because the whole £4,000 sits inside the qualifying earnings band. True cost: £4,720 a year, or £393 a month. If you're claiming the £10,500 Employment Allowance and haven't used it up, the NI part may cost you nothing at all this year.

Now cost losing them instead. Recruiting a replacement through an agency at 18% of first-year salary is £6,480 on a £36,000 role. Run it yourself and you still spend real money: two people, twenty hours between them on adverts, sifting and interviews, at a loaded £45 an hour is £900. Then there's the gap. Assume six weeks to hire and twelve weeks before the new person is at full output — eighteen weeks at, generously, half productivity from a £36,000 role is about £6,200 of lost work, before counting what the rest of the team absorbs to cover it. Add a fortnight of somebody's time on induction, 70 hours at £45, and that's £3,150 more.

Total: between roughly £10,000 if you recruit it yourself and £16,000 if you use an agency, to replace one competent person you already had. Against £4,720 to keep them. And the replacement arrives on the market rate anyway — which is, almost by definition, roughly the number the first person asked you for.

None of that says yes to every request. It says the honest comparison is not 'rise versus no rise'. It's 'rise versus a one-in-three chance of paying three times the rise within the year'.

What I'd learned by the second time

The next time it happened, I handled it almost the opposite way, and it went fine even though the immediate answer was no.

I said I couldn't commit to anything in that meeting because I wanted to look at it properly rather than react. I gave a date — two weeks — and stuck to it. When we met again I explained where the business genuinely was, what a rise would need to look like, and what specifically would need to change for it to be affordable in six months. Then I put that in writing, because a verbal commitment from a busy owner is worth very little to the person waiting on it.

He didn't get the money that month. He got a straight answer, a plan, and the rise six months later. He's still with us. The difference wasn't the money — it was being treated like an adult who could handle the real position.

The number matters less than the reasoning

The thing I'd assumed, and got wrong, is that these conversations are about the figure. Mostly they aren't. They're about whether the person believes the process is fair and whether their work is actually seen.

People will accept 'not right now, and here's honestly why' far more readily than they'll accept an unexplained number. What they won't accept for long is the sense that pay in your business is arbitrary — that it depends on who asks, how confidently they ask, and what mood you're in that week. That perception, once it settles, does more damage than any single salary decision, because it tells everyone the only way to get paid properly is to go and get an offer somewhere else.

What I do now

Four things, none of them complicated. Salaries get reviewed on a fixed date every year for everyone, whether they ask or not — which means most of these conversations never have to be initiated by a nervous employee at all. I keep a rough sense of the market rate for each role, so I'm not negotiating from nothing. Any pay conversation gets an answer within two weeks, in writing, even when the answer is no. And if the answer is no, it comes with what would need to be true for it to become yes, and when we'll look again.

The wider point is one every small employer works out eventually, usually the expensive way. Losing a good person costs far more than the rise they asked for once you count recruitment, the months of lost output, and everything they knew that was never written down anywhere — a cost we've looked at directly in the real cost of a bad hire, and it applies just as brutally to losing a good one.

She'd have stayed for a fraction of what her leaving cost us. I just didn't have a process, so I had a vague sentence instead — and a vague sentence is what people remember.

Common questions

Does an employee have a legal right to a pay rise?

No. There is no statutory right to a pay rise in the UK, and no obligation to match inflation or any market rate. The only hard floor is the minimum wage: from 1 April 2026 that is £12.71 an hour for workers aged 21 and over, £10.85 for 18 to 20-year-olds, and £8.00 for under-18s and eligible apprentices. A right to a rise can be created by the employment contract, a staff handbook term that has become contractual, or a collective agreement with a recognised union, so read those before assuming you have discretion. Equal pay law also bites: paying a man and a woman differently for equal work without a genuine, non-sex-related reason is unlawful under the Equality Act 2010, whatever your pay policy says.

Can I tell staff not to discuss their pay with each other?

You can ask, but you cannot enforce it where the purpose of the conversation is checking for discrimination. Section 77 of the Equality Act 2010 makes a pay secrecy clause unenforceable so far as it would stop a 'relevant pay disclosure' — an employee asking, sharing or comparing pay to find out whether a difference is connected to a protected characteristic such as sex, race, age or disability. Discipline someone for that conversation and you are looking at a victimisation claim, and the employee does not have to prove discrimination actually happened, only that finding out was the purpose. In practice, a pay structure you would be uncomfortable having discussed openly is usually a pay structure with a problem in it.

What do I say if I genuinely can't afford the rise?

Say no, say why, and say when you will look again — in that order, in writing, within two weeks. A straight no with real reasoning is survivable; a vague maybe followed by silence is what turns a request into a resignation. Be specific about what would need to change for the answer to become yes: a revenue figure, a client won, a quarter of margin held. Put a date on the next review and keep it, because an owner who misses their own deadline has told the employee exactly how much the commitment was worth. If cash is the constraint rather than value, consider what you can move now — a smaller rise from a set date, a bonus tied to something measurable, or non-pay changes on hours or responsibility.

Should I counter-offer when someone hands in their notice?

Usually not, and never as a reflex. By the time someone resigns they have interviewed elsewhere, been offered, negotiated and accepted — the pay was often the trigger rather than the reason, and matching it fixes the symptom. A counter-offer also sets an expensive precedent: it tells everyone that the way to get a rise here is to go and get an offer. Where a counter does make sense is when you already knew the person was underpaid, you can say so honestly, and you can fix the underlying issue at the same time. If you do counter, put the new terms in writing immediately and be realistic that they may still leave within the year. Cheaper than any of this is reviewing pay before people start looking.

Can an employee take me to a tribunal over pay?

Yes, on several routes, none of which need the employee to prove you were unfair in general. An equal pay claim under the Equality Act 2010 argues they are paid less than a comparator of the opposite sex for equal work. An unlawful deduction from wages claim under section 13 of the Employment Rights Act 1996 covers pay they were contractually due and did not receive — unpaid overtime, commission or holiday pay, most often. And minimum wage is enforced by HMRC directly rather than by tribunal: a Notice of Underpayment means paying the arrears plus a penalty of 200% of them, capped at £20,000 per worker, and the Department for Business and Trade names employers publicly where arrears reach £500.