While it is best to keep discussions on job evaluation and pay total- ly separate, dealing with the outcomes of a job evaluation exercise and their impact on people’s pay and organization costs is often the most difficult part of the implementation process. The issues are: 1) where to assimilate staff on their new pay range; 2) how to deal with people whose pay is below or above the pay for their new grade, and 3) what policies should be adopted to ‘protect’ the pay of those who are overpaid in relation to their grade and have been red circled.
Assimilation policy
There are essentially four categories of staff to be covered by the assimilation policy:
ឣ those staff whose current actual pay and pay potential are both encompassed by the pay range for the new grades to which their jobs are allocated;
ឣ those staff whose current pay lies within the new pay range but whose existing pay potential is greater than the new maximum;
ឣ those staff whose current pay is below the minimum for the new grade;
ឣ those staff whose current pay is above the maximum for the new grade.
Current pay and pay potential both within the new pay range In some ways this group is the easiest to deal with and the majori- ty of staff will normally be included in it. The only point at issue is whether or not any increase should be awarded on transition and the answer should be ‘no’. The only exception would normally be if pay levels within the new ranges are to be on fixed points only (the
‘pay spine’ approach described in Chapter 9) when the policy would normally be to move each person’s pay to the nearest high- er pay point.
Good advance communications should have conveyed the fact that job evaluation does not necessarily mean any increase in pay.
But some people in this group may still feel disadvantaged at see- ing others getting increases. This negative reaction can be decreased by introducing the new structure at the same time as any annual pay increase, so that everyone gets at least something.
It is necessary to be aware of the possibility of creating equal pay problems when assimilating staff to their new scale. For example, if two people with broadly equivalent experience and skills are on dif- ferent current salaries and are assimilated into the same new grade but at the different salaries as determined by their previous salaries, it would appear that there is no equal pay problem – they are both on the same grade with the same grade and salary potential. But an equal value issue is only avoided if a lower paid man or woman has the opportunity to catch up with the higher paid man or woman within a reasonable period (say three or four years). However, where the difference was nothing to do with grade in the first place and can be shown to be unsustainable now that the jobs are graded equally, an uplift in pay is required. In these circumstances the higher paid individual may be red circled and have their pay pro- tected as suggested below. Any such salary uplifts should be reviewed and implemented only after the jobs are first assimilated into the new scales and the costs of doing so confirmed. It would be
wrong to saddle the new job evaluation and grade system with the costs of rectifying past discriminatory practices.
Current pay within the new pay range but pay potential higher than new maximum
No immediate increase is necessary in this circumstance but employees should be told what will happen. If progression to the old maximum was based on service only, ie automatic annual increases to the maximum, this guarantee will have to be retained.
However, once a person’s pay passes the maximum for the grade, this will then become a ‘red circle’ situation and should be treated as such (see below).
If progression to the old maximum was not guaranteed, but was based on performance, competencies etc, then the range maximum should normally be applied. Care will be needed to ensure that this does not adversely affect any specific category of staff, particularly female staff.
Current pay below the minimum for the new grade
Both justice and equity demand that, if someone has now been identified as being underpaid, the situation should be rectified as quickly as possible. Correcting this situation, by raising the pay to the minimum of the new pay range, should normally be the first call on any money allocated to the assimilation process. Each case should, however, be taken on its merits. If someone has recently been appointed to a post and given a pay increase at that time, it may be appropriate to wait until that person has completed a pro- bationary period before awarding another pay increase.
If the total cost of rectifying underpayments is more than the organization can afford, it may be necessary, however unpalatable, to phase the necessary increases, say one portion in the current year and the rest next year – it is undesirable to phase increases over a longer period unless the circumstances are exceptional. The sim- plest approach is to place a maximum on the increase that any one person may receive. This can be in absolute terms (eg maximum of
£2,000) or in percentage increase terms (eg, maximum of 20 per cent of current pay). Another alternative is to use an annual ‘gap reduc- tion’ approach (eg pay increase of 50 per cent of the difference
between current pay and range minimum or £500, whichever is the greater).
Again, if any delay in rectifying underpayment situations is nec- essary and some staff have therefore to be ‘green circled’, it must not disadvantage one staff group more than another. Most organi- zations introducing job evaluation for the first time (or replacing an outdated scheme) will find that more women than men have to be green circled. Failure to correct these would be a perpetuation of gender bias.
Current pay above the maximum for the new grade
These situations which lead to red circling are usually the most dif- ficult to deal with. They normally include a high proportion of peo- ple (often male) who have been in their current job a long time and who have been able to benefit from a lax approach to pay manage- ment in the past. People can take very different attitudes about what should be done about these situations and, as a result, the most protracted of the implementation negotiations are often cen- tred on ‘how to handle the red circles’.
At one end of the scale is the argument that these people are now known to be receiving more pay than the job is worth and that this should be stopped as soon as possible, especially if the organization needs that money to pay more to those people who have been (or are still) receiving less than they should. The opposite stance is that these people have become accustomed to a standard of living based on the pay that the organization has been willing to provide up to now and they should not suffer just because new standards are being applied. This is the principle that is usually adopted but there are different ways of applying it.
Any assimilation policy must set out how the ‘red circle’ situa- tions will be handled. The starting point is normally that no one should suffer a reduction in pay – it should be ‘protected’ or ‘safe- guarded’. Thereafter, it is a matter of how quickly pay can and should be brought in line. Approaches to protection are discussed below.
Protection policies
‘Indefinite protection’, that is, maintaining the difference between current pay and range maximum for as long as the employee remains in the job, is highly undesirable. First, because it will create permanent anomalies, and second, because, where there are a lot of men in this situation (which is often the case), it will perpetuate unacceptable gender gaps. The Equal Opportunities Commission in its Good Practice Guide on Job Evaluation Schemes Free of Sex Bias states that red circling ‘should not be used on such a scale that it amounts to sex discrimination’. And as stated by the Equal Pay Task Force: ‘The use of red or green circling which maintains a difference in pay between men and women over more than a phase-in period of time will be difficult to justify.’
Because of these considerations, the most common approach now is to provide for red-circled employees to receive any across- the-board (cost of living) increase awarded to staff generally for a protection period which is usually limited to two to three years.
They will no longer be entitled to general increases after the time limit has been reached until their rate of pay falls within the new scale for their job. They will then be entitled to the same increases as any other staff in their grade up to the grade maximum. If a red- circled individual concerned leaves the job, the scale of pay for the job reverts to the standard range as set up following job evaluation.
Where there is an incremental pay structure, it is usual to allow staff to continue to earn any increments to which they are entitled under existing arrangements, up to the maximum of their present scale.
If there is no limit to the protection period, red-circled staff con- tinue to be eligible for general increases for as long as they remain in their present job. They are then on what is sometimes called a
‘personal to jobholder’ scale.
Throughout the protection period, and particularly at the start of it, every attempt should be made to resolve the ‘red circle’ cases by other means. If jobholders are thought to be worth the current salary, then they may well be underused in their existing job.
Attempts should be made to resolve this by either: a) increasing the job responsibilities so that the job will justify regrading to a higher grade, or b) moving the person concerned to a higher graded job as soon as an appropriate vacancy arises.