How equitable pay supports mental wellbeing
Last week’s Mental Health Awareness Week was an important opportunity for organisations to reflect not only on how they support employee wellbeing, but how they might unintentionally be undermining it.
While initiatives, such as mental health first-aiders and employee assistance programmes (EAP) are hugely valuable, one foundational aspect of wellbeing is often overlooked: fair and transparent pay.
The reality is that mental health in the workplace starts long before someone opens up about stress or burnout.
It starts with the systems that govern people’s day-to-day experience, and few are as influential as how people are compensated.
Financial insecurity is mental health risk
The connection between financial wellbeing and mental health is both direct and profound.
When people struggle to make ends meet, the stress doesn’t end when they leave work. Anxiety about bills, rent, debt, or saving for the future often follows them into every part of life, including their job performance.
A report by the Money and Mental Health Policy Institute found that people with financial difficulties are three times more likely to experience mental health problems.
As well, among workers who feel underpaid, symptoms of anxiety, sleep disruption, and burnout are significantly more common.
In short, when pay is not enough to live on, or when it feels unfair, wellbeing suffers.
Why equitable pay signals more than money
Equitable pay is about more than what lands in your bank account each month.
It’s about being seen, recognised, and valued.
If an employee knows they are paid equitably compared to others in similar roles and industries, it reinforces a sense of trust and belonging.
But if that same employee suspects they are underpaid - whether due to discrimination, outdated practices, or lack of transparency - it creates stress, resentment, and disengagement.
In this way, fair pay is deeply psychological.
It touches on self-worth, fairness, and justice.
When people don’t feel valued financially, it’s very hard for them to believe their wellbeing matters to the company.
What does fair pay look like?
“Fair” doesn’t always mean “the same” - it means equitable.
Fair pay recognises experience, skill, and performance, but it also ensures that factors like gender, race, disability, or background are not influencing pay decisions.
Key features of an equitable pay system include:
- Market-aligned salary benchmarking
- Clear and transparent salary bands
- Regular pay equity audits
- Documented, consistent processes for pay increases and promotions
Equally important is how well an organisation communicates this.
Employees don’t just want to know they’re paid fairly - they want to understand why.
Supporting wellbeing beyond salary
While base pay is fundamental, total reward also matters.
A competitive salary helps employees feel secure, but additional benefits can significantly enhance their wellbeing:
- Health and wellbeing support, including mental health services
- Paid time off, including personal and mental health days
- Flexible work, reducing commute stress and allowing work-life balance
- Bonuses or recognition programs, reinforcing appreciation
- Financial education, such as budgeting and retirement planning workshops
When done well, total reward shows that the company cares about the whole person, and not just their productivity.
Practical steps for employers
Mental Health Awareness Week has given us some practical actions employers can take to align their pay and reward strategy with their mental health commitments:
- Conduct a pay equity audit: Review salaries across roles and demographics to identify and close unjustified gaps.
- Improve transparency: Be open about how pay decisions are made and how progression works.
- Invest in financial wellbeing resources: Provide tools or services that help staff better manage their money.
- Train managers: Ensure line managers understand how pay affects mental health and how to talk about it sensitively.
- Listen: Engage employees in discussions around what they value in compensation and benefits.
In summary
Pay is not just transactional - it’s emotional.
When done equitably, it builds trust, enhances wellbeing, and helps people thrive.
When neglected, it erodes morale, increases stress, and undermines even the best-intentioned wellbeing programs.
Hopefully we’ve learnt from Mental Health Awareness Week that caring for mental health starts with systems that are just, transparent and respectful.
Few systems have more day-to-day impact than how we pay and reward our people.
Supplied by REBA Associate Member, Turning Point
Our data and insight helps organisations build the best reward strategy for their business and people.
