Pay trends for 2025 and beyond
With the deadline for the implementation of the EU Pay Transparency Directive across all EU countries due by June 2026, UK employers are increasingly redefining their approach to pay.
Changes to pay structures
REBA’s Benefits Trends for 2025 Research found changes in pay structures are being used to support business transformation in just less than half (41%) of workforces.
This has been largely influenced by tech developments which enable employers to better analyse large swathes of data.
Removing bias from performance-based pay
This analysis can also help in decisions about performance-based pay, with the aim to create a process with minimum bias where employees are granted bonuses based solely on their performance.
Three-quarters (75%) of employers are currently, or expect to, increase their use of digital and/or data tools to manage performance pay in the next two years.
Greater flexibility in pay practices
Increasing flexibility is also being introduced into pay practices to help address the workforce’s skills challenges.
REBA research found roughly one in 10 employers are currently increasing pay flexibility to support reskilling.
A third (31%) plan to do so in the next two years, equating to a 282% increase.
This flexibility could be brought in via payroll flexibility, where employees can choose their pay day or advanced wage slips in case of emergencies.
National Minimum Wage changes may cause issues for some employers
Shortly after coming to power in July 2024, the government reinforced its commitment to delivering a “genuine living wage” for working people.
Independent body The Low Pay Commission advises government on the yearly National Minimum Wage (NMW) rate, and last year its remit was changed to take account of the cost of living when recommending rates.
Age bands will also be removed so that all adults (aged 18 and above) will receive the same NMW rate.
Just under half (42%) of employers see this as a potential challenge, while companies with more than 2,500 employees are much more likely to see the rate changes as causing difficulty.
These concerns are likely based on the costs of implementing the new NMW rate and also the ripple effect of pay increases for those paid above the NMW.
