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Fair pay

Information on what constitutes fair pay.

​Pay is one of the most important parts of any employment relationship. Employers must pay employees and workers in accordance with the law (The Wages Act 1986) and their contracts of employment.

The contracts agreed with employees and workers are legally binding and must adhere to the agreed pay arrangements as well as any other specifically agreed terms.

This information is current, but it is important to consider issues in your workplace that are specific to Coronavirus (COVID-19) and make suitable arrangements to keep your staff safe. For more information and advice on working safely, read our COVID-19 guidance

  1. Correct pay
  2. Employment status
  3. A week's pay
  4. Holiday and sick pay
  5. Scottish Living Wage

​1. Correct pay

A decent hourly rate and job security are important components of good work or decent work. What people earn and security of income is crucially important for general health, mental health and wellbeing.

Having employees living in poverty will have implications for their health and the health of family members.

Pay is an element of developing good work. It is important that pay is based on standardised and transparent pay grades, which apply across all workers regardless of gender or any other equality characteristics.

It’s important to regularly review pay and other rewards such as extra annual leave, pension schemes, and contributions to childcare costs and so on. Another significant aspect of pay is to ensure that it reflects respect and values each individual worker.

It is important to involve employees and worker representatives to develop the best pay and conditions possible.   

Any issues around pay and wages will be dealt with most effectively if the employer and employee fully understand the organisation’s pay processes and legal obligations. Any mistakes, misunderstandings or disputes that occur should be resolved as quickly as possible.

Equal Pay

Workers should be treated equally and paid the same rate for doing 'like work', 'work rated as equivalent' or 'work of equal value' regardless of their gender or other equality characteristics.

Equal pay includes most terms in an employment contract such as

  • basic pay
  • overtime rates
  • performance-related benefits
  • hours of work
  • access to pension schemes
  • non-monetary terms - for example, free gym membership
  • annual leave entitlements.