An FAQ guide to pay review planning

By Sheila Attwood, Brightmine Senior Content Manager, Data and HR Insights

The autumn marks the busiest time of the year for reward professionals planning their next pay reviews. Pay awards during 2025 have centred on a 3% increase, below the October 2025 CPI inflation rate of 3.6%. Are employers now looking to make higher awards over the coming year? Will internal and external factors keep a lid on pay rises?

The latest resources by Brightmine offer the data and tools needed for smart decision-making. This helps when setting budgets for yearly pay reviews.

This guide answers the most common questions. The answers come from Brightmine research, alongside our pay settlement database, and subject matter experts. 

When do most pay awards take effect and when should budgets be set? 

Most pay awards take effect in the first half of the year. In April, 47% of pay settlements come into effect, followed by 28.8% in January and 7.8% in July. The pattern changes slightly by sector. Manufacturing organisations prefer January more than other sectors. The public and not-for-profit sectors focus heavily on April.

Most organisations set budgets for pay reviews three months before implementation. This means that 52.2% of organisations review pay budgets between September and December.

More detailed sector breakdowns are available in Pay review planning – Factors to consider

What objectives should guide the pay review process, and what data is essential? 

The pay policy can differ between organisations. It may focus on rewarding behaviours associated with business success, attracting skills to the organisation, talent retention or incentivising achievement.

Organisations looking to make cost-of-living increases or target, for example, the median/upper quartile in the relevant market, will need data on:

• Inflation rates.
• Other organisations’ pay review plans.
• Market salary data that can be filtered for your organisation’s needs.

Other factors to consider and how to use the data you collect are covered in Pay review planning – Factors to consider

What factors are influencing 2026 pay budgets?

Organisations typically review a number of different data points when drafting budgets for pay reviews. Affordability and employer national insurance contributions will be the key drags on the value of pay rises over the coming year. However, inflation, competitor organisations, and the national living wage will create some upward pressure.

Downward pressures:

• Affordability – 72.9% (of organisations citing this factor)
• Employer National Insurance contributions – 57.1%
• Organisation performance – 34%

Upward pressures:

• Inflation/cost of living – 66.5% 
• Pay levels in the same industry – 57.1% 
• The level of the statutory minimum wage/national living wage – 47.3% 

See how other organisations are managing the national insurance contributions increase in our November 2025 pay and labour market update.

What are the practical implications of the living wage rises?

The living wage, as supported by the Living Wage Foundation, sometimes called the real living wage, increased by 6.7% on 22 October 2025, with employers having until 1 May 2026 to implement the new rate. The increase adds £1,657 annually per full-time (37.5 hours per week) employee outside London. If this increase – or the forthcoming rise in the national living wage – is higher than the overall paybill increase being planned, it could result in entry-level pay gaps being narrowed.

Use the Brightmine Pay Grading tool to: 

• Model the cost of a pay rise across the entire structure 
• Identify employees below April NMW/NLW 
• Flag those falling outside the increased salary bands 

The Pay review planning guide provides step-by-step instructions.  

Request a demo to see this in action. 

What are the current forecasts for 2026 pay awards?

Pay awards in the past year were lower than those in 2024. However, employers feel more settled now. Many are planning pay awards in 2026 at the same level as in 2025. Forecasts for 2026 pay awards centre on the 2.5% to 3.5% range, with a 3% prediction being the most common.

Access segmented forecasts by industry sector in the Forecasts for pay awards in 2026 – Infographic

Which non-financial benefits are gaining traction?

Employers are keen to understand what employees would like to see in their benefits package, and are reacting to the feedback they receive. Health and wellbeing benefits are a key focus, including those that go beyond the traditional idea of “employee benefits” to include flexible working options. Offering some flexibility in their offering, to allow employees to tailor their package to suit their particular needs, allows employers to have a full package that appeals to diverse populations.

For deeper insight into how organisations are shaping their employee benefits offering, watch the November 2025 Pay and Labour Market Update webinar.

Plan with purpose: Use our references below to start planning now:

Pay review planning – Factors to consider
A companion guide to help you plan your next pay review, featuring key data points you’ll need to approach the 2026 pay review season with clarity and confidence. 

Understanding bonus payment trends for 2025
Explores the latest data and trends shaping bonus decisions based on Brightmine Compensation Planning data.  

November 2025 pay and labour market update (on-demand webinar)
Learn about the economic and labour market outlook shaping reward decisions, and where employers think their 2026 pay awards will land. This session is valuable for anyone preparing key pay decisions for 2026.​​ 

Forecasts for pay awards in 2026 – Infographic
Whether you work in the private or not-for-profit sector, trusted pay forecasts are essential for planning next year’s pay review. Use these insights to balance budgets, retain talent, and stay competitive.​ 

Four steps to deciding pay and benefits for a new position
Explore the essential components of designing a reward package for an individual vacancy. With monthly-refreshed UK market data and automated job matching across all roles, you’ll be equipped to make confident, data-led decisions.