Should You Turn Down a Pay Increase – Ask HR Bartender

by Sharlyn Lauby on July 28, 2013

It goes without saying that everything that happens during our career isn’t always good. We have to make the most of the challenges that come our way. And we also have to know when to decline something if it’s not a good fit for us. That’s what today’s reader question is all about.

Would it be acceptable to reject my salary increase and retain my previous salary? I’m not happy with my increase amount.

I know, you’re thinking “Who would turn down a pay increase?” But I can see a situation where someone is so insulted by the amount that they’d rather have nothing. Or where the increase does nothing more than move an employee to a higher tax bracket so they net less pay. The question becomes what should you do when that happens.

raise, career, payroll, pay, increase, pay increase, manager, employee, ADP

To help me answer this question, I spoke with David Turetsky, vice president of talent management consulting at ADP. With over 60 years of experience, they’re one of the world’s largest providers of payroll solutions. I had a chance to meet the ADP team during the SHRM Annual Conference in Chicago and they graciously offered to help me with this reader question.

Let’s get to the heart of this question. Should an employee ever turn down a pay increase?

raise, career, payroll, pay, increase, pay increase, manager, employee, Turetsky[David] As adults, we make decisions about our careers all of the time. The best decisions are made with forethought and a clear head. Typically, emotions are high when discussing compensation decisions as managers and employees usually have different opinions about what is deserved versus expected. Many times, disappointing news is as hard for the manager to communicate as it is for the employee to hear.

In the heat of the moment, an employee might see a small increase or incentive as an insult. Consider, however, that there are employees who are not getting any increase or worse, maybe losing, or have already lost their jobs. While the hurt may pass, the organization is still making a further investment in the employee.

While it may seem like a principled move to do so, it is not advisable to turn down an increase even if it was less than expected or hoped. Doing so may damage your relationship with your manager and potentially damage career opportunities within your organization. So, it would be better to take the increase.

If employees are unhappy with their pay increase amount, what should they do?

[David] Talk to your manager to understand the root cause for the discrepancy in expectations. Ask for the criteria behind the decision, providing you with the necessary information to make the right changes to behavior or performance for the next cycle. Also, find out what can be done to ensure that your relationship can improve instead of diminish.

Calmly ask your manager what can be done to find opportunities for a better increase next cycle. This enables you to understand the decision with more depth and insight. It may also strengthen your relationship with your manager and show strength of character and maturity in a difficult situation. That will most likely go over better than rejecting the increase. 

If an employee does decide to decline a pay increase, how should they go about doing it?

[David] If they make that decision to decline the increase, it must be done carefully. The employee should schedule a time with the manager with a clear purpose in mind. The discussion will be difficult so the employee should expect that the manager will not be happy about the decision or the discussion. There should be a goal in mind and there should be no expectation that the manager will change his or her mind.

This is neither a negotiation nor a request for more money. The employee will need to communicate the decision with no emotion and with clarity of purpose. “I am declining this increase because…”.  Then the employee needs to clearly demonstrate that the reasoning for the rejection is in the company’s, the manager’s, and the employee’s best interest. If that cannot be communicated, then keep the increase, work on the relationship with the manager, and move on. 

If companies can’t give employees more money due to limited budgets, are there other low or no cost options they can offer?

[David] Talking about career development and opportunities for advancement provide a great way for a company to look beyond pay as a reward for employees. As part of any good manager/employee discussion, the employee should bring an open attitude and willingness to see career development moments as a benefit and a reward.

My thanks to David for sharing his expertise with us. ADP has some great tools on their website – including a payroll calculator, where you can figure out your personal exemptions for your W-4 and plan your 401(k) savings.

While this might have appeared to be an obvious answer, it’s one that many have faced. As an HR pro, I’ve had employees come to me, angry about their pay increase and looking for options. Keeping a cool head and thinking the situation through is always good advice.

{ 1 trackback }

{ 2 comments }

HR mole July 30, 2013 at 3:46 am

Really interesting I have found that flexible working can be even more valued more money. I worked in a HR team where we all under paid clearly . The manager agrees but was clear there was no more money, instead we proposed a nine day fortnight working an extra hour a day so every two weeks you got a weekday off. This I think was a really powerful motivator and made leaving hard as such a great benefit!

Taxpro August 10, 2013 at 11:18 am

Tax brackets are progressive. You can’t get an increase in gross that pushes you into the next bracket and end up with less net. If you make $45k, the next highest bracket is $50k and you get a bump to $55k, then you pay the lower rate on everything below $50k and the higher rate on $5k.

Comments on this entry are closed.

Previous post:

Next post: