Are Employers Required To Give A Cost Of Living Raise?

The rise in inflation rates makes for increases in cost-of-living. This, therefore, poses the question of whether employers must compulsorily adjust their employees’ salaries every year, commensurate with the inflation rate. Or, whether employees have a right to request raises when their cost-of-living increases. The short answer to these questions is that neither private nor public employers are legally mandated to raise salaries due to an increase in the cost of living of their employees. Of course, doing it is one of the best practices as an employer of labor but no law says they must. However, there are a few things that employers are legally required to do to make sure their employees are duly compensated. Whether you are an employee or an employer, this article is for you. Keep reading to find Are Employers Required To Give A Cost Of Living Raise?

Employer-Employee best practices

Concerning pay raises and cost-of-living adjustments, here are a few industry best practices that could help you keep a good relationship with your employees even if you don’t increase their pay too often. Lets see Does Employers Required To Give A Cost Of Living Raise?

1. Always make sure your employees’ pay is commensurate with industry standards. Bear in mind that you are not the only employer in your industry of choice. That means that the salary and other benefits you reward your employees with at the end of the year must be competitive enough to keep them loyal to the company. 
2. Adjust cost-of-living of living for each employee based on where they live. This is especially important if you employ labor from all over the country. The cost of living in LA will definitely be higher than in Michigan. 
3. Research salary and benefits pay in your industry and make necessary adjustments for your employees.
4. Develop a reward scheme. You can raise pay based on performance rather than the number of years on the job. This way, you are rewarding excellence and your best heads know that you appreciate them.

Who raises pay for cost-of-living adjustments the most – government or private sectors?

Truth be told, it is a known fact that the government is more likely to raise employees’ pay for the cost of living adjustments than the private sector. 

However, while increasing pay for existing employees, the government may also reduce employment such that the few staff have become overworked. Looking at it from that angle, the pay raise may not be significant at the end of the day.

You may then ask why people almost always want government jobs if the working conditions are not exactly favorable. The answer is that the job security of a government job is more than that of the private sector and may have to downsize just to increase the partner’s or shareholders’ dividends.

When you should request a pay raise

Simply put, you can request a pay raise as soon as your paycheck begins to not cover your normal expenses anymore. Bear in mind that when u request a pay raise, your employer may need to investigate whether your claims are true. So, be sure your claims are legitimate to start with. Here are a few things you can include in the pay raise letter.

1. Explicitly state your reasoning as to why you need a raise. Apart from the increased cost of living, you might have had increased duties with no compensation, been at the company for long with no raise, and so on. Make sure your reasons are good and sound.
2. State the amount your colleagues in other companies in the same industry are earning. You may need to do a little bit of research on this to get current information. But also make sure the information is legit and current. You do not want to state figures that are no more feasible based on inflation rates.
3. Be specific about the amount you should be earning now. Based on the fact that your employer might negotiate, keep your proposed amount within the upper limit of your expectation! That way, when negotiations come, you still earn around the range you should be earning.
4. Overall, be polite in making your request. Remember, presentation matters as to if the recipient of your words will bring out carrots or dagger.

Conclusion

Requesting for pay raise as an employee is your right. However, your employee is not obligated to do so if they do not want except it has been explicitly stated in your conditions of employment.

FAQ

1. How often can I request a pay raise from my employer? 

If you have been with the company for a long, you deserve a raise per year, so you should request for pay raise every year. Otherwise, if you are just starting out with them, you should normally wait for at least six months before asking for a pay review.

2. Does my current position factor into how much pay raise I can get?

Of course. You should normally get about 10% of your current salary as an increase. So, if you have been promoted or have additional responsibilities without an increase in payment, those should factor into your pay raise request.

3. How often should an employer review employees’ salaries?

Employees generally want an increase in payment about every six or twelve months. Therefore, you should endeavor to keep up a constant review of your employees’ salaries such that it is competitive in the industry.