Benefits of pay freeze ‘must be demonstrated’

Should a company’s management and HR departments opt to introduce a pay freeze, they must demonstrate the benefits of such a course of action right across the board, one commentator has explained.

Phil Flaxton, chief executive of Workwise UK, said this was one way of ensuring that employee relations remain positive amid the downturn.

However, speaking of employers who provide additional benefits to staff, such as a pension scheme or medical insurance, he said: "What a lot of them are doing at the moment is suspending those kinds of benefits … before they actually move towards wage freezes."

Mr Flaxton noted that once the recession was over, people who feel they were badly treated in their current job were likely to leave, which could mean that HR staff who do not drive for positive workforce relations could see a large number of workers going elsewhere.

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A new report from Industrial Relations Services has shown that around four in ten (41.3 per cent) of all pay deals – basic and performance-based – are pay freezes.