In the lumi reward benchmark, 84.1% of UK organisations run their main pay review cycle annually (n = 251), 80.1% have formal pay ranges for some or all permanent roles (53.9% + 26.2%, n = 267), and 63.3% run the cycle on spreadsheets (n = 264).
Key findings
- 53.9% of organisations define formal pay ranges for all permanent roles, and 26.2% do so partially (n = 267).
- 46.1% link their pay ranges to a documented job evaluation or grading framework (n = 267).
- 84.1% run their main pay review cycle annually (n = 251).
- 45.0% say pay increases are not differentiated by performance rating, answering "flat or near-flat" (n = 258). 17.2% use a full merit matrix (n = 256).
- 45.7% do not review pay decisions for fairness before implementation (n = 267), and 65.7% do not put reward changes through an equality impact assessment (n = 265).
- Final sign-off on the annual pay decision sits with the HRD in 25.3% of organisations, the CEO/MD in 23.0% and a Remuneration Committee in 21.5% (n = 265).
- 63.3% run their pay review cycles on spreadsheets (n = 264).
About the data
This paper reports how UK employers answered lumi's questions on pay structures and pay review governance. The lumi reward benchmark covers 269 UK organisations across 14 sectors and five size bands. Data was collected in the 2026 H1 collection window. Each figure gives its base (n): the number of organisations that answered that question. Percentages are rounded to one decimal place, so a distribution can add up to 100.1%. Figures here are national. Sector and size comparisons are available to lumi members. See how lumi works for the method.
The legal context
Gender pay gap reporting is required of employers with 250 or more employees. Gender equality and menopause action plans were introduced on a voluntary basis on 6 April 2026, and are due to become mandatory in 2027, with timing to be confirmed. The questions in this paper cover internal pay process, not gender pay gap reports or action plans.
What percentage of UK employers have formal pay ranges?
lumi asked: Are formal pay ranges defined for all permanent roles? (n = 267). "Yes" is the common answer, at 53.9%. "Partially" is an alternative, at 26.2%. "No" is rare, at 19.9%. In all, 80.1% have formal ranges for some or all permanent roles (53.9% + 26.2%). In the "Partially" group, some roles have no defined range; the data does not show which.
Are pay ranges linked to a documented job evaluation or grading framework? (n = 267). "Yes" is common, at 46.1%. "No" is an alternative, at 36.0%. "In development" is rare, at 18.0%. A documented framework gives a written reason for placing a role in one range and not another.
How often are pay ranges reviewed and refreshed using market data? (n = 267)
| Answer | % of organisations | Prevalence |
|---|---|---|
| Annually | 47.9% | common |
| Ad hoc | 31.1% | alternative |
| Not reviewed | 10.5% | rare |
| Biannually | 7.9% | rare |
| Quarterly | 2.6% | rare |
41.6% either refresh their ranges ad hoc or do not review them (31.1% + 10.5%). For them, how current a range is depends on when it was last refreshed, not on a set timetable.
Does your organisation use external pay benchmark data when setting pay ranges or offers? (n = 267)
| Answer | % of organisations | Prevalence |
|---|---|---|
| Used consistently and informs decisions | 25.8% | common |
| Used regularly for most roles | 25.5% | alternative |
| Used occasionally or for specific roles | 20.6% | alternative |
| Used systematically with multiple data sources | 15.7% | rare |
| Not used | 12.4% | rare |
87.6% use external benchmark data to some degree (25.8% + 25.5% + 20.6% + 15.7%).
How often do UK employers run a pay review, and is it linked to performance?
How often is the organisation's main pay review cycle (for salary increases) conducted? (n = 251). "Annually" is the common answer, at 84.1%. "Twice a year" (6.8%) and "Quarterly" (4.0%) are rare. 5.2% have no regular cycle and review ad hoc. 10.8% run their main cycle more than once a year (6.8% + 4.0%).
Are pay increases differentiated by performance rating? (n = 258). "No – flat or near-flat" is the common answer, at 45.0%. "Yes – moderately differentiated" is an alternative, at 36.4%. "Yes – strongly differentiated" is rare, at 18.6%. 55.0% differentiate to some degree (36.4% + 18.6%).
Do you use a formal merit matrix (performance rating x position-in-range) to differentiate pay increases? (n = 256). "No" is the common answer, at 52.0%. "Performance only" is an alternative, at 30.9%. "Full merit matrix" is rare, at 17.2%. The question defines a merit matrix as performance rating by position-in-range, so the three answers are reported separately.
The two questions measure different things. The first asks whether outcomes differ by rating. The second asks whether a formal rule decides how. A full merit matrix also needs each person's position in range to be recorded.
How do UK employers set pay for range position, promotion and acting up?
Where in the pay range do you aim to pay someone who is fully competent in their role? (n = 160; "Not applicable" answers excluded from the base). "At midpoint (100%)" is the common answer, at 60.6%. "Above midpoint" is an alternative, at 20.6%. "Below midpoint" is rare, at 18.8%. Where the target sits above or below the midpoint, the midpoint does not mark full competence, so the same range can be read in different ways.
What is your policy on pay for employees at or above range maximum? (n = 213; "Not applicable" answers excluded from the base). "Frozen until range moves" is the common answer, at 50.2%. "Lump-sum in lieu" is an alternative, at 30.5%. "Continue increases" is rare, at 19.2%. 49.7% give people at or above the maximum some outcome in the cycle, as a lump sum or a continued increase (30.5% + 19.2%). The choice sets how firm the maximum is. A freeze holds it. A lump sum holds it for base pay while recognising the individual. Continued increases treat it as a reference point.
What is your typical promotion pay increase policy? (n = 268)
| Answer | % of organisations | Prevalence |
|---|---|---|
| Fully discretionary | 38.1% | common |
| To new range minimum | 25.4% | alternative |
| Fixed % guideline | 21.3% | alternative |
| Range-position driven | 9.7% | rare |
| Combination of the above | 5.6% | rare |
56.4% name a single rule: the new range minimum, a fixed percentage guideline or range position (25.4% + 21.3% + 9.7%). Discretion gives managers room to respond to each case. A rule gives consistency across promotions and a ready explanation if an outcome is questioned.
Is there a documented policy for pay during acting-up (temporary higher-duties) arrangements? (n = 266). "Formal allowance or uplift policy" is the common answer, at 45.5%. "Case-by-case" is an alternative, at 35.3%. "No" is rare, at 19.2%. A documented policy settles the outcome in advance. Case-by-case handling settles it each time, which puts more weight on how each decision is recorded.
Do UK employers check pay decisions for fairness before they take effect?
Are pay decisions reviewed for fairness before implementation (e.g., calibration, central review)? (n = 267). "No" is the common answer, at 45.7%. "Yes - always" (32.6%) and "Sometimes" (21.7%) are alternatives. 54.3% review pay decisions for fairness at least some of the time (32.6% + 21.7%).
Does your organisation review pay outcomes for compression and internal equity as part of the annual pay cycle? (n = 267). "Yes" is the common answer, at 40.8%. "Sometimes" (33.7%) and "No" (25.5%) are alternatives. 74.5% carry out this review at least some of the time (40.8% + 33.7%).
The first question checks decisions before they take effect. The second looks at the pattern of outcomes, such as newer and longer-serving colleagues in the same role being paid close together.
Are exceptions to standard pay rules formally documented with justification? (n = 267). "Always" is the common answer, at 50.2%. "Sometimes" is an alternative, at 49.1%. "Never" is rare, at 0.7%. 99.3% document exceptions at least some of the time (50.2% + 49.1%). Where documentation is only occasional, a written reason exists for some exceptions and not others.
Are reward changes subject to an equality impact assessment before implementation? (n = 265). "No" is the common answer, at 65.7%. "Major changes only" (17.4%) and "Always" (17.0%) are both rare. 34.4% assess at least some reward changes (17.4% + 17.0%).
Are line managers given pay-decision training or guidance before review cycles? (n = 265). "Guidance pack only" is the common answer, at 44.9%. "Neither" is an alternative, at 43.4%. "Mandatory training" is rare, at 11.7%. 56.6% give managers guidance or training (44.9% + 11.7%). What managers are told beforehand shapes the proposals that reach any later review.
Who signs off the annual pay review, and what do UK employers use to run it?
Where does final sign-off on the annual pay/reward decision sit (RemCo, HRD, Finance, CEO)? (n = 265)
| Answer | % of organisations | Prevalence |
|---|---|---|
| HRD | 25.3% | common |
| CEO/MD | 23.0% | alternative |
| Remuneration Committee | 21.5% | alternative |
| Joint HR + Finance | 15.8% | rare |
| Finance/CFO | 14.3% | rare |
Sign-off is spread across all five answers. HR holds it, alone or jointly, in 41.1% of organisations (25.3% + 15.8%). Finance holds it, alone or jointly, in 30.1% (14.3% + 15.8%). The 15.8% who answered "Joint HR + Finance" are counted in both of those totals, so the two cannot be added together. Where sign-off sits decides who makes the final trade-off between cost, consistency and fairness.
Is there an appeals or challenge route for pay review outcomes? (n = 264). "None" is the common answer, at 65.5%. "Grievance route only" is an alternative, at 24.6%. "Formal appeal route" is rare, at 9.8%. 34.4% offer some route to challenge an outcome (24.6% + 9.8%). A grievance route uses a general process. A formal appeal route is specific to pay review, and depends on the reasons for each decision being on record.
What do you use to run pay review cycles? (n = 264). "Spreadsheets" is the common answer, at 63.3%. "HRIS module" (16.3%), "Dedicated comp tool" (11.0%) and "Outsourced" (9.5%) are all rare. 27.3% use a system built for the purpose (16.3% + 11.0%). Spreadsheets are flexible, but version control and audit trail depend on manual discipline. A system builds some controls in, at the cost of set-up and licence fees.
How large is your dedicated reward team (in FTE)? (n = 266)
| Answer | % of organisations | Prevalence |
|---|---|---|
| Shared HR/reward role | 32.7% | common |
| No dedicated reward resource | 23.3% | alternative |
| 1 dedicated FTE | 20.7% | alternative |
| 2-4 dedicated FTE | 19.2% | rare |
| 5+ dedicated team | 4.1% | rare |
56.0% have no dedicated reward FTE (32.7% + 23.3%). 44.0% have at least one (20.7% + 19.2% + 4.1%). Refreshing ranges, calibrating decisions, reviewing equity and documenting exceptions all take time. The data does not link team size to those practices.
What the data means for reward decisions
The data describes a set of choices, not a single model. Each trades control against flexibility, and each control adds time to the cycle.
Structure. Ranges for every role give each pay decision a reference point. Partial coverage keeps flexibility but leaves some decisions without one. A grading framework gives a written basis for placement and takes effort to build and maintain. Questions a reward team might ask: which roles sit outside our ranges, and is that by design? Could we explain in writing why each role sits where it does?
Differentiation. Flat or near-flat outcomes are simple to explain and to run, and carry less information about performance. A merit matrix gives a documented rule but relies on ratings people trust and accurate range positions. Questions: do our ratings carry enough weight to drive pay? If outcomes are differentiated, is the rule written down?
Controls. Each check adds a step to the cycle and leaves a record. Questions: if a pay decision were challenged, what record would we produce? Who sees the pattern of outcomes before they are communicated?
Decision rights and tools. Questions: what does the person who signs off see first? Could we reconstruct last year's cycle from our records? What route does an employee have to question an outcome?
"Rare" in this paper describes how often an answer was chosen. It is not a judgement on whether a practice suits a given organisation.
Frequently asked questions
What percentage of UK employers have formal pay ranges? In the lumi reward benchmark, 53.9% of UK organisations define formal pay ranges for all permanent roles and 26.2% do so partially, giving 80.1% with ranges for some or all roles (53.9% + 26.2%, n = 267). 19.9% have none. 46.1% link their ranges to a documented job evaluation or grading framework (n = 267).
How often do UK employers run a pay review? In the lumi reward benchmark, 84.1% of UK organisations run their main pay review cycle annually (n = 251). 6.8% review twice a year and 4.0% quarterly, so 10.8% run the cycle more than once a year (6.8% + 4.0%). A further 5.2% have no regular cycle.
Do UK employers link pay increases to performance ratings? In the lumi reward benchmark, 45.0% of UK organisations say pay increases are flat or near-flat, not differentiated by performance rating (n = 258), so 55.0% differentiate to some degree (36.4% moderately + 18.6% strongly). 17.2% use a full merit matrix and 30.9% differentiate on performance only (n = 256).
Do UK employers check pay decisions for fairness before implementation? In the lumi reward benchmark, 45.7% of UK organisations do not review pay decisions for fairness before implementation (n = 267), so 54.3% do so at least sometimes (32.6% always + 21.7% sometimes). 65.7% run no equality impact assessment on reward changes (n = 265), and 65.5% have no pay review appeals route (n = 264).
Who signs off the annual pay review decision? In the lumi reward benchmark, final sign-off sits with the HRD in 25.3% of UK organisations, the CEO/MD in 23.0% and a Remuneration Committee in 21.5% (n = 265). Joint HR and Finance holds it in 15.8% and Finance/CFO in 14.3%, so HR signs off alone or jointly in 41.1% (25.3% + 15.8%).
What do UK employers use to run pay review cycles? In the lumi reward benchmark, 63.3% of UK organisations run their pay review cycles on spreadsheets (n = 264). 16.3% use an HRIS module, 11.0% a dedicated compensation tool and 9.5% outsource, so 27.3% use a system built for the purpose (16.3% + 11.0%).
Notes
- Base, "Not applicable" handling and rounding as described in "About the data". Unless a question is named below, "Not applicable" answers are included in the base.
- The question on where in the range a fully competent employee is paid excludes "Not applicable" answers from the base (n = 160; 56 organisations answered "Not applicable").
- The question on pay policy at or above range maximum excludes "Not applicable" answers from the base (n = 213; 3 organisations answered "Not applicable").
Data appendix
Every question on this page, with its base and full distribution, as a spreadsheet: download the CSV.
All national figures used in this paper, as recorded in the lumi reward benchmark (collection window 2026 H1).
Are formal pay ranges defined for all permanent roles?
Base: 267 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| Yes | 53.9% | 144 | common |
| Partially | 26.2% | 70 | alternative |
| No | 19.9% | 53 | rare |
Are pay ranges linked to a documented job evaluation or grading framework?
Base: 267 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| Yes | 46.1% | 123 | common |
| No | 36.0% | 96 | alternative |
| In development | 18.0% | 48 | rare |
How often are pay ranges reviewed and refreshed using market data?
Base: 267 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| Annually | 47.9% | 128 | common |
| Ad hoc | 31.1% | 83 | alternative |
| Not reviewed | 10.5% | 28 | rare |
| Biannually | 7.9% | 21 | rare |
| Quarterly | 2.6% | 7 | rare |
Does your organisation use external pay benchmark data when setting pay ranges or offers?
Base: 267 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| Used consistently and informs decisions | 25.8% | 69 | common |
| Used regularly for most roles | 25.5% | 68 | alternative |
| Used occasionally or for specific roles | 20.6% | 55 | alternative |
| Used systematically with multiple data sources | 15.7% | 42 | rare |
| Not used | 12.4% | 33 | rare |
How often is the organisation's main pay review cycle (for salary increases) conducted?
Base: 251 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| Annually | 84.1% | 211 | common |
| Twice a year | 6.8% | 17 | rare |
| No regular cycle (ad hoc) | 5.2% | 13 | — |
| Quarterly | 4.0% | 10 | rare |
Are pay increases differentiated by performance rating?
Base: 258 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| No – flat or near-flat | 45.0% | 116 | common |
| Yes – moderately differentiated | 36.4% | 94 | alternative |
| Yes – strongly differentiated | 18.6% | 48 | rare |
Do you use a formal merit matrix (performance rating x position-in-range) to differentiate pay increases?
Base: 256 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| No | 52.0% | 133 | common |
| Performance only | 30.9% | 79 | alternative |
| Full merit matrix | 17.2% | 44 | rare |
Where in the pay range do you aim to pay someone who is fully competent in their role?
Base: 160 organisations · "Not applicable" excluded from base
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| At midpoint (100%) | 60.6% | 97 | common |
| Above midpoint | 20.6% | 33 | alternative |
| Below midpoint | 18.8% | 30 | rare |
Are pay decisions reviewed for fairness before implementation (e.g., calibration, central review)?
Base: 267 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| No | 45.7% | 122 | common |
| Yes - always | 32.6% | 87 | alternative |
| Sometimes | 21.7% | 58 | alternative |
Are exceptions to standard pay rules formally documented with justification?
Base: 267 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| Always | 50.2% | 134 | common |
| Sometimes | 49.1% | 131 | alternative |
| Never | 0.7% | 2 | rare |
Does your organisation review pay outcomes for compression and internal equity as part of the annual pay cycle?
Base: 267 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| Yes | 40.8% | 109 | common |
| Sometimes | 33.7% | 90 | alternative |
| No | 25.5% | 68 | alternative |
Where does final sign-off on the annual pay/reward decision sit (RemCo, HRD, Finance, CEO)?
Base: 265 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| HRD | 25.3% | 67 | common |
| CEO/MD | 23.0% | 61 | alternative |
| Remuneration Committee | 21.5% | 57 | alternative |
| Joint HR + Finance | 15.8% | 42 | rare |
| Finance/CFO | 14.3% | 38 | rare |
Is there an appeals or challenge route for pay review outcomes?
Base: 264 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| None | 65.5% | 173 | common |
| Grievance route only | 24.6% | 65 | alternative |
| Formal appeal route | 9.8% | 26 | rare |
Are line managers given pay-decision training or guidance before review cycles?
Base: 265 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| Guidance pack only | 44.9% | 119 | common |
| Neither | 43.4% | 115 | alternative |
| Mandatory training | 11.7% | 31 | rare |
Are reward changes subject to an equality impact assessment before implementation?
Base: 265 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| No | 65.7% | 174 | common |
| Major changes only | 17.4% | 46 | rare |
| Always | 17.0% | 45 | rare |
What do you use to run pay review cycles?
Base: 264 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| Spreadsheets | 63.3% | 167 | common |
| HRIS module | 16.3% | 43 | rare |
| Dedicated comp tool | 11.0% | 29 | rare |
| Outsourced | 9.5% | 25 | rare |
What is your policy on pay for employees at or above range maximum?
Base: 213 organisations · "Not applicable" excluded from base
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| Frozen until range moves | 50.2% | 107 | common |
| Lump-sum in lieu | 30.5% | 65 | alternative |
| Continue increases | 19.2% | 41 | rare |
What is your typical promotion pay increase policy?
Base: 268 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| Fully discretionary | 38.1% | 102 | common |
| To new range minimum | 25.4% | 68 | alternative |
| Fixed % guideline | 21.3% | 57 | alternative |
| Range-position driven | 9.7% | 26 | rare |
| Combination of the above | 5.6% | 15 | rare |
Is there a documented policy for pay during acting-up (temporary higher-duties) arrangements?
Base: 266 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| Formal allowance or uplift policy | 45.5% | 121 | common |
| Case-by-case | 35.3% | 94 | alternative |
| No | 19.2% | 51 | rare |
How large is your dedicated reward team (in FTE)?
Base: 266 organisations
| Answer | % of base | Organisations | Prevalence |
|---|---|---|---|
| Shared HR/reward role | 32.7% | 87 | common |
| No dedicated reward resource | 23.3% | 62 | alternative |
| 1 dedicated FTE | 20.7% | 55 | alternative |
| 2-4 dedicated FTE | 19.2% | 51 | rare |
| 5+ dedicated team | 4.1% | 11 | rare |
See how your organisation compares with other UK employers. Book a call
David Whitfield, Pay ranges and pay review governance: UK benchmark 2026. lumi, collection window 2026 H1. https://lumihr.co.uk/research/pay-review-governance-2026Last reviewed 20 September 2026 · Figures describe organisations in the lumi reward benchmark, not a random sample of UK employers. Every figure on this page states the question asked and the number of organisations that answered it.