How to decide on a salary or wage rate for an employee YK

How do you decide what salary or wage you are going to pay a new employee?  Should they earn more or less than someone already in the job, or the person who left the job most recently?  Should you be concerned about how it will fit in with your current employees pay rates? 

Every business has the right to make their own decisions about pay once they have met the requirements of minimum wage.  And how you choose to compensate your employees for their work is up to you and can include many things other than a wage rate or salary alone.

Here are some questions to ask and answer in order to decide how to go about this.

What about the employment market in general in the Yukon?

You can access information about what is going on in the labour market in the Yukon from the Yukon Bureau of Statistics and the most recent Yukon Employment Annual Review .  In addition, the most recent Yukon Business Survey might also help in understanding the job market.  This information will help you understand if it is a buyers’ market or a sellers’ market with regards to potential employees.

What is a job rate for someone doing this type of work?

There are a number of private firms that can provide salary survey information for a price.  The most recent government produced information is from 2012 and is the Employment, Hours and Earnings survey.  You may also be interested in Alberta  or National data to help you

What is your direct competition paying?  Do they have benefits?

This is important to find out and ensure that you remain competitive for the best talent, both to hire and to retain.

Is it always about the money?

On a broad brush basis, young employees are often more interested in the salary dollars and learning opportunities than they are in things like benefits & retirement plans, a middle years employee, often one with kids, can be more attracted by a solid benefit program and older employees, perhaps those who are semi-retired might find a more flexible working schedule even including the option of unpaid leaves very attractive.   Looking at who you are most likely going to recruit and retain can influence the balance of compensation dollars between salaries and benefits.

How does your new employee stack up in skills, qualifications, work experience and quantifiable talents vs. your current employees?

What does it take to do a great job in this line of work and how do you predict it with resumes, interviews and references?  Can you accurately measure future contributions of employees?  If not, you may need to review your recruiting practises so that you can make a sound judgement of where this potential new employee fits.

What about Employment Standards requirements for Equal Pay?

In the Yukon, an employer needs to have a solid rationale for paying one person more than another who does the same job.  Equal pay provisions require that men & women be paid the same wages for the same work.  You can have a differential, but it must be based on some type of plan that shows why one person might be earning more than another.  That plan might be one where years of job experience pay more, production amount is related to pay, particular qualifications pay more or years of service with your business may trigger an increase.  The rules of the plan are up to you, but must be job related and you must follow them within your business.  No one’s salary may be reduced in order to implement an equal pay plan.

Additional Considerations on Employment Costs

Remember to add at least 15% to the salary calculation to consider the total cost of employment when you are considering adding a new employee!

You will pay Employment Insurance premiums, Canada Pension Plan premiums, as well as Workers Compensation premiums.   Also in the case of part time employees, remember to add vacation pay percentages and statutory holiday costs to ensure you are costing the position fully.  If you provide tools or uniforms and/or other employee benefits or bonus plans, add those costs in as well to give you a full picture of your likely expenses in hiring a new employee.

Questions?  Contact a Business Counsellor.