should our raises be late just because our performance reviews are late? — Ask a Manager

A reader writes:

I work for a small company. The leadership and many members of the team, myself included, left another, much larger company three years ago to start this firm.

I’ve gotten great annual pay increases at the new small company! But my gripe is that they don’t seem to be pegged to any kind of 12-month calendar; they’re contingent on when our reviews get scheduled, which our founders are very laid back about.

Many of us share the same work anniversary due to having left the previous company together, so we’re all experiencing the same issue. Let’s say my work anniversary is May 1. In 2021, my annual review didn’t get scheduled until July 1, and that’s when my raise took effect, meaning I worked 14 months at my 2020 salary. In 2022, my annual review got scheduled for July 15 and that’s when my raise took effect, so I worked one year and one pay period at my 2021 salary. I was frustrated because last year, my review got pushed by two weeks due to unrelated scheduling conflicts, meaning moving that meeting effectively lost me money! We’re talking 10% increases year over year, so it’s a decent chunk of change.

I mentioned the old company because the convention there was to issue backdated incremental paychecks that would apply the raise to the pay periods between when my work anniversary took place and when my review got scheduled. I loved this, because it meant raises were pegged to a firm 12-month schedule and if my review got scheduled late, it wouldn’t affect my salary. My founders came from there with me, so I think philosophically they’re open to it, but I also think springing an ask on them today to backdate my 2022 salary increase by a pay period (and having to do that across the company) might be a big ask financially for our smaller firm.

I don’t know what’s conventional here — does my company have any obligation to peg raises to a strict 12 months? Is backdating raises a thing that many companies do? I have enough political currency/seniority to make a case for whatever I think they should do, but I want to be sure my expectations are reasonable. I have the option of advocating at minimum for reviews moving forward to happen BEFORE our start date anniversary, which I think they’d be open to, but I’m curious whether I can remedy us being “underpaid” historically (if I’m looking at this the right way).

I think you’re asking about legal obligations, and companies don’t have any legal obligation to give raises at all, let alone to peg them to any particular schedule. So there’s no legal remedy here (assuming that your company didn’t make a commitment in writing to raise your salary at specific intervals, which I’m guessing they didn’t).

The way your company does it is pretty common — aiming for roughly annual salary reviews, but not always hitting the 12-month mark. There also are lots of companies that don’t have any kind of salary review schedule at all, and either they happen when they happen, or they don’t happen at all unless a specific employee requests one. (You’re talking about working an extra pay period “at my 2022 salary” — but salaries aren’t normally pegged to years like that; there isn’t typically such a rigid expectation for “your salary will increase every year on exactly this date.”)

However, there are lots of companies that back-date raises — so that if you’re supposed to get an annual evaluation and it’s late, once it does happen any accompanying raise will be retroactive to whenever the review was supposed to be. That’s the way your old company did it, and it’s a really common approach … and a good one, since reviews often do get pushed off when other priorities get in the way, and you shouldn’t be financially penalized for that.

If you’re talking about 10% raises every year (which is a lot higher than the average raise, which is closer to 3%) and they’re only delayed by a short time, I wouldn’t consider this an outrage. But you’d be on solid ground in advocating for future raises being retroactive to the intended review date (or work anniversary or however you do it).

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