“My salary is too low.” These four words, whether said directly in a one-to-one meeting, flagged in an engagement survey, or surfaced through a resignation letter, represent one of the most consequential signals an HR professional can receive. Handled well, the moment can become a catalyst for meaningful compensation review and stronger employee trust. Handled poorly, it accelerates turnover and signals to the wider workforce that pay concerns will not be taken seriously.

This article outlines the steps an HR professional should take when an employee or manager raises a salary concern, including how to assess whether the concern is valid, what data to gather, how to build a case for adjustment, and how to communicate the outcome regardless of what it is. It also addresses how the EU Pay Transparency Directive is changing the context in which these conversations take place.

Step One: Take the Concern Seriously Before Assessing It

The first response to any salary concern should be acknowledgment, not immediate assessment. An employee who raises a pay issue has often been sitting with it for some time before speaking up. Responding with scepticism or defensiveness, even if that reflects a genuine belief that the salary is competitive, will damage the relationship before the conversation has properly begun.

HR should acknowledge that the concern has been heard, commit to reviewing the relevant data, and provide a clear timeline for a follow-up conversation. This does not commit the organisation to any particular outcome. It simply signals that the concern will be taken seriously, which is the minimum standard any employee should be able to expect.

Step Two: Gather the Data

Once the concern has been received, the next step is to gather the data needed to assess it objectively. This requires two types of information: internal and external.

Internal data includes the employee’s current salary, their role level, time in role, last salary review date, recent performance assessments, and how their pay compares to peers doing equivalent work within the organisation. This internal comparison is essential: a salary that appears low relative to the external market may already be addressed if the employee is early in their progression through a pay band, or it may reveal a genuine internal equity issue if peers at the same level are being paid more without objective justification.

External market data means current benchmark figures for the role, level, and location. This is where many HR responses fall short: using survey data from the prior year or relying on generic salary guides that do not reflect current market conditions. In fast-moving hiring markets, benchmarks can shift meaningfully within a single calendar year. Using the TalentUp Salary Intelligence Platform to pull live, position-specific market data for the relevant city and role level provides the most accurate external reference available.

Step Three: Make an Honest Assessment

With both types of data in hand, HR can make a genuine assessment of whether the salary concern is valid. There are typically four possible findings.

The salary is at market. The employee’s salary is within the expected range for their role, level, and location based on current data. The pay concern may reflect unrealistic expectations, a mismatch between the employee’s self-assessment and their actual market value, or dissatisfaction with other aspects of the role that are being expressed as a pay complaint. In this case, the honest response is to share the data and have a transparent conversation about what the market shows.

The salary is below market. The employee’s pay falls below the current market median or the lower quartile for their role. This is a legitimate concern and the data validates it. HR should treat this as a priority issue, particularly given that the EU Pay Transparency Directive is creating more transparency around pay that will make below-market salaries increasingly visible to employees who can now request benchmark information.

There is an internal equity issue. The employee’s salary is at or above market, but peers doing equivalent work within the organisation are earning more, without documented justification. This is a pay equity concern and may have legal implications under the Pay Transparency Directive framework.

The salary reflects a legitimate differential. The employee earns less than some peers, but the difference is explained by documented factors such as seniority, performance, or a market premium for a specific specialisation that the employee does not hold. This can and should be communicated clearly.

Step Four: Build the Business Case Where Adjustment Is Warranted

When the data shows that an adjustment is warranted, HR needs to build a business case for the relevant decision-maker. This case should include the current salary, the relevant market benchmark, the gap as a percentage, the replacement cost of losing the employee (which typically runs 50 to 200 percent of annual salary when recruitment, onboarding, and productivity loss are included), and a proposed adjustment with its annual cost.

Quantifying the cost of turnover is frequently the most persuasive element of this case. Managers who resist salary increases often underestimate what it costs to lose and replace a person. A well-constructed business case that contrasts the cost of an adjustment against the cost of a departure typically shifts the conversation from “can we afford to pay more?” to “can we afford not to?”

For context on what structured pay band reviews look like and how to frame the argument internally, the guide on auditing salary bands provides a practical framework HR leaders can adapt.

Step Five: Communicate the Outcome Honestly

Whatever the outcome, the employee deserves an honest, direct response. If an adjustment is being made, communicate it clearly: the new salary, the effective date, and the acknowledgment that their concern was valid. Avoid framing an adjustment as a favour; frame it as a correction based on data.

If no adjustment is being made because the salary is at market, share the data. The EU Pay Transparency Directive gives employees the right to request pay benchmark information from their employer. Forward-thinking HR teams are already prepared to have these data-backed conversations. Being transparent about what the market shows, and why the current salary reflects it, is more credible than a refusal to engage.

If the answer is “not now but under review,” give a specific timeline and keep to it. Vague commitments to “look at it in the next cycle” without a defined date or process erode trust faster than a clear no.

Prevention: Avoiding the Conversation Altogether

The most effective response to “my salary is too low” is to create conditions where the concern is unlikely to arise in the first place. This means benchmarking compensation on a regular schedule, conducting proactive pay reviews, and adjusting salaries when market data shows drift before employees experience it.

Organisations that rely on reactive, complaint-driven pay reviews consistently face higher turnover than those with structured, proactive compensation review processes. As the EU Pay Transparency Directive brings greater salary transparency to the market, the employees most likely to feel underpaid are also the ones most likely to have the data to confirm it. The preventive investment in regular benchmarking and proactive adjustment is almost always less costly than managing the downstream consequences of avoidable turnover.

According to TalentUp data, organisations that benchmark compensation systematically against external market rates are significantly more likely to report strong talent retention and employee trust scores. HR and compensation teams can use the TalentUp Salary Platform to access live, role-specific salary benchmarks across European markets and build the evidence base needed for credible, transparent pay decisions. See also our piece on pay compression, which explains how below-market salaries for existing employees emerge and how to fix them before they become a retention crisis.

Frequently Asked Questions

What should an HR professional do first when an employee says their salary is too low?

The first step is to acknowledge the concern without immediately accepting or dismissing it. Commit to reviewing the relevant data and provide a clear timeline for a follow-up response. This signals that the concern is being taken seriously while giving HR time to gather the information needed for an objective assessment.

How do you determine whether a salary is genuinely too low?

Assessment requires two types of data: internal data showing how the employee’s pay compares to peers doing equivalent work, and external market data showing current benchmark salaries for the role, level, and location. Both are necessary. A salary can look below market externally while being appropriately positioned internally, or vice versa. Using a real-time salary intelligence platform ensures the external benchmark is current rather than based on survey data that may be months or years out of date.

What if the data shows the salary is at market but the employee still disagrees?

Share the data directly and clearly. Under the EU Pay Transparency Directive, employees have the right to request salary benchmark data for comparable roles. Being transparent about the market data builds credibility even when the outcome is not what the employee hoped for. If the employee disputes the benchmark data, be open to exploring whether their role scope genuinely differs from the benchmark job description.

How should HR build a business case for a salary increase?

A strong business case includes: the current salary vs. the market benchmark (with the gap as a percentage), performance and contribution evidence, peer comparisons within the organisation, and the estimated cost of turnover if the employee leaves. The replacement cost of a professional employee typically ranges from 50 to 150 percent of annual salary. Quantifying this cost concretely is often the most persuasive element for budget holders who are resistant to pay adjustments.

What happens if the organisation cannot afford to adjust the salary immediately?

Be direct about this rather than making vague commitments. If budget constraints prevent an immediate adjustment, explain the situation honestly, provide a specific timeline for when the issue will be revisited, and explore whether non-cash compensation such as additional leave, flexible working, or enhanced benefits can partially address the gap in the interim. Vague promises without follow-through damage trust more than a clear, honest explanation of constraints.

How does the Pay Transparency Directive change how HR handles salary concerns?

The EU Pay Transparency Directive gives employees the right to request pay benchmark data and requires employers to publish salary ranges in job postings. This means that employees raising salary concerns increasingly arrive with data: they can see what the market pays and may also be able to see what peers at their level are earning within the organisation. HR teams need to be prepared to engage with this data directly rather than relying on opacity to manage compensation conversations.

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