Employee Says Salary Is Too Low? An HR Playbook With Scripts

When an employee says their salary is too low, HR should do three things in order: acknowledge the concern and set a date to answer, verify it with data (internal equity first, then a properly matched market benchmark), and decide and explain using criteria you would apply to anyone in the same situation. The answer can be a raise, a plan, or a clear no, but it should never be a guess.

This playbook covers how to check compa-ratio, range penetration and peers, why “the market pays more” needs careful matching, a decision tree for underpaid, at-market and above-market cases, conversation scripts, options when there is no budget, the risks of counter offers, and how the EU Pay Transparency Directive changes these conversations once it is transposed into national law. It also includes TalentUp data on how far posted salaries spread for the same job title in the same country.

First Response: What to Say When an Employee Raises Pay

The first reply sets the tone for the whole process. An employee who says their pay is too low has usually thought about it for weeks, often after seeing a job ad, talking to a recruiter or learning what a colleague earns. Your goal in the first conversation is not to decide but to collect the right information and commit to a process.

Ask three questions:

1. What is the concern based on? A job ad, an offer, a salary website, a peer’s pay, a change in responsibilities, the cost of living?
2. What role and level are you comparing with? “Product manager” covers very different jobs, and so does “senior”.
3. What would a fair outcome look like for you? This tells you whether the gap is 3% or 30%, and whether pay is the real issue.

Then give a specific date for the follow-up, typically within two to four weeks. “We’ll look at it in the next cycle” without a date erodes trust faster than a clear no. If the employee mentions an external offer, ask for the timeline, but do not let it short-circuit the analysis below.

Step 1: Check Internal Equity (Compa-Ratio, Range Penetration, Peers)

Start inside the company. Internal data is what you control, what peers will compare against, and what the Directive will scrutinise.

A low compa-ratio is not proof of underpayment on its own: a new hire at 0.88 who joined six months ago may be exactly where your policy intends. But an experienced, well-rated employee at 0.85 while peers sit at 1.00 is a red flag for internal equity, and potentially for a gender pay gap if the pattern repeats across a group. Our guides to range penetration and internal equity vs market pay cover the calculations in detail.

Also check whether the problem is the employee or the band. If several people in the same level sit low, or new hires are coming in above tenured staff, you have pay compression, and fixing one salary will create the next complaint.

Step 2: Check the Market Properly (TalentUp Data)

“The market pays more” is the most common argument, and often the weakest piece of evidence. A job ad shows one employer’s offer for one version of a role. The same job title covers different seniority, scope, sector, company size and city, so posted pay for one title in one country varies a lot.

Source: TalentUp job postings database, January–September 2026. Employee contracts with a structured annual salary; see methodology below.

Across 22 role-and-country combinations with enough data, the 75th percentile of posted salaries is about 50% higher than the 25th percentile (median of the cells). Commercial and tech roles spread the most, administrative roles the least.

Posted annual salary, 25th to 75th percentile (P75 vs P25 in brackets). n/a = sample too small or dominated by a few employers.

Location matters as much as title. In the UK, the median posted salary for software engineers is about £103,000 in London (n≈110) vs about £75,000 elsewhere (n≈750), and for project managers about £69,000 vs £55,000.

What this means in practice: an accountant in Spain earning €30,000 who finds an ad at €35,000 is still inside the middle half of the market. That ad alone does not prove underpayment. A proper benchmark matches role content, level, location and, ideally, company size and sector, and compares like with like (base vs total cash). Our methodology explains how TalentUp matches positions, and the European Salary Benchmark Report gives cross-country reference points.

Vague job ads add noise. In a sample of about 22,500 job ads from 2026, the share that promise a “competitive”, “attractive” or “market-rate” salary without stating any figure was 18.4% in Belgium, 17.6% in Germany, 15.9% in Ireland, 11.8% in Spain and Portugal, 8.9% in the UK, 8.7% in the Netherlands, 7.0% in Poland, 5.6% in Italy and 5.4% in France. Employees cannot benchmark against those ads, and neither can you.

Decision Tree: Underpaid, At Market or Above Market

Once you have internal and market evidence, the decision becomes much less personal. Use the same tree for everyone, and write down which branch you took.

Two rules keep the tree honest. First, performance changes the speed, not the destination: an underpaid low performer should still be brought to the bottom of the range if the gap has no objective reason. Second, flight risk changes the timing, not the criteria: if you would not adjust a quiet employee in the same position, do not adjust the one who complains loudest.

How to Run the Conversation: Scripts

The follow-up meeting should explain the decision, the criteria and the data, in that order. Keep it private, at least 30 minutes, and with the manager and HR aligned beforehand.

Avoid three traps: promising before you have approval, comparing with named colleagues, and justifying pay with reasons you would not write down (negotiation skill, “they asked first”, family situation). Under pay transparency rules, reasons that are not objective and gender-neutral become a liability.

When a candidate says your offer is too low

The same logic applies in hiring. Check that your range is current for the role, level and location, explain the full package (base, variable, benefits), and move within the range based on the candidate’s proven skills, not their previous salary. Where the Directive has been transposed, employers cannot ask candidates about their pay history. See how to meet candidate salary expectations under the Directive and transparent salary job postings.

What to Do When There Is No Budget

A valid request with no budget is common, especially when 2027 salary increase budgets hold at around 2–3% in most of Europe. The options, from strongest to weakest:

• Commit to a date and amount. “We’ll bring you to €X in the April cycle” is a real answer if it is written down and kept.
• Pre-fund from the next cycle. Reserve part of the merit budget for documented equity corrections before allocating merit increases.
• Phase the adjustment. Close half the gap now and half at the next review, when the gap is large.
• One-off payment. A retention or spot bonus can bridge a temporary gap, but it does not fix base pay, pensions or future increases.
• Level or title review. If the role has grown, a promotion with a new range solves the problem structurally.
• Non-pay levers. Flexibility, extra leave, training budget or a development plan help when pay is already fair, not as a substitute for a clear underpayment. See our list of alternatives to a salary increase.

Be explicit about which option you are using and why. An employee who is clearly below market and is offered only a training course will hear “no” and act on it.

Counter Offers: When They Work and When They Backfire

A counter offer is a pay decision made under the worst conditions: little time, incomplete data and a negotiating partner who has already decided to leave. It can be the right call, but the risks are well known:

• It rarely fixes the cause. People resign over pay, but also over their manager, growth or workload. Money does not solve those.
• It rewards resigning. If the only route to a raise is an outside offer, others will learn to get one.
• It creates internal inequity. The person who threatened to leave ends up above peers at the same level who did not, a gap that is hard to justify with objective criteria.
• It signals the pay was wrong. If you can find the money now, the employee will ask why you did not before.

If you counter, apply the same tests as any other adjustment: is the new salary inside the range for the level, consistent with peers and supported by matched market data? If the answer is yes, it is a correction you should have made already, and you should check whether peers need the same fix. If the answer is no, the counter offer creates more problems than it solves.

Document Decisions for the EU Pay Transparency Directive

The EU Pay Transparency Directive (2023/970) had a transposition deadline of 7 June 2026; its obligations apply through national laws once each member state transposes them (see where each country stands). For “my salary is too low” conversations, four provisions matter most:

In practice, an employee who says their salary is too low may soon arrive with an Article 7 answer showing that the average for their category is higher, or that the gap between women and men is. Reporting adds more visibility: employers with 250+ workers report gender pay gaps every year from 7 June 2027, 150–249 every three years from 2027, and 100–149 every three years from 7 June 2031. An unexplained gap of 5% or more in a category that is not remedied within six months triggers a joint pay assessment.

What to document every time

Keep a short, consistent record for every pay request:

• Date, who raised it and what evidence they brought.
• Internal data used: band, compa-ratio, range penetration, peer comparison.
• Market data used: source, role and level match, location, date.
• The branch of the decision tree and the objective criteria behind it.
• The outcome, amount, effective date, approver and the next review date.

This log protects you in a dispute, lets you spot patterns (who asks, who gets adjustments, by gender and group) and feeds your pay equity audit. For the full set of obligations, see our EU Pay Transparency Directive guide and the pay transparency resource page.

Prevent the next “my salary is too low”

Reactive, complaint-driven pay decisions favour the people who ask. A few habits reduce the number of requests and make the ones you get easier to answer:

• Benchmark key roles at least once a year, and more often for families where the market moves fast.
• Publish the criteria for pay and progression, and explain where each person sits in their range.
• Run an equity check before every review cycle, and reserve budget for corrections.
• Train managers to use the scripts above and to escalate instead of improvising.
• Watch new-hire pay against tenured staff to catch compression early, and run a structured salary review cycle.

TalentUp’s plans give HR and compensation teams role-, level- and city-specific benchmarks across Europe, so the answer to the next pay request starts from data.

Sources

• TalentUp. Job postings database, January–September 2026: posted salaries by job title in five countries and a random sample of about 22,500 employee job ads in 10 countries (see methodology above).
• European Union. Directive (EU) 2023/970 to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms, Articles 4, 5, 6, 7, 9, 10 and 18. EUR-Lex.