Pay transparency and fairness

When it comes down to it, we’re all working for that pay cheque at the end of the month. And we all expect to get fairly compensated for that work. But are we? How do we know? Salaries have been a taboo subject in the past, but that’s rapidly changing. 

In this article, we’ll explore Singapore’s move towards pay transparency, examining the pros and cons, and looking at how to introduce a policy that champions pay transparency and fairness for all. 

As things stand, there are no pay transparency laws in Singapore, and employers do not need to disclose salary data. However, the situation on the ground is changing, driven by both younger workers and businesses. 

Young workers are increasingly pushing for greater pay transparency, in a bid to ensure that they’re being paid fairly and in line with their peers. In response, HR teams are including salary information in job adverts more often. This voluntary move helps businesses secure young talent, as this is a key influence on Generation Z and millennial job seekers in a competitive recruitment market. 

The trend towards greater pay transparency will push HR teams and business leaders to rethink compensation structures and salary communications. 

While they sound similar, pay transparency, pay equity, and pay equality are in fact different things. Equality means fair pay based on experience, skills, and knowledge, whereas equity also accounts for societal barriers and biases. Transparency means open communication about pay in relation to other employees. 

The move towards increased pay transparency means that both employers and employees can see that it has advantages.

For employers, these include:

• Employee satisfaction: Fairness and transparency leads to increased morale and fosters trust, which has a knock-on effect on productivity.
• Better hiring: Employers who publish salaries, or pay bands, attract applicants with aligned expectations.
• Increased retention: Employees who feel respected and treated fairly are more likely to stay with the company, retaining knowledge and talent within the business and reducing hiring expenses.
• Reputational impact: When businesses are transparent about pay and compensation, they are more likely to be viewed as ethical and progressive, and are therefore seen as an employer of choice.
• Fewer grievance cases: Employees who understand pay structures and feel as if they are treated fairly are less likely to raise grievances and legal disputes.
• Closing the gap: Pay discrepancies due to gender, race, or location are eliminated if everyone is placed within clearly defined salary bands.

For employees, the benefits include: 

• Career planning: When employees can see how salaries are awarded, they are able to make informed career decisions.
• Reduced discrimination: Bias – conscious or unconscious – can be reduced if transparent pay structures are introduced, due to increased visibility and accountability.
• Job satisfaction: Employees who feel respected and valued are likely to be happier at work.
• Negotiation potential: With clearly defined salary bands, employees can negotiate raises based on defined criteria as they progress in their roles.

Of course, it’s not all plain sailing. Pay transparency also has its disadvantages, such as: 

• Resentment: A culture that is open about salaries could breed resentment if individuals feel their pay compares unfavourably to their colleagues.
• Employee confidentiality: Not everyone is in favour of their compensation being a matter of public knowledge.
• Structural change: Being open about salaries may require an initial commitment to reworking current pay structures across multiple departments or locations.
• Weakness in negotiations: Pay transparency could hinder a hiring manager’s ability to negotiate for top talent.

The trend towards greater pay transparency is borne out in survey results. In 2024, HRM Asia reported that 57% of survey respondents in Singapore thought pay transparency was increasingly important, compared to 18% who thought it was already important. 

Recruitment agencies are seeing more and more job adverts citing salary bands, with The Straits Times noting that one recruiter has seen a rise “from 50% in 2022 to 90%” by the end of 2024.

The move towards pay transparency is firmly embedded, and it’s not looking like it will go away any time soon. 

There may be initial challenges when moving towards pay transparency, which include: 

• Employee perception: The transition can highlight discrepancies in existing pay, impacting morale, relationships, and perceptions of fairness.
• Administrative burden: Any kind of business change, including developing and implementing new salary policies, takes time and effort.
• Communication challenges: The success of policy change depends on the success of its communication, so all leaders, managers, and HR staff must be fully on board.
• Manager resistance: Line managers may fear the loss of control and influence in setting salaries.
• Employee resistance: Employees may not want their peers to know about their salary, and may feel their privacy is being invaded or disregarded.

With this trend and these challenges in mind, how can businesses implement a policy of pay transparency? 

Conversations about pay should be framed in terms of bands, rather than precise figures, to allow for differences in experience or qualifications within a role. Using bands provides a clear framework for career progression and can also simplify the annual pay review process. 

Research and evaluate industry and regional norms to ensure salary bands are competitive, and update the research annually.

Start by assessing the current situation with a pay audit. Then, define salary bands for each role grade, based on responsibilities, skills, experience, qualifications, and job frameworks. Other factors will also affect banding, including location, company size, industry, and – of course – budget. 

Regularly monitor industry benchmarks to ensure that company banding remains within industry norms. Audit internal pay annually to identify which employees fall above or below the established salary band for their grade, and use concrete data to address disparities.  

Before implementing the new policy, communicate the rationale behind it. The new policy is more likely to be accepted if business leaders and employees understand that it reduces inequalities, promotes inclusivity, boosts employee satisfaction, and gives the business a strategic advantage. Share information about how benchmarking was carried out and how bands were decided. 

Continue to build trust by regularly cascading information about pay structures and salary bands, and ensure that all employees have access to pay and compensation policies. 

Provide managers with training on how to hold conversations about pay and compensation, and make those conversations a natural part of 1-2-1s and appraisals. 

The role of HR teams is to benchmark external salary data, negotiate feasible salary bands, and communicate changes and ranges openly. These are on-going tasks, which should be reviewed annually to keep pace with market conditions. HR also needs to create written pay and compensation policies and monitor compliance, as well as provide training opportunities for managers and leaders. 

Business leaders play a supporting role, ensuring that policy and changes are clearly communicated throughout the organisation, including the rationale behind the policy. They also need to encourage open dialogue and build a culture of trust, to enable pay concerns to be discussed without fear of reprisal. Any concerns should be addressed promptly to maintain that trust. 

As Singapore moves towards pay transparency as standard, make sure your business isn’t left behind. With benefits including greater leverage in a competitive hiring market, increased employee satisfaction, and a reduction in discrimination, a transparent approach to salaries has both individual and business advantages. 

Developing a new pay transparency policy involves a combination of research, implementation, and communication – with communication arguably being the most important pillar of the project, if it is to achieve acceptance by both business leaders and employees. 

If your move towards pay transparency results in restructuring or retrenchment, Careerminds can help. Our outplacement services help your displaced employees to move quickly into new, meaningful roles by reducing the stress of a job search. 

Contact us today to find out whether we’re the right outplacement partner for your business.