Why Should Your Last Salary Decide Your Next One?

Two candidates apply for the same job. Both have the experience and capability to do the work, and both could make a similar contribution. One currently earns £35,000. The other earns £50,000. The employer has budgeted £55,000 for the position.

So what should each candidate be offered?

If your answer depends on what they’re earning now, I’d suggest you’re asking the wrong question. Their previous salaries tell you what somebody else decided to pay them. They don’t tell you what either person could contribute to your business.

Yet asking candidates about their current salary remains a familiar part of recruitment. Once that number enters the conversation, it can begin shaping the offer, even when it has little relevance to the work being discussed.

What Does Your Old Salary Actually Tell Me?

A salary looks like an objective piece of information. It’s a number, after all, and employers often use it to understand a candidate’s seniority, expectations or likely willingness to move. The problem is that the number tells us remarkably little about what the person could contribute to a different organisation.

Previous salary reflects decisions made by another employer, under different circumstances. It may have been shaped by a career break, a move into a lower-paid sector or an organisation that simply paid less than its competitors. It may also reflect discrimination.

Using that figure to determine a new offer risks carrying those disadvantages into the next job. Someone who has been consistently underpaid can find that each subsequent employer uses their salary history to justify another relatively low offer.

This is why the Equality and Human Rights Commission recently recommended that employers should stop asking candidates about their salary history or expectations. The government is also considering greater transparency about pay during recruitment. These proposals are not yet law, but employers don’t need to wait for legislation to reconsider the practice.

There’s a much simpler starting point: what does this job actually pay?

Tell People What the Job Pays

Most employers have some idea of what they’re prepared to pay before advertising a vacancy. They have a budget, an understanding of the responsibilities involved and perhaps a salary range based on comparable positions.

Yet candidates are often expected to enter the recruitment process without knowing that information. Instead, they’re asked what they currently earn or what salary they’re looking for.

Think about the imbalance. The employer knows the available budget, while the candidate has to guess what number will keep them in consideration without leaving money on the table. Ask for too much and they risk being rejected; ask for too little and they may receive an offer well below what the employer was prepared to pay.

That’s an odd way to begin a relationship that is supposed to work for both parties.

It also wastes time. Candidates invest hours preparing applications and attending interviews, only to discover that the salary was never going to make the opportunity viable. Employers lose time progressing candidates who would never have accepted the offer.

There’s a straightforward alternative.

Tell candidates what the job pays before asking them what they want.

Publish a credible salary range and explain how you decide where somebody would sit within it. If most people will start near the bottom, say so. If particular experience or capability justifies a higher offer, explain what that means.

A salary range should reflect what an employer is genuinely prepared to offer. If the advertised range is £40,000 to £60,000 but almost everyone will be offered £45,000, candidates aren’t being given a realistic picture of the opportunity.

Transparency means giving people information they can actually use to make a decision.

Start With the Work, Not the Person’s Pay

Before meeting candidates, employers should be able to explain what they’re recruiting someone to accomplish, the responsibility involved and what they’re prepared to pay for that contribution.

An employer shouldn’t need to know somebody’s previous salary to establish what the opportunity is worth to the organisation.

Once the range is clear, the employer can assess candidates against the requirements of the role. Someone who brings directly relevant experience and can contribute immediately may justify a different starting point from somebody who will need time and support to develop.

Someone who can take on greater responsibility or brings capabilities that are particularly valuable to the role may also justify a higher offer. An employer should be able to explain any difference between offers without referring to either candidate’s previous salary.

Candidates should have enough information to make their own decisions too. Someone might willingly accept less money for greater flexibility, a more interesting challenge or the chance to work somewhere that better suits their ambitions.

That’s their choice, provided they understand what the opportunity offers.

Once an employer has published a credible salary range, both parties can establish whether the opportunity is financially viable. That’s a very different conversation from asking candidates to reveal their previous salary or name a figure before they know what the employer is prepared to pay.

Recruitment should help two parties discover whether they can do something worthwhile together. That includes understanding the practical terms on which the relationship would work.

Let’s return to our two candidates. Both could make a similar contribution, despite the difference in their pay.

If the employer offers them different salaries, it should be able to explain why without referring to either candidate’s previous pay.

Your previous employer decided what to pay you. They shouldn’t get to decide what you’re worth to the next one.