How to ask for a pay rise in a cost of living crisis when the budget is stacked against you

It’s a difficult, emotionally charged landscape, and navigating conversations about pay rises has never been more delicate or more necessary.

Inflation might be easing on paper, but for most people it certainly doesn’t feel that way. Groceries, rent, childcare, energy costs — none of these have returned to anything resembling pre-crisis levels. Many employees feel they’ve been absorbing the shock for too long.

There’s a growing disconnect between what workers expect and what businesses can realistically afford, and that gap is opening tension in all sectors.

And yet, businesses are not exaggerating when they say they’re struggling too. Employers face their own rising costs at a time when margins are thin and demand is volatile.

A key point many employees overlook is that pay rises aren’t limited to the salary figure on their payslip. When wages go up, so do employer contributions.

Employer National Insurance Contributions increased in April, and the National Minimum Wage rise this year has created additional burdens, particularly for SMEs.

Even well-intentioned employers who value their people are honest about the challenges: the spirit may be willing, but the funds just aren’t there.

It is important to be clear on the legal position. Despite the assumptions many people have, employees do not have an automatic right to a pay rise.

There’s no statutory entitlement to annual increases, inflation-matching uplifts or cost-of-living adjustments. That said, employers should not be flippant about these conversations.

Fairness, transparency and retention all matter — especially in sectors where talent shortages remain acute. No business wants to lose good staff simply because they mishandled a conversation about money.

As for what the Budget may bring, expectations should remain grounded. Even if the Chancellor introduces measures related to wage growth or financial support for businesses, there is rarely an instant ripple effect that solves the problem.

The reality is that both employers and employees are likely to be squeezed even further in the coming months, and pay rises will continue to be the exception rather than the norm.

So if you are considering asking for a pay rise, how do you approach the conversation sensibly, confidently and realistically?

Top Tips for Asking for a Pay Rise in 2025

1. Pick the right moment

Timing is everything. A pay review meeting, a performance appraisal or the completion of a major project are all appropriate moments. Pouncing on your manager during a crisis, a budget discussion or a stressful week is not.

If your organisation has a formal review cycle, make sure you’re aligned with it. Asking outside that window can put your employer on the back foot.

2. Prepare a business case — not an emotional appeal

Your employer knows the cost of living is high; so is theirs. Instead of leading with why you need more money, focus on why you’ve earned it.

Good preparation includes:

• evidence of achievements since your last review
• impact on revenue, cost savings or efficiency
• positive client or colleague feedback
• responsibilities you’ve taken on beyond your job description
• comparison with market rates (use reputable data, not hearsay)

This reframes the conversation from “I want” to “I contribute”.

3. Acknowledge the wider financial pressures

Demonstrating that you understand the employer’s perspective shows maturity and professionalism. A simple acknowledgment — “I appreciate budgets are tight and costs have risen for the business too” — can create a collaborative, not adversarial, tone.

Employers are far more receptive when they feel the conversation is rooted in realism rather than entitlement.

4. Be open to alternatives

• If cash isn’t available, consider what else might improve your working life:
• extra annual leave
• flexible working arrangements
• professional development funding
• one-off bonuses
• phased increases when budgets allow
• title changes or clearer progression pathways
• A pay discussion doesn’t have to be all-or-nothing.

5. Keep the tone constructive

Avoid comparisons with colleagues or ultimatums. These rarely achieve the desired outcome and can damage trust. Focus on your own value, keep the tone solution-focused and maintain professionalism, even if the answer isn’t what you hoped for.

6. If the answer is no, ask what would make it a yes

A reasonable employer should be able to outline:

• what targets you need to hit
• what skills you need to develop
• when the question can be revisited

Clarity helps you plan your next steps — whether that’s staying, growing or seeking opportunities elsewhere.

Communication Is the Key — on Both Sides

Employers should be ready for more pay conversations in the months ahead, and employees should expect more transparency — even if that transparency includes disappointing news. Honest, clear communication prevents resentment, reduces misunderstandings and helps maintain morale in a difficult economic climate.

For employees, understanding the financial realities of business doesn’t invalidate your own financial pressures. For employers, acknowledging the human cost of the crisis doesn’t erase your balance sheet. But respectful, well-prepared conversations can bridge that gap.

If you need tailored employment law advice — whether you’re an employer navigating pay pressures or an employee preparing for a negotiation — you can find guidance at Farringford Legal

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Sarah-Jane Butler is a HR Lawyer, entrepreneur, and award-winning business leader from Farringford Legal

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