Should you show your payslip when negotiating salary for a new job?
Not showing your payslip is important if you feel that your current employer does not pay you what you are worth.
Although it is standard practice in South Africa for new employers to ask to see your current payslip before making you an offer, should you show your payslip when negotiating your salary for a new job?
New job salary negotiation is a delicate dance. A job offer from a potential new employer brings great excitement and visions for the future, but also the reality that this presents the tricky next step in negotiations: the question of salary and benefits linked to the contract of employment.
In South Africa, it is still standard procedure for many companies to ask prospective new employees for proof of their previous salary in the form of a payslip before making a concrete offer, which presents a challenge for many people who would prefer to negotiate in line with the value they bring, not their historic remuneration, Advaita Naidoo, Africa MD at Jack Hammer, an executive search firm, says.
“After going through the job search, application, shortlisting, interview and assessment process, you can feel that your job is done. But if you do not handle this phase correctly, things can still go awry during the package negotiations.”
Package negotiations present a difficult situation because you would like to negotiate remuneration in line with what you believe you are worth, which may not necessarily be equivalent to your current compensation. On the other hand, companies, also for obvious reasons, would like to manage their costs and risk where possible, Naidoo says.
Only in South Africa
The practice of asking for previous salary disclosure is not universal. The US, for example, has very specific regulations around how companies can discuss pay. In some states, companies are not allowed to ask candidates to disclose their current income.
The EU Pay Transparency Directive for 2024 suggests that, depending on the size of a company, it might in future be non-compliant if it asks candidates for current salaries.
Naidoo says there are many reasons why candidates can currently earn a salary that does not match the value they bring to a company. “For instance, the employee may have been receiving only inflation-linked increases for many years, raises may have been put on hold due to company performance in the past, or someone may have been on the receiving end of pay inequality based on race or gender bias.”
She says people who are offered a new position and believe that they should not merely be receiving an incremental raise based on their previous remuneration, but rather an offer that is in line with the value they bring and what the company is willing and able to pay, this can present an uncomfortable situation.
“Fortunately, when head hunters or recruiters who have their finger on the pulse of executive renumeration trends are involved in the negotiations, this issue arises less frequently. However, where negotiations take place directly between the candidate and the employer, conversations about package expectations can get tricky. Nevertheless, there are ways to approach this matter diplomatically in a way that presents a win for both parties.”
Naidoo says the key to ensure a fair resolution is to enter the negotiations prepared and with ample supporting evidence. “You must do your homework to determine firstly what the range of a market-related salary would be and secondly where in that range you are.”
This information can be hard to obtain, but there are some resources, such as industry-related salary surveys and benchmarking.
Match your current payslip to your experience
“Candidates should match current industry compensation to their own experience, skills and track record and then also align that to the stage of maturity, size of company, industry, location, current financial position and growth prospects. All these variables play a role in determining what ‘fair’ entails.”
If you are armed with the relevant information and evidence, providing the rationale for your package expectations becomes a less fraught experience. In addition, Naidoo recommends that candidates have a solid understanding of their current remuneration package and structure before they head into offer negotiations, to ensure they do not inadvertently shoot themselves in the foot.
“We see at all levels that people do not really understand total compensation and their actual cost to company, and therefore, you must make sure you do not actually end up poorer. Every company structures packages differently and therefore you must understand all your current benefits, including health, retirement and life, as well as all the extra perks and benefits that are you are receiving.”
Ultimately, negotiating a fair package is in the interest of both employer and the new employee.
“Negotiating your salary is not only about ensuring that you get paid what you are worth, but also about building a positive and trusting relationship with your future employer. The process may undoubtedly be thorny at times, but it also presents an opportunity to build a solid foundation for the future relationship.”