Hays Guide: 89% of Legal Employers to Boost Salaries

Australia’s most comprehensive salary guide has found an overwhelming 87% of legal employers plan to increase salaries in their next review.

Key Takeaways

• 87% of employers will increase legal salaries in their next review
• 58% will award increases of more than three per cent
• 73% say the skills shortage has forced them to offer higher salaries than planned
• 63% of employees looking for a new role

What Hays Says

In its 45th year, the Hays Salary Guide is based on a survey of more than 15,000 employers and professionals, covering more than 1,270 roles across 26 industries.

Australia’s most comprehensive salary guide has found that 87% of legal employers plan to increase salaries in their next review. The report found that 69% of legal employers planned to increase salaries above three per cent, while 65% of employees expected a pay rise above three per cent.

Sixty-three per cent of legal professionals are also either looking for or planning to look for a new job in the next 12 months, with the rising cost of living (59%) being the top reason for leaving their current role in pursuit of a higher salary.

Poor workplace culture or purpose (56%), adverse health and well-being (55%) and uncompetitive salary (54%) also top the list of reasons why employees would look to leave their current roles.

“The mismatch between what employees want and what employers are willing to offer will play out over the next year, with 39% of legal employees being dissatisfied with their salaries and 76% saying it doesn’t reflect their performance,” Hays CEO, APAC, Matthew Dickason said.

“There’s a trend of employees expecting higher salary increases over the past three reports, with 59% indicating they believed they would benefit financially from changing jobs in the next 12 months.

“In 2019, 67% of employees expected a pay rise of less than three per cent. In just five years, the pendulum has swung to 65% of employees expecting a pay increase of more than three per cent.”

“However, we are also seeing a slight decrease in the number of legal professionals asking for a pay rise (68%) down from 71% last year,” Mr Dickason said.

“Individual performance remains the number one employer consideration for a pay increase (92%). Other factors employers will consider include responsibilities (82%), expertise (56%), external typical salaries for the role (59%) and the organisation’s performance (54%).”

Employers forced to offer higher salaries

The report found that 46% of employers expected to increase permanent headcount over the next 12 months, up five per cent from last year, with 62% of those employers looking to increase staff levels by more than six per cent.

However, 72% of organisations indicated they were experiencing skills shortages, with 15% experiencing extreme skills shortages and 57% experiencing either moderate or minor shortages.

“We also saw a rise in legal employers being forced to offer higher salaries in the past year due to the skills shortage, with 35% offering substantially higher salaries and 37% offering nominally higher salaries,” Mr Dickason said.

“The survey also found that 65% of organisations expected skills shortages to impact the effective operation of their business in the next 12 months.

How Employers and Employees See It

Value of Salary Increase	Salary Increase Employers Intend to Pay	Salary Increase Employees Expect
0%	13%	13%
<3%	28%	21%
3-6%	40%	28%
6-10%	11%	21%
>10%	7%	16%

 

1. No Increase (0%)

Both employers and employees align perfectly, with 13% of each group not expecting any salary increase.

2. Less than 3% Increase

More employers (28%) intend to offer less than 3% increases compared to employees (21%) who expect this range. This suggests a moderate employer preference for minimal increases.

3. Between 3-6% Increase

A significant gap appears here; 40% of employers are willing to give raises between 3% and 6%, whereas only 28% of employees expect increases in this range. This indicates employers are more likely to offer mid-range increases than employees anticipate.

4. Between 6-10% Increase

Employees have higher expectations (21%) for raises between 6% and 10% compared to employers' intentions (11%). This discrepancy shows that many employees hope for more generous increases than employers are prepared to offer.

5. Greater than 10% Increase

Here, the expectation gap widens further, with 16% of employees looking for increases above 10%, whereas only 7% of employers intend to offer such high raises. This points to a significant expectation mismatch, particularly among those employees seeking the largest salary boosts.

The data reveals a consistent pattern where employees' expectations for higher salary increases surpass what employers are willing to provide, especially at the higher end of the increase spectrum (>6%).

Employers seem more cautious, focusing more on modest increases. This mismatch could lead to employee dissatisfaction and turnover if expectations are not managed or market realities shift, necessitating greater salary adjustments to retain top talent.

Advice for Employers

“Salary is undoubtedly the most critical factor in attracting, rewarding, and retaining legal professionals today, with 70% of employers being prepared to offer above the standard package to secure a candidate,” Mr Dickason said.

“But employers must also recognise that additional benefits are not just a bonus but a must. Benefits employers are offering this year to retain valuable employees include flexibility (60%), additional benefits (49%) and professional development (51%).

“Your employer’s brand and reputation are among the strongest motivators for staff to stay. Positive changes to a company’s ESG approach, DEI strategies, flexible hybrid setups, and strong team culture are some ways employers can hold on to valued staff.”

Advice for Professionals

“With skills in demand, you still have bargaining power, but it’s important to avoid pricing yourself out of consideration. Yes, employers are investing in salary increases, but the commercial reality dictates that salary increases can only stretch so far,” Mr Dickason said.

“Consider the whole package when negotiating a new job or your next pay rise. Think about what you’d value and what could benefit your life and career long-term.”