How an open pay policy supports workplace retention

Issues such as the gender pay gap and inequity arise from pay policies under subjective progression systems; however, an open pay policy may be a solution that promotes fairness and consistency when not everyone can work at the same pace or capacity, one law firm founder has said.

The founder of law firm Lawnch and board member of mental health charity LIVIN, Tammi McDermott (pictured), established a pay transparency policy at her practice, which sets pay for each position level, and bases progression on skills and experience, as opposed to age or gender.

A well-thought-out pay policy has the potential to change the productivity of younger workers. According to Deloitte’s 2025 Gen Z and Millennial Survey, 62 per cent of Gen Z respondents and 68 per cent of Millennial respondents said their pay impacted their mental wellbeing.

Clarity, fairness, and autonomy

At Lawnch, McDermott offers 10 position levels, from entry-level roles to senior roles, each aligned with a corresponding set salary – each of these positions is based on clearly mapped skills and experience, with career and pay progression to all employees based on structure, she said.

McDermott said the structure of a company’s open pay policy should be “designed to promote equality and flexibility”.

Age and gender should not influence progression, she said. Instead, under an open pay policy, a person’s experience and soft skills determine if they are ready for the next position level.

She added: “Team members value the clarity, fairness, and autonomy it brings – they love having a road map to achieving their next promotion, it enables them to be at the wheel of their career. It supports both high performers and those balancing other life commitments, without bias.”

Helping move the needle

“Our approach creates a workplace we genuinely want to be part of and that clients are proud to engage with,” she said.

The transparency of salary increases and clear visibility of career progression in an open pay policy encourage retention, benefit work culture, make everyone feel valued, seen, and equal, and help attract like-minded talent who value transparency and equity, McDermott said.

Following the implementation of its pay transparency policy, the firm reported greater retention, trust, and a genuine sense of equality across the team.

Along with these benefits, it has also improved performance conversations, which are now more focused on development rather than negotiation, McDermott noted.

She said that this policy prevents the effects of subjective progression systems, which lead to outcomes such as the gender-based pay disparity. With progression dependent on skills and experience, this bias is taken out of the picture.

Speaking about its impact on the gender pay gap, McDermott said: “This is an important part of a bigger solution with many different factors at play, but it can certainly help move the needle.”

“It attracts people who value fairness and helps foster a culture where everyone feels seen and supported.”

A model for all industries

To implement an open pay policy, McDermott said that HR professionals need to design a clear and structured framework that connects pay grades to defined position levels and measurable skills.

She said that progression discussions must be communicated openly and handled with care – the purpose of this transparency is to empower workers to take control of their own growth, and ensure that accountability and fairness remain key priorities.

As every workplace benefits from transparency and equality, an open pay policy has scope to be a model for all industries; however, the way each company’s policy is implemented is dependent on the size and structure of the organisation, she said.

“In law, open pay is a big shift because the sector has traditionally been secretive about remuneration. But once people see the benefits, such as higher engagement, retention, and morale, it’s hard to argue against it. The principles behind it, like fairness and autonomy, are universal,” she said.