HomeHR glossaryPay Compression
Pay Compression

Pay compression refers to a situation where there is a minimal difference in pay between employees at different levels within an organization. It occurs when new hires or lower-level employees are paid similar or even higher salaries than more experienced or higher-level employees.


Due to pay compression, a recently hired junior employee with limited experience earns almost the same salary as a senior employee who has been with the company for several years and has more responsibilities.

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