Rules for Annual Increment of S&E - employer and employee
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Rules for Annual Increment of S&E

sivakumar1611 Started The Discussion:

Hi All, Is there any rules and regulations for giving of Annual increments to the employees that means any fixed percentage we have to give to employees annually. Regards T. Sivakumar

ajoy.hr - 
Annual Increment is not compulsory as per S & E. It is mostly dependent upon the financial growth of the company. Average increments depending upon the financial growth of the company is between 10-30 % + Peformance Bonus if any.

JOSEPHPATRAO - Contributing Member
Hello, Become expert in payroll NATIONAL ACADEMY OF INDIAN PAYROLL Regards Joseph - josephpatrao@gmail.com Half-Knowledge is Dangerous

smbhappy - Contributing Member
If you salary structure is not linked to the W/S and Consumer Price Index, and unless you are not under contract on a fixed pay for a particular period, it is warranted that the employees are compensated towards the general rate of inflation as well as for the loyalty as well as for the prosperity of the employees. Otherwise, the salary of the employees will be stagnated and the employees (read Talent) will loose interest and start looking for other better avenues of income/employment.

Akbarjiva - 
smbhappy Follow Join Date: May 2010
Location: The City Beautiful - Chandigarh
Posts: 199

Re: Rules for Annual Increment of S&E
If you salary structure is not linked to the W/S and Consumer Price Index, and unless you are not under contract on a fixed pay for a particular period, it is warranted that the employees are compensated towards the general rate of inflation as well as for the loyalty as well as for the prosperity of the employees. Otherwise, the salary of the employees will be stagnated and the employees (read Talent) will loose interest and start looking for other better avenues of income/employment.
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Surendera M. Bhanot
CEO - Avis Software
The City Beautiful - Chandigarh
+919-888-810-811

chat -

Thanks,
smbhappy, this is valid answer for me, if my organisation is earning good profit, would I (my colleagues) liable for any share in it according to law. plz. answer.

Regards,

smbhappy - Contributing Member
Otherwise also, owing to the inflation the rate of inputs, raw materials and services goes up. The fuel (electricity, coal, petrol, diesel, oil etc) cost is up every years. The Government services rate goes up. Taxes also have a increased bearing. Other direct and indirect expenses also go up (including salaries, wages, food, freight and cartage, communication, traveling, rents and duties etc.). The organization has to increase the price of its products/services keeping in view of all these increases. If an organization pay for all other increases, why not pay its employees, who actually toil to earn for the organization, their share of increase!!

kannanmv - Contributing Member
Dear Sivakumar,

There are no fixed rules or norms for annual increments. Generally it depends on the following.

1. The job market (What similar industries are paying)
2. The potential of employees you are hiring or retaining.
3. The capacity of your industry to pay.

As indicated by other collegues if you do not consider giving a fair raise then retention of employees will be difficult. Moreover, you may end up hiring employees for higher wages which will be much higher than the increment you have offered. By hiring new employees at higher wages you will upset the existing apple cart (existing loyal employees). So it is an art of fixing the right scale of pay and retaining employees.

You need to constantly update yourself on the market trends.

M.V.KANNAN

Dear All
I am Dibya Ranjan from gurgaon.I HAVE RECENTLY STARTED MY CAREER IN HR FIELD.MY QUESTION IS IF A,B,C,D, & E ARE 5 EMPLOYEES OF MY COMPANY.

A-4000(BASIC),2500(HRA),2000(TA),
B-5000(BASIC),2700(HRA),2000(TA)
C-4500(BASIC)2700(HRA),2000(TA)
D-5000(BASIC)2700(HRA)2000(TA)
E-7000(BASIC)3500(HRA)2000(TA)

USING THESE BASIC DATA KINDLY CALCULATE PF,ESI,GRATUITY AND OTHER THINGS IN EXCEL SHEET AND MAIL ME AT

kannanmv - Contributing Member
Dear Dibya,

We appreciate that you are new to the HR field and we welcome you to this forum.

My humble opinion is you can seek guidance but can't expect your fellow colleagues to work for you.

The guidance you require is as follows.

1. PF is computed @ 12% on the Basic Salary. The contribution from Employer side is 12% and is remitted to the EPF/ FPS account and another 12% from Employee's side. However, if the employee wishes to contribute another 12% as Voluntary PF he can make a request to the employer and he can recover it either as 12% or 24% (12 + 12) from Employees earnings for the month. There is a wage ceiling of Rs.6500/-. In other words for those employees drawing salary above Rs.6500/-, the employer can restrict the Employer contribution to 12% on Rs.6500/-.

8.33% from the 12% contribution of the Employee's share is credited to Employee's Pension account and the rest is credited to the PF account.

2. ESI is computed @ 1.75% on the Gross Salary, in your case Basic + HRA + TA and is deducted from the employee's account. 4.75% of the Gross Salary is remitted by the employer. Please note that both the employer and employee contributions should always be rounded to the next higher rupee. In other words even if it is one paise above one ruppee it is considered as two rupees.

3. Gratuity is generally considered for the purpose of arriving at the Total Cost To Company. The calculation of Gratuity per month is arrived as follows Basic salary X 15/26 and divided this by 12 to give you the Gratuity contribution per month. But this amount need not be paid to the employee every month. It is paid only to those employees who have rendered minimum of 5 years of service in your organisation at the time of their leaving. The calculation is Basic Salary X 15/26 X Nr. of years completed service or part thereof in excess of 6 months, this means if the employee has put in more that 6 months of service it is considered as one full year. For example if the employee has put in 7 years and 8 months of service the calculation will be for 8 years.

Regards

M.V.KANNAN

if pay scales are time rated scale/regular pay scale like 10000-1000-15000-eb-2000-29000. is it not mandatory for employer to give annual increment to employees as per pay scale ? Please advise

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