Salary revision - NOT allowed to hike our and team salaries without completing 1 full financial year? - CiteHR
Umakanthan53
Labour Law & Hr Consultant
KK!HR
Management Consultancy
Manojkamble
Sr. Hr Executive
Kharwal_123
Global Head Of Client Services

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We are a private limited firm established in Feb 2017. Currently we are in process of revising our salaries however a good friend of mine said that since we are a new company and haven't completed 1 full financial year we are NOT allowed to hike our and team salaries. I wanted to check if this is true?
Dear Kharwal,
This is good that your company is planing to revise salary of your staff. There is no stipulation for non revision of salary for the 1 year. As per LAW minimum salary is been put under stipulation but if want to pay more than that or you want to hike salaries then their is no stipulation as such.

thanks Manoj,
I still want to hear from other members. Not that I don't value your response but the friend who advised me against revising salaries is an HR guy. Just want to be double sure here.
Other! can you please chip-in.

Dear Kharwal, I fully endorse Shri Manoj's opinion. The principle is the capacity of the industry to pay, if it can be afforded then why not? Indeed it spreads a positive image and would definitely be a motivating factor. Even if you pay the minimum wages, they are revised after six months, and thus a revision of salary needed. To conclude, though it is not necessary, an employer can revise salary, depending on his paying capacity.
Dear Kharwal 123,
Here you have to understand one thing,when organization flourishes, employees are part and parcel of the process, and as such even if the establishment is new and doing well there is no hard and fast rule to give the salary hikes after a year.
In general policy is after a year of working an employee is eligible for his hike on salary for his previous year's performance.
Statutes say that employer has to pay minimum wages and the VDA (which is Variable Dearness Allowance) has to be followed in the salary.
The Labour department issues VDA every year or in a six month period (as is applicable) in the state.

Go ahead and suggest your company to revise the salaries basing on their performances (employees) which shall boost the employee morale and also improve the brand image of the company.
Keeping the employees happy is always good for the Management.

Dear Kharwal,
Yours is a nascent organization and as such the employees might be of a mixed group of people i.e., a combination of fairly experienced and freshers on the same or similar job profiles.. Therefore, your present salary structure would be more or less on par with Market Labor Wage Structure prevailing for your industry as a whole. The need for revision of the existing salary structure within a short span of time since inception of the organization might have been prompted by different reasons such as enhancing the competitiveness of the Company by motivating the present work force as well as attracting new talents, removing certain anomalies in the existing salary structure, introducing Potential Performance Appraisals with a view to retention of star-performers and the like.
The advice of your experienced HR friend is, though signalling caution based on frugality, as it seems to me, based on his misconception of salary hike vs salary revision.
Salary hike is incremental based on the performance appraisal of a certain periodicity or mere passage of a predetermined time duration like six months or one year depending upon the practice followed by the employer. The employer is the sole judge for this. Simply put, it is the same percentage of hike in any one component in the salary structure mostly a hike in the basic only.
Salary Revision, on the contrary, is modification of the entire salary structure including all primary components. To distinguish, 15% of increment relates to 15% of hike in any one component of the salary structure mostly the Basic whereas the same 15% of salary revision implies 15% hike in all components. The mismatch between the current pay/wage structure and the Market labor wage structure acts as the general determinant of salary revision. In case of unionized or bargainable category of employees, salary revision is determined by Collective Bargaining.In other cases of employees, periodical study of the pay scale patterns of similar job profiles in the market is undertaken by the employers and the salary structures are carefully designed or modified accordingly. At times, in order to reward and retain senior employees kept frozen in the maximum scale, "longevity increase" or "stagnation increment" is also provided for in the salary revision.
By and large, you can go in for the salary revision of your employees not withstanding the fact that your firm is less than one year old. What is important is your ability to pay and the employees' sustained contribution to the growth of the Company.

Many thanks to all of you who contributed and my apologies for being late to respond - I was travelling.
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