Madhu.T.KPayment of Increments depends on the profitability of the respective organisation and market situations facing the company. If you expect good market, you can pay good increments so that you can make your employees happy and retain them. Normally an increment of ten to fifteen percent will be the industry standard. But at the same time, you can also consider an increase at par with the increase in cost of living index only to those whose performance has been rated to be very poor. If you have the practice of paying Dearness Allowance, that would justify increment to such employees. But most of the IT companies do not pay DA but have a salary structure with a minimum amount as Basic (reason not known...!) and higher amounts on other allowances. The increment should be reflected in the basic pay component also else, the same will lead to other legal complications in future. The percentage of increase shall be on gross salary and the amount so arrived at shall be equitably distributed among the various components of salary.
With regard to bonus payment, you should work out a plan in which you have to define who all will be entitled to get bonus and how much shall be the rate of bonus. Statutory bonus is governed by Payment of Bonus Act and if you follow the same, then person with salary of more than Rs 21000 will not come under the bonus brackets but only a few will be available as employees entitled to get bonus. If your remuneration structure itself is designed with a component called bonus, then that shall be paid irrespective of your profitability. Depending upon the profitability of the organisation, the rate of bonus shall vary from 8.33% to 20%.
From India, Kannur
sudha-murthy1Thanks Madhu for the inputs.. I was infact wondering if I could get some insights about the current increment % in IT startups while the review cycles are nearing..
From India, Bengaluru
Increments are based on the performance of the individual Companies and future projects in pipeline. Not sure how the data % of increment @ IT startups is going to help you. Your Organisation's P&L bottom line will be the ultimate criteria.
From India, Madras
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