Are There Mandatory Rules for Annual Employee Increments? Let's Discuss!

sivakumar1611
Hi All, Are there any rules and regulations for giving annual increments to employees? Does this mean that we have to give a fixed percentage to employees annually?

Regards,
T. Sivakumar
ajoy.hr
Annual Increment Guidelines

Annual increment is not compulsory as per S&E. It is mostly dependent upon the financial growth of the company. The average increments, depending on the financial growth of the company, are between 10-30% plus a Performance Bonus, if any.
smbhappy
If your 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 their loyalty and prosperity. Otherwise, the salary of the employees will stagnate, and the employees (read Talent) will lose interest and start looking for better avenues of income or employment.
Akbarjiva
Rules for Annual Increment of S&E

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

Thanks and Regards,
Surendera M. Bhanot
CEO - Avis Software
The City Beautiful - Chandigarh
[Phone Number Removed For Privacy Reasons]
Email: [Email Removed For Privacy Reasons]
Chat: [Email Removed For Privacy Reasons]

Thanks, smbhappy, this is a valid answer for me. If my organization is earning a good profit, would I (or my colleagues) be liable for any share in it according to the law? Please answer.

Regards,
smbhappy
Otherwise, owing to inflation, the rate of inputs, raw materials, and services goes up. The cost of fuel (electricity, coal, petrol, diesel, oil, etc.) increases every year. Government service rates rise, and taxes also see an increase. Other direct and indirect expenses, such as salaries, wages, food, freight, cartage, communication, travel, rents, and duties, also increase. The organization must raise the prices of its products/services in consideration of all these increases. If an organization covers all other increases, why not also increase pay for its employees, who actually work hard to earn for the organization, their share of the increase?
kannanmv
Dear Sivakumar,

Understanding Annual Increments

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 colleagues, if you do not consider giving a fair raise, then the 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.

Regards,
M.V.KANNAN
If you are knowledgeable about any fact, resource or experience related to this topic - please add your views. For articles and copyrighted material please only cite the original source link. Each contribution will make this page a resource useful for everyone. Join To Contribute