Salary Review Timing Dilemma: How Do You Handle Pro-rata Increments for New Joiners?

Hi! Can anybody who has hands-on experience in the increment and fitment of salary exercise, comment on the following issue!

In my organization, people who complete their probation period, i.e., 6 months from joining, are eligible for a salary review as it is conducted every year on 1st April. This means that on 31st March, anyone with confirmed service is eligible for the review.

For instance, if someone joins on 2nd October 2006, they are not eligible since they do not have confirmed service on 31st March 2007. They would have to wait until April 2008, with the maximum increment being for 12 months.

However, if someone joins on 1st September 2006, they will receive a pro-rata increment for 7 months. Given the above, I would like to hear how you all handle this matter or what your policy is. Only those in the compensation division may comment.

Dear Pardip,

A better way to handle the first increments for new joiners is to schedule them on the anniversary of their joining. The rationale behind this approach is that after a year of service, the organization has ample time to assess the employee's performance. This method is also fair as it aligns with the appraisal cycle of other employees who are evaluated over a 12-month period.

To integrate new joiners into the regular appraisal and increment cycle, their next increment (following the first year) is synchronized with the rest of the employees (e.g., April 1 in your case), and the increment is prorated accordingly.

I hope this information proves to be helpful to you.

Cheers,
Faizal Haque

Dear Faizal,

Thank you for your reply. You are absolutely right; this is the option I have already decided on, as the earlier organization used to follow this practice.

However, I was also considering implementing a new system for the increment of new joiners, based on slabs. For example:
a) Those who have joined from April to June will receive a 100% increment.
b) Those who have joined from July to September will receive a 75% increment.
c) Those who have joined from October to December will receive a 50% increment.
d) Those who have joined from January to March will not be entitled to the increment for the year.

While the option you provided is perfect, the concern is that one person would need to be continuously involved in the corrections, which could be avoided by addressing the matter once a year.

Thanks again for your prompt reply.

Regards,

Hi,

I agree with Faizal's suggestion that for any probationer, it is better to conduct the salary review only after completion of a year. A year's time is a fair assessment period for both you and the new employee to decide on their commitment levels.

Regards

First thing is yearly increment is a policy matter which is approved by all HODs and CMD. It differs from organization to organization depending upon its culture. However, usually a person is entitled to an increment if he/she serves at least 6 months continuously. In that case, he has to join on or before 1st September. Sometimes, a few companies give increments on confirmation also after 6 months. In a word, there is no static rule, only depending on mutual understanding or corporate policy.

Suvajit

Dear Pradeep, I have spent over 14 years in HRD and have a suggestion. In today's diverse organizations, I have experienced motivational measures such as Reliance giving "Default Ratings" to all employees. Increments are on an annual basis there. Most private organizations operate on an annual mode.

Suggestion for Mid-Level Employers

The best suggestion from my experience to save money for mid-level employers is to shorten the review period for administrative employees by 3 months (IT companies are also following this trend) and allow them pro-rated increments.

Illustration

Let's consider a simple calculation for Mr. X who joined on 25/07/'18:
- Date of Joining
- Number of days worked in the financial year
- Base salary for a Class 4 category employee
- Incremented amount decided in lump sum by small/medium-sized entrepreneurs
- Pro-rated increment amount based on the number of days Mr. X was with the company in the financial year

Actual pro-rated effect = 10%