Are Our Experience-Based Salaries Fair and Legal? Seeking Advice on Pay Concerns

Dear All, Kindly help me with the following points:

Experience and Salary Concerns

1. Some workers have experience of about 5 to 10 years.
2. However, they are unsatisfied with their salaries.
3. Are there any rules regarding experience-based salaries?
4. Currently, we are providing wages above the minimum.
5. Is this legally acceptable?

Regards,
Shriname

The minimum wage is what an employer is required to pay to an employee according to the skills possessed by them, irrespective of the number of years of service. However, for a salary to be just and fair, it should relate to the skills, experience, and degree of responsibilities.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai

So far as compliance under the Minimum Wages Act is concerned, the government notifies minimum wages for each category of employees such as skilled, unskilled, and manual establishments like shops, commercial establishments, or engineering industries. These categories consist of basic pay and special allowances. Minimum wages are not based on the length of service. It is essential to ensure that you are not paying less than the minimum wages prescribed for that particular category. If you are paying more wages than the minimum wages stipulated in the notification for any specific category of employees, you are deemed to have complied with the Act.

However, when I talk about just and fair wages, I am referring to wages beyond the prescribed minimum wages. As per the Act, there is no breach on your part since you are paying more than the minimum wages. The Minimum Wages Act does not specify that wages should be based on the length of service or experience.

Regards,
B. Saikumar
Mumbai

Legally, you are okay. However, if workers are not satisfied, you need to see how your salaries compare with others in the industry. In the end, you need to make a decision on how much you can afford to pay, how easy it is to replace a 10-year-old worker if they decide to leave, and how it affects your efficiency, quality, and output. A combination of these factors will determine the final salary you will pay.

You did not mention if there are a number of employees or just one. In any case, you have to identify personnel working in your organization according to their skills, such as unskilled, semi-skilled, skilled, and highly skilled. The change in their skill levels is based on the length of service required to be put in at that level, coupled with the level of higher skill achieved to the satisfaction of the management. You have to judiciously decide on the number of timescales at a particular level. In doing so, you may refer to the wage structure/pattern of other industries of a similar nature in your neighborhood for guidance and parity.

Regarding the Minimum Wages Act

It applies to workers engaged on a casual/daily basis; hence, their wages are computed on a daily basis and also on a monthly basis if the work persists accordingly. Secondly, it stipulates wages below which the employer cannot pay to his workman in any case and on any pretext. These wages are revised by the government concerned from time to time.

I am sure this can take care of your problem.

Regards,
S.K. Johri

Dear Johri, I am quite satisfied with your suggestion. However, one worker mentioned that if any worker has been working for 7-8 years, then legally he must receive about Rs. 14,000 in salary. He also provided examples of other companies where the labor officer visited and stated that the company is currently paying a very low salary to its workers (Rs. 8,200).

What should be done in this situation?

Regards,
Shriname

The Labour Officer is concerned with the enforcement of the Minimum Wages Act, etc. If he visits your organization and poses questions related to the wages of the workers' experience, you can satisfy him by showing him the wage payments to the concerned workmen as per the Minimum Wages Act (which you should ensure for all workmen). In this case, I agree with Mr. Neeraj Sharma.

However, not as a rule, but for the purpose of keeping your personnel motivated, please consider a time scale (which should include annual increments) for every position so that no workman feels stagnant and thinks of leaving at the first available opportunity.

Regards,
S.K. Johri