Is It Legal to Issue New Appointment Letters After a Salary Increase? Seeking Advice

I am working in a small company. Right now, we have a marketing staff of 20 individuals. Some of them have been with us for the last 2 years, while others have joined more recently. This year, we have increased the salary for all employees. Now, my boss wants to send a new appointment letter to everyone with their revised salary. Is this okay, or are there any potential legal issues to consider? Please guide me on this matter.

Thank you.

Instead of re-issuing the appointment letter with a revised salary, what you can do is send them an increment letter.

Increment Letter Format

Find below the format for your perusal:

Date

Dear [Name],

Sub: Increment Letter

We are happy to inform you that based on your sustained performance over the tenure of your service since [Date of Joining] and on receiving satisfactory reports from your superiors, we wish to revise your compensation as described below.

- Basic - Rs.
- DA - Rs.
- HRA - Rs.
- Conveyance - Rs.
- Medical - Rs.

(Please use your own format for compensation. I mentioned the above titles based on a generic breakdown.)

Please note that all the conditions of employment, however, would remain the same as per the order during your tenure of service with our organization.

We wish you all the very best in your career with our organization.

Regards,

Authorized sign

Importance of Written Applications for Employment Changes

Whenever any changes are made in the employment terms, it is always better to have a written application for it. If you are changing the services or roles of the person, a similar letter should be assigned to the concerned individual(s).

This kind of letter helps the company keep track of what is being communicated, who does what, and who is being compensated at what rate, etc. Above all, such letters are very essential to be filed properly and preserved in case of an audit. (Companies have to conduct HR auditing just like financial auditing.)

Note: Issuing Letters in Duplicate

Always issue such letters in two copies. One copy should be handed over to the employee. On the other copy, the employee's signature should be taken and it should be filed with other documents.

Hope it helped. :-)

An appointment letter is given to employees at the time of joining the organization. Issuing a letter for an increased salary to the employees is an "Annual Increment Letter." Your boss/management has to approve these increment letters once the appraisal is done for all the candidates. Issuing a new appointment is almost illicit for the following reasons:

1. Employee tenure will be retaliated against, and no company shall engage in such activity, as the employee may already have the appointment letter back from the time of their joining.

2. These employees can dissent over company policies if the employer violates procedures.

The main point here is, if your boss has no idea about increment letters, it's HR's duty to educate him and not blindly follow instructions that could have dire consequences regarding the letters the company sends out. If your boss remains adamant and obstinate, you may prepare such a letter and obtain his consent before handing it over to those employees. Furthermore, it's advisable to practice taking acknowledgment of every correspondence, including increment letters given to those employees, and file them in their personal records.

[QUOTE=sonal12345;2055051] Dear All, I am working in a small company. Sonal, I guess we cannot re-issue an appointment letter for an employee already working. Maybe you can provide them with a salary appraisal letter. If you release a new appointment letter, it will affect their gratuity period. 

I am surprised at your boss's behavior. It's childish and ridiculous to ask you to re-issue the appointment letters since he is pleased to give his employees some rise in their salary. Normally, a person feels happy when some increment is granted to him, but if you resort to the action as proposed by your boss, your employees will be suspicious of your action and instead of being encouraged, they will be discouraged and demoralized. You can't re-issue appointment letters from the date of their original joining the company; it has to be from a prospective date, which is likely to affect their entitlement like gratuity and other statutory and non-statutory benefits as well. I have observed that none of our Cite HR Members have liked your boss's idea. You can convey this to your boss.

Regards,
BS Kalsi
Member Since Aug 2011

Dear Ms. Sonal,

Your query is not clear. It appears your company had never issued any appointment letters to employees at the time of joining, like most small entities do. If this is the case, you can issue appointment letters to all employees. Otherwise, if you had issued one at the time of joining, just issue increment letters or performance letters. In an increment letter, you can also mention the new service terms and conditions.

Best wishes.