Is an Employee with Less Than 240 Days Attendance Eligible for a 3% Annual Increment?

Dear Seniors, I am working for a state PSU manufacturing unit. In our organization, there is a fixed 3% increment every year for all employees. Now, my question is if an employee's attendance is less than 240 days in a year, are they still eligible for the annual 3% increment? Please provide your kind suggestions and specify the exact calculation for such an annual increment.

Regards, Masterguna.

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You have not mentioned whether the PSU in which you are working is a Central Government Unit or a State Government Undertaking. The award of an annual increment is based on the service rules/regulations adopted by the PSUs. If you or any employee of your organization has been denied a yearly increment, then you or the employee can ask the management about the rules/regulations on the basis of which the annual increment has been denied.

With regards,
Harsh Kumar Mehta

Understanding Service Rules for State PSU Employees

You have mentioned "state" PSU in your remarks. Please see which of the service rules are applicable to employees of your PSU. You can also ascertain the causes of non-sanction of yearly increments through RTI.

Regards,
Harsh Kumar Mehta

Yearly increment is a type of award given to an employee for their dedication towards work, work performance, and for encouraging other employees. However, the employer cannot be forced to give an increment. It may be provided based on work performance, company rules, government notification, if required, or as per the terms of the Appointment Letter.

You mentioned that you work for a state PSU manufacturing unit, and you also noted that "In our organization, there is a fixed 3% annual increment for all," which suggests that you may be deployed there through a contract agency, if my understanding is correct.

In this scenario, there may be specific Rules & Regulations or Terms and Conditions for the yearly increment of employees as per the contract agreement with the State Government. Therefore, I recommend inquiring with your management about the criteria for the Yearly Increment.

Thank you.

Understanding PSU Service Rules and Increment Policies

PSU service rules are an unknown territory to me. Based on private sector practices, applicable law, and at a conceptual level, I wish to state the following:

• The magic figure of 240 days is relevant only regarding determining eligibility for Earned Leave in the manufacturing sector (where the Factories Act is applicable) and concerning the Industrial Employment (Standing Orders) Act 1946. Clause 4-C of the Model Standing Orders makes it mandatory for the employer to confirm any temporary employee who completes 240 days in a period of the previous twelve months.

• At a conceptual level, there is a very weak connection between the "attendance" level and increment. In fact, there is often a negative correlation, but the idea of anyone with "good" attendance receiving a good increment is really unheard of!

• Increment and 240 days of attendance are NOT issues with any law. It is the management's policy on the subject that should decide the issue!

Trust there is enough clarity on the query.

Regards,
Samvedan

November 9, 2013

The increment is based on the performance of the employee and the company's profit. As said by Mr. Samvedan, the 240 days count is meant for earned leave calculation, gratuity calculation, and serving of the notice period, and not for calculating increment. The increment can be calculated on a pro-rata basis based on the company's PMS Policy.

Regards.

It is very difficult for members to respond to your query in the absence of actionable information. I can only say in general terms that in PSUs, normally granting an annual increment is automatic unless the employee exhausts their leave and remains on loss of pay. Thus, in PSUs, the possibilities of withholding or postponing an annual increment may arise in the following cases:

1. When the absence is on loss of pay, in which case the increment gets postponed to the extent of loss of pay.
2. Where an increment is withheld by way of punishment.
3. Where the granting of the increment is linked to an efficiency bar/performance as laid down under the rules.

Regards,
B.Saikumar

Normally, there is no such restriction on attendance to receive an annual increment. However, this policy is established when determining the increment pattern or wage scales. In this regard, I fully agree with Mr. B. Saikumar. Instead of seeking an answer externally, you should first investigate within your organization how and when the system of annual increments was implemented, and if there are any qualifying clauses.

As I endorse the reply of Mr. Sai Kumar, I may add to what has been said by him as follows:

Increment Policies in PSUs

While the increment in PSUs is time-bound and automatic, it can be withheld by a specific order as a punishment arising out of a disciplinary inquiry. This may result from charges such as unauthorized absence (habitual absenteeism) or other offenses warranting inquiry. Even in cases of Leave of Pay (LOP) where extraordinary leave is granted or authorized leave is taken (for higher studies, confinement, sickness), the increment could still be granted if the concerned authority is satisfied with the genuineness of the leave's grounds.

Probation Period and Increment Postponement

However, if and when the probation period is not completed successfully and is extended, the increment could be postponed irrespective of the time-bound rules.

Revocation of Withheld Increments

In many cases, when increments are withheld as a punishment, the authorities may revoke this decision later on some grounds such as subsequent good performance or other considerations, including the influence of a union.

Increment Policies in the Private Sector

In the private sector, in many cases, increments are not automatic but based on performance, etc.

Dear MG, I also work in a Central PSU. In our industry, there is a provision that if an employee is absent or avails Leave Without Pay for a period not less than 26 days, their annual increment should be deferred by one month (wages being paid for working days only and not for Sundays). Though it is not religiously followed due to the lack of reconciliation of LWP days.

Dear MasterGuna,

As per your question about who should check the rules applicable in your state, I am working with the MP government, and here there is no such clause for an increment unless it is withheld due to any punishment.

No, the increment takes place as per the mutual understanding between management and the workers' union in our organization. Since there is no rule for the deduction of the increment against specified attendance, we can, again mutually, establish a rule that we feel is best to reduce the increment and ensure its proper utilization, providing it to the real performers with all aspects considered.

Thanks & regards.

Increments linked to attendance would generate unhappy employees. Instead, increments should only be linked with performance, contribution to the organization, and actual achievement of targets, be it in any sector, public or private. Only then will it lead to healthy competition, quality resources, and a growing economy.

Regards,
Pooja
Meara Human Consulting

I have a different view. Habitual absenteeism acts like a slow poison, eating into the vitals of an organization and adversely affecting smooth operations, customer service, productivity, production, and ultimately profits. Therefore, attendance deserves to be considered as one of the key factors in decisions regarding granting increments during appraisals. It will help curb the habit to some extent, but more importantly, it motivates those who regularly attend to their duties since their dedication has been recognized.

Regards,
B. Saikumar