Should My Friend Take a 90% Pay Hike Without PF and Gratuity? Need Your Advice!

Dear Experts, greetings! I need your valuable suggestions on the following:

1) My friend is working in an imported coal trading MNC. He has received an offer from an organization that is not an MNC and does not contribute towards PF and Gratuity. However, the company is offering him a 90% hike. Should he accept this offer? Please advise.

2) If he accepts this offer, will it affect his career in any way?

3) Also, suggest if, in the future, he looks for a change to an MNC again, will he be able to get a better hike?

I am awaiting your valuable suggestions. Please advise.

Why is the firm offering your friend a 90% hike? Is your friend's pay way below the market standards? Or would his joining the firm earn profits by that multiple?

Please ask your friend to have the reason for the change remain crystal clear to him. If he wants to switch for money, he needs to understand if he would be given a similar hike when he switches next. In case he is switching for the role, how job-ready would that role make him in case he needs to switch again and when?

Finally, how good is the brand that he is joining? What is the feedback about them from their ex-employees? A firm's culture is more important than what it pays. Please ask your friend to weigh that well with facts and data.

We wish him/her all the very best!

Thank you so much for your reply. I would appreciate it if you could guide further with the details below.

In continuation of my last post, I would like to share a few more details so that it will be easy for you to suggest. My friend has spent five years in one organization, so he is looking for a change for better prospects. The company has offered him a similar job profile but with better pay and one step senior designation. The company is only one year old in imported coal trading, but their group holds a good name in the market. As they are new in the market, they are targeting all competitor resources with better pay. However, they don't contribute anything towards PF and Gratuity. Considering the designation and pay are good and he is getting the same profile, should he proceed further, or should he wait for another company? Also, what if he looks for a change after 2-3 years back to an MNC; will he be able to get a similar percentage hike? Please advise.

Thank you.

There are many companies that are violating statutory norms. They do not provide salaries as per Minimum Wage Rates, nor do they contribute to PF or ESI. Law enforcement authorities are concerned with GANDHI BAPU. JAI HO!!!

I would like to quote two points here.

1. Provident Fund: The company may be treating your friend as an "excluded employee" within the meaning under the EPF & MP Act. This option is with the employee, but unfortunately, many companies do not follow it.

2. Gratuity: There is no contribution by the employee. It is the liability of the employer to pay Gratuity as per the POG Act. If your friend does not receive Gratuity upon leaving the company after completing 5 years, he has a legal remedy to obtain it.

Regards

Word of Caution to Your Friend...

Remember, higher pay means deliverables and expectations will also be higher. Therefore, the pressure to perform and achieve will be much higher than in his current organization.

PF is not compulsory if the Basic is more than 6500/-. That is the reason why you have PPF. Your friend must ensure that he puts the PF equivalent in PPF so that he could get the same benefit later on.

Coal trading, in itself, is a very small industry, so the chances are that everyone in the industry knows everyone else. His chances of getting into a so-called MNC at a later date would purely depend on how he is able to perform and how much he is visible in the marketplace.

Just remember, if you need good opportunities to come your way, you must always be visible in your marketplace. Invisible professionals just remain that way.

I don't think it's a bad move at all, but then I am not an expert in the coal trading industry, and that's where your friend's experience and exposure will help in deciding. All the best!

Dear jei2013shree,

Learned members have given excellent views. There is nothing more to add. However, I recommend your friend investigate why the company is not providing him with a PF facility. Is this a norm for the company, or is it an isolated case for your friend?

If the company is violating labor laws, then your friend should be cautious as it reflects the mindset of the owners. Apart from PF, they could be violating other labor or tax laws.

Regarding Working Hours

When there is a 90% pay hike, is there also a 90% increase in the number of working hours? Ultimately, if PF contributions do not matter to a business leader, why would working hours be a concern for him?

As (Cite Contribution) mentioned, the culture of the company is also crucial. In such companies, it is often an owner-driven culture. For professional growth, it's essential to work under a proper business leader rather than someone who acts like a steamroller. Encourage your friend not to overlook this aspect solely for monetary gain.

Thanks,

Dinesh Divekar

Statutory Benefits and Company Culture Check

PF, ESI, Gratuity, and Medical. These are the four statutory benefits to be provided to an employee by an organization. However, the organization should have at least 25 employees on rolls (outsourced will not count).

So, if you say that the company is new and is looking for an experienced professional (5 years in the case of your friend) and is ready to offer growth too, I guess the only thing you should check is the culture.

- Check on LinkedIn (employees and profiles)
- Facebook (company profile)
- Talk to already working employees

Always remember... opportunity does not knock twice.

If the company has given a proper offer letter and appointment letter, and if the HR provides a logical reason for not offering PF and other benefits, then please go ahead and join.

Hope it helps. All the best!

Dear Ms. Kanika, thank you so much for your valuable suggestion. After sharing your post with my friend, it really made him rethink the offer. As per your guidance, he has also started his research about the company profile and the employees associated.

Thank you again.

Regards,
Jeyashree