Struggling with Increment Policies: When and How Should Employees Get Their Raise?

Dear Teammates,

Ours is a multinational company, and we would like to draft a clear-cut policy for the employees. I found it troubling while drafting the same because of one question:
1. When is an employee eligible for their first increment?
2. Are probationers/trainees eligible for an increment?
3. Is an employee guaranteed an amount of an increment, for example, Rs. 1000/- or any amount, even if they are not performing up to the required extent?

If somebody can shed light on this issue, I would be very thankful.

Regards,
Tushar Devta

An employee is eligible for an increment upon confirmation in service. Employees under probation or trainees during their training period will not be eligible for any increment upon completion of the probation period appraisal when he/she is confirmed in service, you can add the increment to his salary. In the case of trainees upon getting regularized in service, the applicable CTC upon regularization will be paid to them. The amount of the increment to be paid to the employees is a policy decision of the company. Usually, it is based on the annual performance rating of the employee for the year. An outstanding employee may get a very high increment compared to an average-rated employee. Also, there are cases where a poorly rated employee may not get any increment at all.

Regards,
Kanchan

Hi Tushar,

1. When is an employee eligible for his/her first increment?

Firstly, as per the company standard, an increment is provided based on performance or on a yearly basis. If performance-based, the employee's appraisal will be rated on KRA (key result areas) quarterly, half-yearly, or annually. The appraisal process could involve self-appraisal and assessment by the immediate superior.

In the case of a yearly basis, the appraisal process should be followed along with the ratings given by respective department heads. The increment will be given in percentage terms.

2. Is a probationer/trainee eligible for an increment?

Yes, the probation period is usually 6 months. Two outcomes are possible: confirmation or extension. In the case of an extension, there will not be any increment. Upon confirmation, an increment may be given based on performance, or only a confirmation letter may be issued with or without an increment.

3. Is an employee guaranteed a specific amount of increment, e.g., Rs. 1000, even if their performance is not up to par?

If an employee is not performing well (based on percentage), the increment would typically range between Rs. 500 to Rs. 750 only. The rating would be determined only after discussing with the individual employee about the "non-performance."

Shobha

Dear Sir,

Normally, we revise salaries, i.e., provide increments in the month of January. Now, suppose an employee who joins on 1st January '05 is eligible for an increment, as per your opinion, on 1st January '06 (i.e., after one year). But, suppose an employee who joins duties on 1st June '05, will they also be eligible for the increment in January '06?

Kindly clarify.

Regards,
Tushar Devta

You have to decide the cutoff date for including the employees in the appraisal. Most organizations keep it at 6 months. That means if the increment is effective on 1st April, then anyone who joined before 1st October will be appraised in the April Cycle appraisal.

Regards,
HRJ