Facing No Salary Increment, Only DA: How Should We Handle Employee Complaints?

Dear Team,

In our organization, the management has decided not to give an increment to all employees. They are planning to provide only the revised DA amount to all employees. If an employee has filed any complaints with the Labor Department, what should we do? Are there any rules/policies we have to follow for giving increments to the staff?

Please share your valuable comments regarding this matter.

Thank you.

No employee can demand a periodic increment or hike in salary as a matter of right unless there is a settlement providing for such a hike.

Importance of Increment in Salary Administration

Increment or periodic hike is an important factor in the wage/salary administration of an organization. It motivates employees to maintain their contribution to work at an optimum level over time and distinguishes their seniority in terms of their tenure of service in a perceivable manner. If employees with a long tenure of service are paid on par with newly recruited employees, the result is pay compression or salary compression, which will lead to low morale. At the same time, no employer will be prepared to hike the salary of a non-performer just because of their longer tenure in the organization. This is why performance appraisal has come into place.

Linking Increment with Performance

An increment should not be confused with a general hike in salary to offset the rise in prices, like the dearness allowance. As a prudent employer, if one links the rate of annual or periodic hike with performance and the appraisal is objective, it will certainly motivate employees to work harder to achieve targets, if any.

Regards

Salary increases are always at the discretion of the employer. Employers may decide to increase salaries after conducting performance appraisals on how employees are achieving their KPIs.

True, increments are not a matter of the right of the employee to receive, but a matter of the employer's discretion to grant. However, in industrial practice, increments are given based on performance, the volume of responsibility, the value of contributions, and the length of service of an employee. It is a tool not only to compensate an employee for their knowledge, skills, efficiency, responsibility, and loyalty but also to retain them.

B. Saikumar

Changing living conditions, the cost of living matters a lot in the performance of employees, due to which the organization may face losses. Shouldn't there be a law in this regard.

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Dear Paul,

Your company is trying to give DA instead of an increment. Should you accept it, don't forget one thing: as per the law, you cannot be waived from an increment.

Annual increments in basic salary are at the discretion of the management. Normally, they are linked to the performance management system, specifically the achievement of KPIs/KRAs.

If there exists any tripartite agreement with the union for the grant of annual increments, subject to fulfilling conditions detailed therein, then it will be automatic if the conditions are fulfilled. In case of a breach in such an agreement, you can take it before the Labour Department. Otherwise, there is no law that provides for annual increments.

Regards,
B. Gramesh