Salary Cap Concerns: Are Yearly Increments Mandatory for Long-term Employees in India?

My organization is having drivers who joined the organization at the beginning of the business. As per yearly increment, their salary is approximately 40k in hand nowadays. Now, management doesn't want to increase their salary anymore. Is there any law in India according to which we have to give yearly increments to them, or can we cap their salary now?

Other than complying with minimum wage norms, there is no law for a minimum increment per annum.

The Importance of Salary Increments

Increment is generally given as a motivational factor and to meet the general cost of living, other than Dearness Allowance. If a person performs well, then increments, appreciation amounts, promotions, etc., are given so that people get motivated to work well. If there is no salary increase by these means, people may leave the organization and look for jobs elsewhere, where they get such recognition. It is for the organization to decide whether they wish to retain their employees or allow them to leave. Over a period of time, word will spread in the market that your employer is not sought after by new candidates because of poor human resource policies.

There is no hard and fast rule for annual increments, but you have to follow the minimum wages of the state. As Mr. N.K. Sundram aptly stated, increments serve as a motivational factor. When a motivational factor exists in any industry, employees are likely to stay, and those who have been with the organization since its inception are valuable assets. In your case, if a driver is receiving a salary of Rs 40K in hand, you need to consider why an employee should continue in the company. You can conduct a "Why Why" analysis to understand this better and then utilize the driver's skills in other departments as well.

Increment in salary is at the discretion of management. It all depends on the organization's interest in retaining the employee. A company provides an increment only if they feel that the employee is an asset to the company and contributes significantly or if the employee might be a whistleblower to the management. There are no specific rules to demand an increment as per Indian law so far. The only thing you can do is bring this matter to the attention of management through the proper channel, such as a union leader or your immediate supervisor.

Thank you.