How Would You Handle a Salary Increase Demand When Employees Stop Working?

Someone asked me in an interview that as a HR Payroll Officer, I have 50 employees in my company who have stopped their work. They are demanding a salary increase before they will resume their work. They are not listening to anything else; their only demand is an increase in their salary. So, what would be your action as a HR payroll Officer? I replied to the interviewer, but my answer was not satisfactory. Kindly answer this complex question. Advance thanks to all!

Your first reaction needs to be on assessing the reasonability of the demand by evaluating the impact of the requested salary increase, the organization's affordability of the demand, whether your wages align with statutory notifications, the prevailing industry and regional wages, as well as the strengths and weaknesses of the employees in case of a prolonged conflict. Consider the options available to the employer before initiating negotiations with the strikers, and ensure you have your best offer prepared for the circumstances.

HR is only recommending the agency to increase pay. In case you receive such a threat/demand from employees as HR, your first duty is to report it to higher management. When talking to the employees, be courteous and respectful and do not commit yourself to granting an increase in pay. Details such as the current pay they are receiving, the existing pay scale, the impact of the increase on the entire company, etc., can be tabulated and presented to the decision-making authorities.

Preparing for Wage Settlements

In wage settlements, you need to do some homework before sitting at the negotiation table.

1) You cannot pay less than what is provided by the Minimum Wages Act for the same class of employees. Check this first.

2) Find out what the industry norm is—compare wages paid by the same or similar industries for the same or similar class of employees in the region where your industry is located.

3) Compare monetary rewards like incentives and bonuses paid by you and other industries, which may not be part of the salary but are part of the CTC. This gives you leverage in bargaining.

4) Compare non-monetary welfare schemes provided by you and by other industries, such as free health camps, to use as a bargaining tool.

5) Consider the paying capacity of the employer—how much of an increase can be sustained by the balance sheet.

6) Bargain for more productivity versus a salary hike.

Regards, B. Saikumar
HR & Labour Relations Advisor
Navi Mumbai

Understanding the Role of a Payroll Officer in Industrial Relations

At times, in an interview for any professional position in an organization, only the interviewer knows what answer would satisfy them because their intention might be to assess whether the candidate has the correct understanding of their role and whether they would be able to confine themselves within their limits in a given situation, which otherwise demands the coordination of other departments. Therefore, it would have been better had you narrated your answer to the question as you told it then. Now, we, the respondents, are in a fix and can only indulge in some sort of educated guess.

Since I have no knowledge about the law relating to industrial relations in Pakistan, my answer is confined to the contract of employment between the employer and employee and the primary role of a Payroll Officer or Payroll Administrator in the HR domain of an industrial organization. Stopping work suddenly in a concerted manner under the pretext of demanding a hike in salary on the part of employees/workmen is a flagrant violation of the contract of employment and would enable the employer to deny wages/salary for the entire period of stoppage of work on the basis of the principle of "No work - No wages," apart from taking any disciplinary action as per the service regulations.

The Role of a Payroll Officer

Payroll management is a portfolio under the HR Department of an organization. As such, a Payroll Officer's primary responsibility is the calculation and distribution of payroll for employees periodically based on the inputs furnished by the Line or other Staff departments. Certainly, the Payroll Officer is not responsible for determining or setting salary levels of the employees. Therefore, in such a strike or stoppage of work by employees, the Payroll Officer has to ensure no wages/salary for such days of no work in the wage period based on the inputs passed on to them. If they are also charged with the IR responsibility, they should first resolve the stalemate and restore normalcy.

Dear Seniors,

I have faced this type of issue during the payroll process. Management is not ready to provide an increment. In that situation, workers are not working properly. Management is also not prepared to lose those workers. What can be done to solve this issue and make those workers work with full cooperation?

Please guide me.

Thanks.

I agree, it becomes a difficult situation to handle as the threat of adverse action can only worsen the situation. Here comes the need for sound Industrial Relations. Your skill would lie in making the employees empathize with the company on why the demanded increase/increment cannot be agreed upon. Facts and figures could only help to an extent. Some sort of emotional appeal is needed. The key would lie in individually taking into confidence the opinion leaders among the group of workmen and using personal influence. An important factor is the credibility of your management; if the trust and confidence in management are high, the task becomes easier; otherwise, the situation becomes very complex, and a prolonged crisis would be the result.

Hi Dear,

As an HR professional, you have to act based on incidents.

1) Are you paying minimum wages? If you are not paying, you have to motivate your management to clear the issue.

2) If you are paying minimum wages, they have to give notice before a strike; otherwise, you can take legal action against them.

Dear Seniors,

Yes, sir, we are paying minimum wages. Many times we have approached management to increase the wage limit, but management is not ready to do so. How can I solve this issue as an Assistant HR? Please guide me.

Thanks.

"Lot of times we have approached management to increase wages limit. but management is not ready to increase wages. how come i can able to solve this issue as Asst HR."

It is beyond the scope of HR to sort out this type of issue. Pay scales are determined by the company at a higher level, based on several inputs. HR can recommend and administer pay scales but cannot force management to increase pay.

Handling Sudden Work Stoppage and Strike Situations

As suggested by senior friends here, firstly, a sudden stoppage of work or a strike is illegal. Any issue can be resolved amicably across the table, but there may not have been sufficient patience or information provided to the staff or workmen concerned to appeal the matter to the management in the requisite fashion. Management would be right to adopt the rule of "No Work, No Pay."

Approach for HR Teams in Managing Payroll and Staff Motivation

As an HR team handling payroll or other aspects of motivating the staff or workmen, you need to represent the matter to the management through your concerned bosses. As suggested by other seniors, facts and figures help to inform the management. It would not be the entire group that takes the agitation mode. If possible, you can identify the main perturbing personnel and discreetly inform the management for a future course of action. No doubt, it is a tough situation to handle these unruly individuals and illogical situations. Seeking help from the core teams and convincing the erring party, whether workers or management, would help solve these issues.

Dear Ranjeetha,

As KKHR and other seniors have pointed out, this issue is no longer just a payroll process concern but has evolved into an industrial relations matter. While it may not be as severe as a strike situation, the skills required to address industrial relations are distinct. As Mr. Nathrao mentioned, HR alone cannot resolve this issue, as ultimate decisions regarding salary hikes rest with top management. Therefore, as HR, your role is to act as a mediator between the demanding employees and the hesitant management. No party can emerge entirely victorious in this scenario; if management prevails, employees may choose to leave the organization. Strive for a win-win resolution.

Conduct thorough groundwork by determining the employees' expectations, evaluating the value of their contributions to the company, and researching the industry average salaries for similar positions. Gather any other pertinent details you deem necessary. Present these findings to management for discussion and obtain feedback. Subsequently, negotiate with the employees based on the input received. Through extensive dialogue, you can identify a mutually acceptable compromise.

Best regards,
B. Saikumar
HR & Labour Relations Advisor
Navi Mumbai

Dear Ranjeetha,

Any person who happens to be an all-in-one HR in an organization has to face such an inevitable crisis situation, particularly when the organization is relatively smaller and in its early stages of growth. The rule of thumb would be the management style. Often, it would be much more difficult for such an HR executive to even initiate a free and convincing dialogue with the CEO, who could be obsessed with growth only through cost-cutting, about the natural expectations of the employees for a hike in their remuneration over time. Your statement that you are paying minimum wages is an indication of the mindset of your management in this regard. Payment of minimum wages is an act of minimum compliance only, and as such, its continuance for years cannot retain employees or make them committed to the organization in the long run. It may be ideal for seasonal or intermittent nature of work only, as such workers are free to seek alternative employment elsewhere. However, in the case of regular employment within an organization, expectations of a fair share in the growth and development of the organization, improvement of their standard of living, the desire for an increase in real and monetary wages on par with similarly placed workers in the same industry elsewhere, and questions of seniority-based wage differentials would naturally arise in the minds of workers who have been paid minimum wages for an extended period.

If the management chooses to ignore such a justifiable demand of the workers with a callous attitude, not only will efficient employees leave the organization in search of better opportunities, but the remaining employees would also become highly demoralized and demotivated, ultimately affecting the quality of the products or services of the organization. I understand that you are not the ultimate decision-maker. However, as an HR professional, you can be tactful and persuasive to convince the management that if they do not become part of an amicable solution, they will become part of the problem. Finally, remember that employees do not leave companies but leave managers only.

Kind regards

Understanding Employee Dissatisfaction

Employees do not leave the company; they leave bosses/managers. It's true in most cases. However, in this particular instance, workers stopping work indicates a serious issue. Productivity is hampered. As an HR person, the first thing they should ascertain at the beginning of their job is the ground situation of employees—are they happy or not? They need to determine whether the environment and management are favorable enough towards workers' welfare.

Addressing Underlying Issues

No issue arises all of a sudden; it would have been simmering for a while, and perhaps no one paid attention to it. In such situations, the HR person is likely to convene an emergency meeting and seek expert opinions to arrive at the right decision, which should be amicable and a win-win for both employees and the employer. The HR person should have a clear stance on their statements and a positive influence to persuade employees and buy time for further discussions and assessment of the situation.

Role of HR in Management Communication

Having said this, I always recommend that HR should also be able to convince the management about the laws and their implications and consequences, along with ideas or concepts of business development and enhancing productivity through empowerment, welfare, and training. After all, employees are not just workers; they are assets of any organization and key to branding.