Arrear amount - unable to release the Incremented salary of month June 18 till date due to some financial crisis of company

Hi, I am seeking your advice regarding the appraisal process, which I will describe below.

My organization conducts annual appraisals effective from June every year. However, last year, due to issues from employees, the appraisal process was delayed, and the increment in salary was disbursed from July 18. We had mentioned in the employee increment letter that the appraisal (increment) would be effective from June 1st, 2018.

As of now, we have been unable to release the incremented salary for the month of June 2018 due to financial constraints faced by the company. Some of our resigned employees are requesting their arrears. I would like to know if it is necessary to release the arrear amount or not.

If you have revised the salary effective from June, you are bound to pay it from June. If you had some financial problem, why did you commit to an increment? If you had problems, you should have postponed the increment. Naturally, some good talents may leave you. Let them leave. But not paying the salary or part of it (the incremental amount is part of the salary) is illegal and a violation of the contract of service. This rule applies not only to existing employees but also to those who have left the service.

Thank you for your reply. We don't have any financial problems at the time of appraisal. It occurs suddenly after the month of appraisal. Is it still necessary to give the arrears, or can we change the effective date of the increment and revise the appraisal letter?

Dear Friend,

You mentioned that your company is in a financial crisis. Do you think your management will be able to pay the outstanding amount? Payments should be made from June according to the terms and conditions outlined in the increment letter. Discuss this topic with your management because when the management is not in a position to pay the arrears due to its financial crisis, the suggestion of forum members does not make any sense.

If you have a trade union, you can have an agreement with the union. But from the post, I understand that your company does not have a trade union. In such cases, there can be a bilateral agreement with the employees, but it is unethical. Keep in mind that the arrear is part of the salary not paid, and you have to pay it unless the employees come and submit in writing that they would like to waive it off considering the financial status of the company.

For this to happen, you should first accept the fact that there is a financial crisis. In your first post, you said that there was some crisis, and due to that crisis, some employees left the company. After reading my advice, you changed that there is no financial issue. If there is no financial problem, pay the arrears - very fine. And if there is a problem, be positive and transparent, call the employees, and explain the situation in detail. They will likely agree to it. Take the employees into confidence and acknowledge that they work for us. If you want them to continue working for us, take them into confidence.