Dear Colleague,
The wages settlement process is a very important aspect to be handled with a lot of homework and preparation, as guided by colleagues.
General Process for Wage Settlement
The amount of internal preparation is most important. I share a general process which may be of use for your work:
1. Forming an internal team for data collection from cluster companies of similar processes/products/industry types.
2. Checking any previous settlements or awards that are prevailing and the terms of such documents.
3. Identifying the presence of any Trade Union and analyzing their demands, preparing counter demands for productivity, and other matters by the management team.
4. Assessing the paying capacity of the business/industry and determining the extent to which it is healthy to increase in year 1/year 2/year 3, and how to avoid giving a significant increase in a single year to spread the financial burden.
5. Reviewing any Wage Board Awards that are prevailing and ensuring compliance with wage regulations.
6. Determining how to allocate the proposed increase into different components to avoid excessive costs on statutory contributions like PF, ESI, etc.
7. Evaluating existing components and proposing increases in each category.
8. Understanding if the DA system is followed, analyzing past trends in increases, and predicting future escalations.
9. Considering options for a portion of the increase to be given as Performance-Linked Pay or as incentives to ensure performance-based pay.
10. Controlling manpower costs by assessing the percentage of wages cost per ton of production or other comparable metrics.
11. Incorporating key elements into the settlement from the management side for safety, productivity, etc.
12. Meeting with the Conciliation Officer under the ID Act, seeking guidance and opinions with a draft proposal.
13. Creating a meaningful presentation and gaining acceptance from a team of members from management with cross-functional discipline.
14. Initiating discussions with stakeholders.
15. Drafting a settlement after one or two key discussion/negotiation sessions.
16. Emphasizing the connection with productivity, performance, paying capacity, industry's financial health, future growth, sustainability, and industry prospects in the near future.
17. Seeking input from other HR heads of cluster companies in the same or similar industries before starting.
18. Managing expectations from stakeholders as their expectations may be high, requiring moderation by the management side.
19. During initial meetings, addressing the difficulties of running the business, challenges, and the future of the industry.
20. Lastly, wishing you all the best and encouraging the addition of more points to this list after discussions with all colleagues to achieve the best outcome.
Take care,
Dr. P. Sivakumar
Doctor Siva Global HR
Tamil Nadu
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