Stuck on HR Case Study: How Would You Handle Contract Mistakes and Pay Discrepancies?

Hi everyone, I'm currently studying HR at university, and I'm really stuck on this case study. It's about employee relations, and there has been a mistake made in three employees' contracts regarding pay. These three employees are getting paid more than everyone else. I have to play the role of the HRM and solve the problem.

The line supervisor and payroll manager are refusing to process the wages of the three employees as they believe it's unfair to the other employees. All contracts have been signed.

How can I solve this problem? I'm completely stuck on this, and I really need some help! Please help me!

Hi! I am not knowledgeable about your labor laws, but let me help out based on certain basic employment terms and references.

Employment Contracts and Payroll Responsibilities

An Employment Contract duly signed by the authorized officers of your company is a binding document that your payroll supervisor and staff must respect, regardless of the "outrage" they may feel about the "high" rate given to the three "new" employees. We assume that the salary rate was negotiated in good faith by the concerned employees.

The feeling of "outrage," anger, or resentment by old employees seeing that newly hired ones are being paid so high is a normal employee reaction. That's why salary matters, especially managerial and executive salaries, are highly confidential and are supposed to be handled not by ordinary payroll employees but by a trusted and mature executive who understands executive compensation.

Handling Executive Compensation

If this is executive compensation, then your problem is negligence on your organization for entrusting such a sensitive issue to ordinary employees.

Addressing Hiring Rates Beyond Salary Structure

If this is not an executive compensation issue but of hiring rates that are beyond the company's salary structure, then the problem is both employee and corporate.

Your payroll supervisor does not have any business meddling with pay decisions. His job is merely to make sure that every employee with the proper employment contract is included in the payroll list and is paid on the normal pay period.

Submitting Complaints and Establishing Policies

If they have a complaint about the extraordinary rate that was given lately to the three (3) employees, then they must submit their complaints to the proper forum, e.g., Grievance System (if unionized) or Compensation & Benefits Committee (if not unionized).

You would do well to have a Compensation Policy that will provide clear guidelines regarding hiring rates and other issues.

My company has a very good HR Policy Manual that includes this policy. If you are interested, you can buy this from us, and I can extend additional assistance in solving this current problem of your company.

Best wishes.

Regards, Ed Llarena, Jr.

Managing Partner

Emilla Consulting

(helps improve corporate governance in Asia and the Pacific Region)

Dear Colleagues,

The case in question regarding the newly employed officers and their compensation is a matter of negotiation—this supports Ed's postulation. On a more radical note, I strongly believe that whoever handled the contract/employment documentation must have been careless or simply unprofessional in their job. Such documents need to be handled with the required confidentiality as it is the right of the newly employed individuals to privacy.

Additionally, depending on the employees' status, certain documents must be addressed by senior executives of companies rather than the regular recruitment-trainee level. I would strongly advise that the individual responsible should improve and strive to execute their tasks professionally without bias, and consider joining relevant HRM institutes to stay updated on current trends in the profession.

Thank you.

Afolavi,

Your rejoinder is great. But let's not forget that Laeia's problem is classroom-based. It is only a case study. I responded as if it's an actual case, just to give Laeia (and the other students who are members of this forum) a feel of how consultants would react to such a problem occurring in an actual situation. Hope we were able to help.

Best wishes.

Ed Llarena, Jr.
Managing Partner
Emilla Consulting

Hi,

I am currently writing my final project on "Partnership in Employee Relations" with a total of 12,000 words. I am really stuck on this and need help. If anybody has a sample project on this topic or any other materials that could assist me, it would be greatly appreciated.

Regards,
rauf_london