when we are giving hike to our employees is it calculated on gross salary or on basic pay? Regards, megha
From India, Madras
From India, Madras
IT depends on what model of compensation you are following.
If you have salary grades with pay bands and your annual merit increase practices are based on performance appraisal then majority of the companies are following forced distribution or curve method of merit increase. Where the rate of increments in percentage are fixed for the performance rating classified as A,B,C,D etc, for percentage Increments.
If you follow consolidated salaries or without any formal salary grade structure then its always judged on the basis of total gross pay.
Badlu
From Saudi Arabia
15If you have salary grades with pay bands and your annual merit increase practices are based on performance appraisal then majority of the companies are following forced distribution or curve method of merit increase. Where the rate of increments in percentage are fixed for the performance rating classified as A,B,C,D etc, for percentage Increments.
If you follow consolidated salaries or without any formal salary grade structure then its always judged on the basis of total gross pay.
Badlu
From Saudi Arabia
If it is implemented for the first time, we can also take the help of Accounts dept on the components and hike effects and later decide on whether to go for annual performance rating (A,B,C & D ....etc ., for A you can fix around 20% hke for B you can fix it around 15% hke on CTC it depends on your Business turn-over and profit sharing with employees .i.e, depending on your comfort) or on Basic pay for which you need to have separate slabs for each level/Designation (around 10-15 slabs for each Level/slab, if starting basic for ex: Rs.4500/- basic salary of an executive the next level hike in the basic can be Rs 500/- after completing first year second year can be Rs.700, thrid year can be Rs.900 etc., ).
Raj:)
Raj:)
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INCREMENT LETTER.doc