Code on Wages and Salary Structuring

April 2021 is around the corner and there are a lot of buzz about the four new labour laws which are going to be in effect from Apr 1, 2021. One of them is Code on Wages and that’s effectively a revised version of Payment of Wages Act 1936, Minimum Wages Act 1948, Payment of Bonus Act 1965 and Equal Remuneration Act, 1976.

One of the major questions that HRs are facing these days is how the definitions are changing and how it’s going to affect the salary structures. It is their Y2K problem. Employees—who are not in the HR community—are worried as to how this is going to impact their take home salary, as depicted by some of the news outlets in the country.

Before we begin

Please make sure that you read my previous article on how salary structuring works (keep in mind that it was pre-Apr 2021). That article will help you understand various jargons in the Comp and Ben sector and make sure that you get the difference, inter alia, between Gross Pay, CTC, Employer Contributions, Employee Deductions, etc. Let’s call that article a prerequisite for this one.

Introduction

Code on Wages, along with the other three new labour laws, comes into effect from Apr 1, 2021; however, rules for all the four are not yet finalised and notified, but we hope that would happen soon so that they are in effect from the aforementioned date.

This article discusses some major impact these acts bring in to the Compensation and Benefits regime. I will focus more on the payroll structuring per se, rather than other major changes therein. Let’s dive in:

Structuring your salaries in the right way is crucial to make sure that both employees and employers benefit.

Definition of Wages

Definition of wages seemed to be one of the complicated definitions in the labour realm in India for many years. EPF Act defined wages differently than the ESI Act, and every other act in the country had its own definitions of Wages. With the new set of four consolidated labour laws in place, this confusion is removed. All the laws now provide a single definition of wages, as given below:

As per the Code on Wages:

“wages” means all remuneration whether by way of salaries, allowances or otherwise, expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment, and includes,—

  1. basic pay
  2. dearness allowance and
  3. retaining allowance 

Further, the Code excludes the following components from the definition of wages: bonus payments;

  1. any bonus payable under any law for the time being in force, which does not form part of the remuneration payable under the terms of employment;
  2. the value of any house-accommodation, or of the supply of light, water, medical attendance or other amenity or of any service excluded from the computation of wages by a general or special order of the appropriate Government;
  3. any contribution paid by the employer to any pension or provident fund, and the interest which may have accrued thereon;
  4. any conveyance allowance or the value of any travelling concession;
  5. any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment;
  6. house rent allowance;
  7. remuneration payable under any award or settlement between the parties or order of a court or Tribunal;
  8. any overtime allowance;
  9. any commission payable to the employee;
  10. any gratuity payable on the termination of employment;
  11. any retrenchment compensation or other retirement benefit payable to the employee or any ex gratia payment made to him on the termination of employment
Excerpts from Code on Wages, 2019

Additional Clauses on Calculation of Wages

The goes on to state the following, which forms the crucial part while structuring salaries:

Provided that, for calculating the wages under this clause, if payments made by the employer to the employee under clauses (A) to (I) exceeds one-half, or such other per cent as may be notified by the Central Government, of the all remuneration calculated under this clause, the amount which exceeds such one-half, or the per cent so notified, shall be deemed as remuneration and shall be accordingly added in wages under this clause.

Provided further that for the purpose of equal wages to all genders and for the purpose of payment of wages, the emoluments specified in clauses (d), (f), (g) and (h) shall be taken for computation of wage.

Explanation.––Where an employee is given in lieu of the whole or part of the wages payable to him, any remuneration in kind by his employer, the value of such remuneration in kind which does not exceed fifteen per cent. of the total wages payable to him, shall be deemed to form part of the wages of such employee.

Reading the Clauses in the Act in Detail

  1. It is evident that the Basic Pay is part of Wages.
  2. DA, if it is part of the pay structure, it is included in Wages.
  3. Retaining Allowance is also part of the Wages. It is to note that Retaining Allowance ≠ Special Allowance. You need to specifically provide this component and with the specific purposes thereof to make it Retaining Allowance, in the Offer Letter/Appointment Letters.
  4. Gratuity, Statutory Bonus, HRA, ER EPF, ER ESI, OT, Commissions, and retrenchment compensation are excluded in the calculation of Wages.
  5. Payment in kind such as payment for house accommodation (some companies provide free house accommodation for their employees for the initial few days or for a longer term) shall be excluded from Wages
  6. Payment for special purposes shall be excluded from Wages
  7. Dispute Settlements are excluded from Wages
  8. Conveyance allowance is excluded from Wages.
  9. The exclusion components should not be more than 50% (of the gross pay). If it is more than 50%, then the 50% of the gross pay shall be deemed to be the Wages.
HR and Finance need to work together to tackle this ‘Y2K problem for HRs’

Can the Inclusion Components (Wages) be more than 50%?

Yes. The act only says that the exclusion components should not be more than 50%. That clearly means that the inclusion components should be at least 50%. This also means that the Wages should be at least 50% of the gross pay. It can very well be above the 50% limit; and it can also be 100% of the salary. Provide the entire Gross Pay as Basic Pay, and no one will question you (though this is not ideal for both the employee and the employer).

Should Basic Pay be 50% of Gross Pay (or 50% of CTC)?

There are some articles that say the Basic Pay should be 50% of the CTC, which is wrong. The act only says that the exclusion components should not be more than 50% (= inclusion components should be at least 50%). That does NOT mean that the Basic pay should be 50% of Gross Pay.

Further, no acts in India talks about the CTC. It’s a term that our companies and accounting officers coined. When an act refers to the word salary, it, generally, means the gross pay.

Are all allowances excluded from Wages?

Just because a component has the word ‘allowance’ it is not excluded as such. You may want to revise how the definition of Wages begins: “wages” means all remuneration whether by way of salaries, allowances or otherwise. It essentially says that the word ‘allowance’ simply does not exclude it from Wages.

Is Special Allowance Excluded from Wages?

This is a hot and debated topic over the last few months. Indian companies use Special Allowance as a bucket to fill in to reach the CTC. That is, when the CTC is split into different components such as Basic Pay, HRA, etc. the remaining amount  goes to Special Allowance so that they all add up to CTC. As long as your offer letter and/or the appointment letter does not have any specific definition (vide Exclusion List# E) related to Special Allowance, it is INCLUDED in the Wages. Here’s a presentation from Deloitte if you would like to have a look.

If you disagree with the above reading, please let me know in the comments and why.

Is HRA excluded from Wages?

Yes, HRA is excluded from the Wages Calculation.

Is Variable Pay included in Wages?

Performance-based variable pay will be an inclusion component in Wages, since that does not appear on the exclusion list.

So, what’s the big deal now?

The big deal is to make sure that your salary components are in line with the Code and that the Wages components is at least 50% of the Gross Pay. If your components are already in line with this math, you do not have to worry about restructuring at all. Peace!

Wait, can you tell me what all components can be there in a Salary Structure?

It would be unwise for an outsider to comment on how your components should be. However, below are some ordinarily paid salary structure components that one may find in the IT industry. I am trying to give you a comparison of those components with respect to the act.

ComponentIncluded in Wages?Taxable
Basic PayYesYes
Dearness AllowanceYesYes
HRANoYes/No, subject to limits
Special AllowanceYesYes
Conveyance AllowanceYesYes
Telephone & Internet ExpensesNoYes/No, subject to limits
Books & Periodical ExpensesNoYes/No, subject to limits
Fuel and Vehicle MaintenanceNoYes/No, subject to limits
Annual Gift CouponsNoYes/No, subject to limits
Monthly Food CouponsNoYes/No, subject to limits
Medical AllowanceNoYes
Uniform AllowanceNoYes/No, subject to limits
School Fee AllowanceNoYes/No, subject to limits

My recommendation would be to choose the excluded components that may be relevant to job families and job roles in your organisation. If you have certain such components to defray special expenses already in your organisation, you won’t have to remove them and may not have to make much changes. The catch is that these components will help reduce your Wages (yet keeping at the minimum requirements) and help employees save some income tax (flexi benefits—more on that later).

One needs to design the inclusion and exclusion components in the salary structure in such a way that it is both compliant and comfortable.

Hey, what if the Wage goes high? Is there a Problem?

Well, as I mentioned before, the definition of Wages is now standardised. All the acts say that the benchmark on which retiral benefits and other such employee benefits are calculated will be based on Wages. Hence, from a financial point of view, it would be a good idea to look at where you need to keep the balance.

Some companies still continue to pay EPF on the Basic Pay (which may still be over and above the statutory limit of 1800). Such calculations of EPF, ESI, etc. will now be on the Wages component. Some companies may take a hit unless they restructure the salaries since a hike in Wages may imply a hike in employer contributions as well. Likewise, the Gratuity is currently based on Basic Pay, which may change from Apr 1, 2021, subject to final terms in the rules yet to be finalised. Similar is the case with Statutory Bonus as well, whose details are still not finalised. You may read the act for more information on these provisions; I am skipping the details since it may derail the purpose of this act.

Can you give me a sample salary structure?

Yes, I will. Let’s consider the IT industry in Kerala for example.

ComponentIncluded in Wages?CalculationAmount (INR, Monthly)
Basic Pay (BP)Yes41.67% of Gross Pay15,000
HRANo40% of B. Pay6,000
Conveyance AllowanceNo2,000
Books & PeriodicalNo2,500
Fuel & Vehicle MaintenanceNo2,400
Internet & TelephoneNo2,500
Monthly Food CouponsNo2,500
Special Allowance (SA)Yes3,100
Gross Pay36,000
Employer EPFNo12%*(BP+SA)2,172
Employer ESINo3.25%*(BP+SA)588
Employer LWFNo20
CTC38,780
CTC (Annual)4,65,360

In the above example, the Included Components (=Wages) sum as: 15,000 + 3100 = 18,100/- which is 50.3% of the Gross Pay.

Hey, you talked about Flexi Benefits. What’s it?

Flexi benefits is a way for providing income tax exemption benefits for your employees. There are certain salary components that the Government of India allows employees to save taxes on. The idea is to allow, at the start of the financial year, employees to choose these benefits if they want them. Employer may then exclude those components from TDS and at the end of the financial year, the employees shall submit the proofs to the employer who may then re-calculate the taxes based on the quantum of proofs. Some such components are:

  1. HRA: HRA up to 40% of the Basic pay in non-metro cities and 50% of basic pay in metro-cities is exempt from income tax (subject to certain other conditions therein)
  2. Food Coupons: Differs for industry and days of work, but in general Rs. 2500/- per month is exempted when provided as food coupons/food cards (not as cash).
  3. Annual Gift Coupons: A sum up to Rs. 5000/- per year if provided as a gift coupon is exempted from income tax.
  4. Telephone and Internet: The cost of internet and telephone, against bill submissions, are exempted from income tax. You may keep a logical limit as Rs. 2500/- per month for the same.
  5. Books & Periodical: same as Telephone and Internet.
  6. Fuel and Vehicle Maintenance: Rs. 1800 to Rs. 2400/- per month depending on the CC of the engine, and only available for Cars. Usually provided to senior leaders or those who may undertake travels on behalf the company.

It may also be noted that if the company otherwise reimburses any of the above components, the same shall not be duplicated as a salary component.

In the interest of controlling the Wages, you may want to revisit if you should be offering all of these flexi benefit components at your organisation. If some employees do not opt for these, their Special Allowance may increase and hence the Wages. Have a look and decide for yourself!

Can we restrict the EPF to Rs. 1800/- per month?

Rs. 1800/-, which is the 12% of the statutory limit of Rs. 15,000/- per month is the mandatory (upper cap) payment to EPF. Any amount above this is voluntary. If the organisation decides to cap the EPF at Rs. 1800/- per month, they are at their will to do so. But if the organisation has provided a higher figure in the offer letter/appointment letter, they will not be able to take a one-sided decision of reducing this component. Maybe, you want to revisit your offer letter/appointment letter templates for future issues 🙂 

Can’t HRA be more than 40% of Basic Pay?

HRA can. 40% of Basic Pay is the limit for income tax exemptions. Don’t confuse yourself between income taxability and definition of Wages.

How’s it going to affect my take home salary?

If your organisation has included Gratuity as a component in the CTC, then if the Gratuity component goes up and CTC remains the same, it will effectively reduce your take home salary. Similarly, if the CTC is fixed and the employer redesigns the salary structure in such a way that the EPF/ESI component goes up, that will also affect your take home salary. It all depends on how your current salary structure is defined and how it is going to be in Apr 2021. Non-HR readers: you may want to consult your HR team soon!

Disclaimer

This article is written in my personal capacity and advisory in nature. The figures or components mentioned herein have no relationship with my employer or employer’s decisions. Neither my employer nor does my professional role endorses the content in this article. I shall not be liable to any action that you conduct or pursue upon the reading provided by me above.

This article is also published on LinkedIn and Medium.

Salary Structuring: A Primer

Well, let’s admit it. At some point in our HR Career, we have all wondered: should we include DA mandatorily in the structure, should we keep the Basic Pay at 30%-40%, or Should CTC include Gratuity? Certainly, I did, especially as I come from an Engineering background with no formal education in HR. The beauty of lack of HR knowledge was that I had to find each of these stuff from scratch for which the web and my fellow HR colleagues from and around Kochi helped. Special thanks to the connections I received through NIPM (one of my imminent blogs is on why HRs should network; catch you there soon!).

In this article, I intend to give a primer—a very basic understanding—of how we can structure the salary in India. I would speak of the structure as of 2021, to the best of my understanding, belief and practice.

Wait, tell me about the parlance!

Before we begin, let’s make sure that we get the terms right. During my tenure as an engineer, I never cared about the terms such as Gross Pay and what mattered was the CTC and Cash in Hand. But as an HR professional, there’s more to it and I believe all folks across all departments should get an idea about the payroll parlance. Here’s the gist:

A high-level overview of components of CTC
  1. Cost-to-Company (CTC): This is an accounting term with no legal definition whatsoever. You cannot find this term in any of our labour acts. You use it for your convenience, or for accounting purposes. No one else cares (except probably the job applicants).
  2. Employee/Employer Contributions: There are some mandatory contributions that employee and employer have to make periodically. While employee contributes Employee EPF, Employee ESI, TDS, Professional Tax, Employee Labour Welfare Fund contributions, etc., the employer also needs to make contributions such as Employer EPF, Employer ESI, Employer Labour Welfare Fund contributions. Employee contributions are deducted from the Gross Pay, while Employer contributions are outside the Gross Pay. More on those terms below. Please note that EPF and ESI are mandatory only if your organisation falls into the respective requirements.
  3. Gross Pay: Before I define Gross Pay, we must understand that the CTC is the sum of all payroll expenses an employer incurs on an employee. Basically, CTC includes the salary and other expenses the employer incurs (more on that later). Now, let’s split the CTC as (What Employee Deserves + Extra Expense for the Employer). Here, the “what employee deserves” component is the Gross Pay. Look at the Venn chart above.
  4. Net Pay: An employee has to pay statutory (or even non-statutory) contributions such as EPF, ESI, TDS, etc. These contributions of the employee are deducted from the Gross Pay. In effect, the Net Pay = Gross Pay — Employee Contributions.

Well, we got it covered; pretty much!

It’s important to have the right mixture of components for a tasty meal.

What all are in the CTC?

Elementary, my dear Watson! CTC = Gross Pay + Employer Contributions.

Oh wait, I got your question. You’re basically asking, what all can be there in the ‘Employer Contribution’, correct? Well, the answer is ANYTHING. You can include the mandatory employer contributions as detailed above, plus some other stuff. Some companies include valuation of ESOP in the CTC, some include the amount that the company pays for insurances for the employee/family, etc. As a standard measure, let’s keep the statutory contributions such as ER EPF, ER ESI, ER LWF and the like in the CTC. The best practice, in my opinion, would be NOT to include benefits and other rewards in the CTC with the purpose of inflating it to look attractive. Variables are welcome to be included in the CTC, but we need to mention that they are variables.

How do I structure the Employee Salary?

We’ve finally come to the million dollar question. How do we compartmentalise the salary? I am trying to explain this in the form of a FAQ compilation below:

What are basically the components of Gross Pay?

Broadly, let’s say, Gross Pay contains the Basic Pay, DA, HRA, and other allowances.

Why have you mentioned HRA separately, even when it is an allowance?

HRA has some exemptions with respect to definitions of wages (e.g: EPF calculation where HRA is exempted from consideration).

Okay, understood. Now, tell me whether that DA is mandatory?

As long as you are paying above the minimum wages (read my other article on Minimum Wages to understand how DA is calculated), you can subsume DA in the Gross Pay, without having to show it separately. There are certain occasions (e.g: in the case of those who are using the Wage Protection System in Kerala) some organisations are forced to show DA separately, which I would have no objections against.

How about Basic Pay? Is it 30% or 40%?

Basic Pay used to be defined as any percentage of the Gross Pay by organisations at their will. But as per the proposed Code on Wages, 2019, to be effective from Apr 1, 2021, the (Basic Pay+DA) component should be at least 50% of the Gross Pay (legal nerds, please do not raise your eyebrows; I have used the term ‘should’ as in suggestive parlance and in a practical sense). Assuming that you are not showing DA component in the salary structure, let’s then fix Basic Pay as 50% of the Gross Pay.

Remember, if you are following 30% or 40% of Gross Pay as Basic Pay, you are recommended to revise the same to 50% wef Apr 1, 2021. This will, also, have impact on your financials such as Earned Leave Encashment, Gratuity, etc.

Earmarking the right amounts of the CTC under various heads is not only mandatory but the right thing to do.

Aha, I see. So Basic is Fixed. How about HRA?

HRA is NOT a mandatory allowance. But it is a general practice to provide HRA for the employees to meet their accommodation expenses. Further, HRA is exempt from income tax, while Basic Pay, DA and allowances such as Special Allowance are fully taxable. HRA has an income tax exemption rule, which is three-tiered, details of which I am omitting for now. For metro cities, a maximum of 50% of Basic Pay can be non-taxable, while in non-metro cities, it is 40%. I would then suggest that we go with HRA = 40% of Basic Pay if you are in Kerala.

We’re getting close. Now tell me about ‘Other Allowances’?

Code on Wages mentions about Retaining Allowance, which is an allowance provided to the employee for the retention purposes (this should be part of the offer letter if you are providing it, and you should call it ‘Retaining Allowance’ itself). Generally, new-age companies, usually do not include this in their structure and provide the rest of the salary as “Special Allowance”.

So, in short and in a crude form:

Gross Pay = Basic Pay + HRA + Special (Other) Allowance.

Can you explain it as a salary structure?

Well, that’s my job to explain. Here it goes:

ComponentAmount
A. Basic Pay50% of Gross Pay
B. HRA40% of Basic Pay
C. Special AllowanceRemaining amount to reach the Gross Pay
D. Gross PaySum of (A), (B) and (C)
E. Employee DeductionsTDS, EE EPF, EE ESI, PT, EE LWF, etc.
F. Net Pay(D) — (E)
G. Employer ContributionsER EPF, ER ESI, EDLI, ER LWF, etc.
H. CTCSum of (D) and (G)
Table 1: Sample Salary Structure
Sample-Salary-Structure

Wait, where is the Conveyance Allowance?

Conveyance allowance is a thing of the past. HRs usually included it in the salary structure since that component, up to an extent, along with Medical Reimbursement used to provide some tax benefits to the employee. Not any longer. It stopped two years ago when the concept of standard deduction was introduced in the union budget and there is no point of mentioning Conveyance Allowance in the pay structure unless you want to have one more column for your Finance team to manage.

(But wait, the Conveyance Allowance may sound well for salary structures when Code on Wages comes into force on Apr 1, 2021. That’s a different subject to talk about; but for starters, look at the exemptions from the definition of ‘wages’)

No, it can’t be this simple. I do not see any other allowance—such as LTA, Books and Periodicals, etc. Where are they?

Now we are on the right track! Well, these allowances are non-mandatory allowances, but at times provide great relief for the employees from a portion of their income tax. Such allowances are in fact reimbursements against actual bills, though some of them are paid in advance under the expectation that the employee would submit the bills to the employer by the end of the financial year.

Now to answer the question, yes there can be some such allowances as part of the salary structure. But they are simply the babies of the ‘Special Allowance’. Special Allowance (even this one is not a mandatory allowance; we use it as a filler bucket to make sure that the components add up to Gross Pay) is fully taxable. One can split the Special Allowance into smaller allowances/reimbursements so that a part of it becomes supposedly non-taxable. That’s a story for another discussion, which you can see in my next blog—Flexi Benefits as part of Salary Structure.

Okay, but you didn’t tell us about the statutory calculations yet.

Fine. Here’s the snapshot. Tables speak better.

ComponentPer Month ContributionObservation
EE EPF12% of (Basic Pay+DA+Other allowances excluding HRA)Go with 12% (Basic + DA + Special Allowance)*Some orgs have been exempted and some have 10% contributing rate
ER EPF12% of (Basic Pay+DA+Other allowances excluding HRA)Go with 12% (Basic + DA + Special Allowance)*
EE ESI0.75% of ESI WagesESI wages include all components including Basic Pay, HRA, Special allowance, OT, etc., but excludes components like Annual bonus, Retrenchment compensation, and Encashment of leave and gratuity
ER ESI3.25% of ESI WagesSame as above – 
PTDepends on your state and salary range. This will help you
EE LWFRs. 20/- for S&CE LWF in Kerala. Differs based on the nature of establishment
ER LWFRs. 20/- for S&CE LWF in Kerala. Differs based on the nature of establishment
TDSOn the Employee’s Earnings. Depends on the existing Income Tax rates
EDLI and admin chargesDetails hereOne may or may not include this as part of Employer Contributions
Table 2: Statutory Deductions on Salary

* Assumption: No other ordinarily paid allowances (other than those like OT, Performance-based incentive, etc).

Legal deductions are the savings for the retirement of your employees. Help them plan right!

So far so good. But I have read that there is a cap for EPF contributions. What is that and how is it incorporated in the salary structure?

Yes, EPF up to 12% of Rs. 15,000/-, i.e. up to Rs. 1800/- per month by Employee and Employer each is mandatory. If the (Basic + DA + Other allowances except OT, Bonus, HRA, etc.) is less than 15,000/- per month, then the EPF contribution will be less than Rs. 1800/-, which is fine. Suppose the above amount is Rs. 25,000/-. Then the 12% of 25,000 = Rs. 3000/-. The employee is not liable to pay this entire amount to EPF and can decide to cap it as Rs. 1800/-. This would mean that the employee’s EPF deduction will be Rs. 1800/- instead of Rs. 3000/-, meaning the net salary might increase since the deduction is lesser.

Another catch here is, the employer is liable to pay the equal contribution as the employee makes. So if the employee decides to cap it at Rs. 1800/-, the employer can also do the same, which may be a loss to the employee in the long term as a hole on the savings. But modern-day organisations tend to transfer the benefit of this capping to the employee, by fixing the CTC and increasing the Gross Pay to match the difference, still, all of them totalling to CTC. This would mean that the employee might get a higher net salary even if s/he caps the EPF contribution, but the transfer of benefit depends on the employer and is at their will.

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The post is getting longer by the minute. Would you like to conclude?

So, in short, our intention is to add up the component to Gross Pay and then add employer contributions to reach the CTC. When an offer is made (or a salary revision is recommended), companies usually look at the total cost that it would incur. The rest is on HR to design the structure in the most favorable manner.

More fun on the way

The calculation to sum up earnings, employer contributions, etc. to reach the CTC is pretty straightforward with simple arithmetic calculations. But it can become slightly complex when you are given a CTC and asked to bifurcate it to various components especially when there is a cyclic dependency is involved (e.g: ESI contribution depends on the components of the salary structure, while those components depend on the ESI contribution).

This is not rocket science and can be solved with a system of first-degree multi-variable equations. As long as we have HRMS in place, this won’t be a headache, but don’t you think it would be fun to go back to high school math and see how that helps in the above HR situations? Post your responses in the comment below and let’s see who gets it right first! Let me blog on the math later.

Salary Structuring may be an operational aspect of Human Resources, but it definitely is an important piece of the job.

This article is also published on LinkedIn and Medium.

Software Engineer and Getting Paid below 17,742/- per month? Well, something’s wrong! Let’s look at the Minimum Wages!

I am sure your you were curious as to why the number 17,742/- for a Software Engineer when you clicked on the link to land this article. Let’s see in detail. By the way, if you are a software engineer in Kerala getting paid below this figure, it’s probably the time to send this article to your HR Manager 😉

Context

Recently, on Dec 24, 2020 to be exact, Government of Kerala announced the revised Minimum Wages for the Software industry in the state, after long 10 years of the earlier revision. Numbers have soared up. This article discusses the concept of minimum wages, with examples pertaining to Kerala state; however, the concept should be the same throughout the country.

What’s this “minimum wages”?

As the name implies, the minimum wages is the minimum wage per month to be given to an employee of a particular sector in a state. There is a national minimum wage declared by the central government, and various state-level minimum wages. The idea is to keep the state-level minimum wages equal to or above the national minimum wages. The concept of minimum wages will ensure access to equitable and justifiable pay, thereby eliminating the chances of exploitation by the management.

When is it decided?

Minimum wages are revised periodically. Minimum wages are defined for each sector separately. For example, the minimum wages for Software sector differs from that for the Oil Mills sector. There are roughly 80 such sectors identified for the State of Kerala; and similar numbers for other states as well. Governments revises the minimum wages when it deems that there is, inter alia, a significant increase in the cost of living over a period of time which is not manageable by a mere increase in Dearness Allowance (DA).

How is minimum wages calculated?

Minimum wage calculation for a role is easy. For example, look at the latest Software industry minimum wages notification for the State of Kerala below (extracted from here).

Kerala-Minimum-Wages-Notification-2020-Computer-Software-Industry

If you look at the notification, in the Software sector, roles of jobs are categorised into different grades. For instance, an HR Executive is a Group F employee in the industry, while a Software Engineer is a Group E employee. An organisation needs to categorise all their employees into one of these grades (and, if not already done by any means whatsoever before, it would be advisable to communicate the same through an HR letter/notice, through internal HR portals, payslips, etc. to the employee so that they are aware of the same) Let’s take the example of Group E: Software Engineer for illustration purpose.

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Demystifying the Minimum Wages Calculation: An Example

If you look at the Group E: Software Engineer, 16520-250-17770-300-19270 is the salary range shown for this role. What does that mean, let’s have a look!

The minimum wage for an employee who is a Software Engineer in an organisation is Rs. 16520. This amount is exclusive of another factor called Dearness Allowance (DA), which we will see about later.

Now, look at the number 250 in the wage structure. What does it signify? The notification says:

For every five years of completed or to be completed service in an establishment or under an employer, an annual increment at the rate next to the pay scale fixed in the new scale of pay shall be paid as service weightage to the employee concerned.

So, if an employee continues to be a Software Engineer under the same organisation/employer, then for every such service year, a minimum pay hike of Rs. 250/-pm should be paid as service weightage. That is, for someone with salary 16520/- as per month salary, and completed one year of service, s/he should get a minimum wage of Rs. 16520 + Rs. 250 = Rs. 16770/- pm during the second year of service. Every year, this figure per month will increase by Rs. 250/- for the first five years. Hence, s/he will have a wage of Rs. 17770/- pm during the fifth year of service. That’s the third number appearing in the pay structure.

Now, one can see a 300 next to 17770 in the pay structure. That means, we’re now done with the first five years and reached Rs. 17770/- pm as minimum wage for this employee. Hence for the next set of 5 years, the minimum wages should be increased for every service year by, not the old 250 but, Rs. 300/-. Hence, on the sixth year of service, the employee should have a minimum wage of Rs. 17770 + Rs. 300 = Rs. 18070/-. This will continue for the second block of 5 years. Hence, at the end of the 10th year (i.e. the fifth year of the second block), the employee should be getting a minimum of Rs. 19270/- pm as the salary. After the 10th year, the mandatory pay hike stops. If the employee gets promoted to a higher Grade, that’s a different story, in which case the minimum wages for that role will be applicable.

Image Courtesy: Investopedia

What if one gets more salary hike?

Good for them. The minimum wages talks about the minimum wages to be given, and the minimum pay hike to be given for every service years. If your pay is already above this level, then the employer is NOT obliged to give you the 250 or 300 pay hike.

Now, tell me about DA calculation?

Dearness Allowance is calculated based on an index called Consumer Price Index (CPI). I will skip the economy part and would encapsulate that it is a statistical number published by Dept of Economics and Statistics for various cities in the state, and it depicts the fluctuating cost of living. They publish it here.

DA is a mechanism provided to adjust the salaries for change in CPIs. If you look at the Minimum Wages notification, it says:

In addition to the basic rate of wages, all the employees shall be eligible for Dearness Allowance calculated on the basis of the Consumer Price Index published for the concerned District Head Quarters of the Department of Economics and Statistics at the rate of ₹ 26 (Rupees Twenty Six only) for monthly waged employees and ₹1 (Rupee One only) for daily waged employees respectively, for every point in excess of 300 points of the latest Consumer Price Index Number in the series 1998-99=100.

There are five parts to it:

  1. DA varies for each city (read district HQ)
  2. The rate of DA is Rs. 26/- for monthly waged employees
  3. DA is calculated for every point in excess of 300 points
  4. CPI is published periodically
  5. DA for this sector is calculated basis the CPI in the Series: 1998-99=100.

With these reading in mind, let’s calculate the DA for an employee posted in Trivandrum. Look at the CPI page on the EcoStat website and choose the latest month for which CPI is available. As I write this, it is Nov 2020. If you look at the Trivandrum’s CPI value under the column Estimated Indices for Base : 2011-12 = 100 Base : 1998-99 = 100 for Nov 2020, it is 369. That’s our little guy.

Now, we need to find out the DA from this 369. As per the #3 above, DA is calculated on the CPI-300 value. Here, it is 369-300 = 69.

We need to pay Rs. 26/- per month for every point in this 69. That means, the DA per month for an employee posted in Trivandrum is Rs. 26 * 69 = Rs. 1794/-

DA is paid over and top of the above minimum wage. DA may change when CPI changes.

Tip: An organisation need NOT provide DA as a pay structure component. They can subsume DA component in the gross pay and make sure that the gross pay is above the (minimum wages + DA) figure. But it would sound problematic for organisations who use the Wage Protection System, which mandates the DA component as such, in which case one may decide to keep that little guy in the pay structure.

Are we talking about Gross Salary or Basic+DA?

With the introduction of Code on Wages, 2019 (to be in force from Apr 1, 2021), all confusions with respect to the definition of wage will vanish. You may consider the Basic + DA + Other ordinarily paid allowances (other than OT, commissions, performance-based incentive, etc.) as the wage for this purpose, meaning we’re talking about the Gross Pay. Confused about Gross Pay, CTC, etc.? I’ll write about it in my next article 😉

Compliance is a Culture.

When is this to be effective from?

This notification is to be effective from Dec 18, 2020. Even if December 2020 and/or January 2021 salaries are already paid out by the employer, they are to abide by these changes. If there are revisions to be made as per this notification, then employers have to comply and give arrears wef Dec 18, 2020.

For the existing employees, if the salaries are to be revised to comply with this notification, then the employer must take care of the service weightage as well.

Where can I see minimum wages for other sectors?

Govt of Kerala published minimum wages notifications on this page. This is the old notification for the Software Industry.

An exercise

Well, now find out the minimum wages to be paid to a Senior Software Engineer with 3.2 years of experience in the current organisation in that grade, and posted at Calicut. Post your answers in the comment box and let’s see how many of you get it right 😉

This article is also published on LinkedIn and Medium.

Why did I write SHRM-CP and how did it go?

Anish asked me to write about why and how I prepared for the SHRM-CP examination so a few HRs who might not know about this certification yet could benefit. I spent some time reflecting on whether I should actually write it or not, and finally, here I’m. If it helps someone, I am happy. If not, that’s still okay 😉

Background

I am an engineer by education and early-career profession. I did my masters in Computer Science and joined Oracle in Bangalore where I spent more than 3 years doing things that I was not contented with, and that I do not consider myself good at. FullContact happened as a you-got-what-you-wished-for opportunity, and I happily accepted the offer to join there as an HR. I always loved the HR job, unlike many other engineers out there!

Well, it goes without saying that I am without an MBA. Did it matter? I will be blunt: it did matter to me, though it didn’t to my employer. I was a beginner in the HR profession, but I was invited to lead the India people division of the organisation, owing to the trust and hope the then leaders had in me. I had to make it up to it, and I did not have an MBA. Did it really matter? Does it, now?

(Image courtesy: www.peoplematters.in)

Hey dude, do you really care about the degrees (and not the skills)?

We as humans tend to see and believe things as binaries—YES or NO! Do degrees really matter? Some say that it doesn’t, and some it does. Certain degrees do really matter, but what matters more is the kind of environment you studied in and the exposure you have attained. I have seen the case studies MBA colleges use to teach the graduate students in the tier-2 colleges and the top B-schools in the country and abroad. I was well aware of the differences in engineering education, but the kind of exposure those top-tier B-schools provide to their MBA students is something unparalleled from my observation. One can’t simply say that degrees do not really matter. What matters is exposure and potential—be it with a degree or not.

One may argue that college degrees cannot provide the quantum of exposure that on-the-job training provides. While this generally true in our country, the quick(kick)start the tier-1 educated graduates get is, still, something. There’s no denying that.

Back to our story: well, I did not have a degree. My ego and self-esteem played, and I thought of doing a distance MBA, joined, fully paid for and found it to be worthless an affair, left it at that. But as time progressed, thanks to the openness and unusually solid support that I got from this organisation (and the HR communities that I am associated with such as NIPM Kerala Chapter), I could learn A LOT while being on the job. I wanted to, however, benchmark myself to see where I stood (read this as self-appraisal. Unless you benchmark yourself, you are not giving yourself feedback. If you do not give feedback often, you are buying the same fish, again).

I heard about the SHRM certification and I was not eligible to write SCP then, hence chose CP; out of the blue, after reading some online reviews. I knew that it would take some effort, but my organisation supported me by spending considerably good amount of money on this learning effort by sponsoring the digital training kit for the examination. That’s one reason why I was fast ready to write the exam.

Tell me more about the exam

There is more than enough articles on what and how the SHRM Certification examinations are, hence I will skip that part except for an excerpt:

  • You can write SHRM-CP if you have 2 (or, 1 for those with PG) years of professional HR experience. If you are senior in terms of service, you could try SHRM-SCP.
  • The test is computer-based. Continuous 4 hours (trust me, my eyes pained). 160 questions. I wrote it at Prometric centre in Trivandrum, Kerala, India.
  • Of the 160, there are 95 knowledge-based questions, 65 judgement questions. They are all multiple choices, but alternatives can be confusing and similar-looking. This page gives you a sample set of questions.
  • How I prepared: There are four books that came along with the digital learning kit that was sponsored by the organisation. I read them. They are quite helpful and one may get tons of revelations of as to how many bad concepts/understanding of HR that one has had (I did). In fact, this was the best outcome of preparing for this certification.
  • You will get to know your provisional results immediately after the test. They will send you the official intimation later.
  • The examination costs you $400 ($300 if you are an SHRM member). The certificate is valid for 3 years (and can be renewed by acquiring certain recertification points by doing online courses, attending seminars, etc.). It is not mandatory that you purchase the digital learning system. This page may be helpful.

(Image courtesy: blog.shrm.org)

Should I do it?

  • Yes, if you want to benchmark yourself, and maybe, study something that you already didn’t know. Or, if you are doing it as a self-confidence booster.
  • No, if you are just doing it for a pay hike. Mostly no organisation—I understand some may still be doing—in India provides with a pay hike for HRs just because they have a certification (but that’s not the case abroad, and some job descriptions specify these certifications as minimum requirements, which is a benchmarking/filtering tactic). However, it can be a distinguishing factor. After all these, I know in person a ton of HR professionals doing much better than me, without an MBA and/or an SHRM Certification. So, it’s just all about what you want.

If you’re not so concerned about the certification, why have you written “SHRM-CP” in your LinkedIn profile name?

I am just being ostentatious.

So, you’re saying that you’re after fancy degrees (or candidates with such degrees)?

Wait there, never did I say that I have high respect for candidates just with fancy degrees. Moreover, I believe in interviews that are based on Behavioral Competencies (from a People standpoint)—BEI as it is called—rather than education texts that fill in white spaces on a resume.

TL;DR: Take an SHRM certification exam (or its competitor HRCI) if you want to benchmark yourself against what is considerably-okay in the industry. You may gain some confidence, too.

Wait, did I write a TL;DR at the bottom? 😉

P.S: Julian has written about how he passed the examination already, my job is reduced by 90% in writing this article and hence not explaining what he has already done.

P.P.S: I would strongly recommend being part of the SHRM community by spending money on their membership. It is really worth it (an online membership would suffice) in terms of strategic/operational documentation that is available on their member-only portal and the community of HRs they have built.

If you have more questions, I am happy to help. Please drop me a message or write in comments (beware: you are going to talk to someone who is known to be incommunicado for longer durations; so please expect the delay).

Also published at: https://www.linkedin.com/pulse/why-did-i-write-shrm-cp-how-go-arunanand-t-a-shrm-cp

Income Tax: Can I Choose and Declare the New Regime to the Employer?

Update (Apr 13, 2020): Govt of India has clarified that the employee can ask deductor (employer) to consider new tax regime for taxation (provided certain conditions of no-business income, etc. are met). The notification below is just in. Thanks to Ankit Lohiya for updating me about the notification.

Hence, the article below stands void.

In the 2020-21 budget by the Govt of India, a new tax regime was announced. The below table depicts the difference between the old regime and the new regime. HOWEVER, Govt has announced that it will give an option for the citizens to choose which tax regime they would like to be taxed on.

New Income Tax Regime

Source: https://timesofindia.indiatimes.com/

Does that mean I can tell my employer to tax me on which regime?

As it looks, your employer cannot take such an option from you to choose which income tax regime they should tax you on.

So, what will the employer do?

The employer will still need to, as of today, continue deducting income taxes per the old regime (like how they used to do during FY 2019-20). They cannot ask, or take a choice from, the employee on which regime to tax on, nor they can tax them other than on the old tax regime.

When can I then choose my tax regime?

The employee can choose the tax regime at the time of his/her Income Tax returns. The IT department will recalculate the income tax and ask you to pay/refund an additional amount.

Why is it that so? Why can’t employers take option from employees?

As per the Finance Act, 2020 which is enacted by the Parliament, taxes are to be withheld and paid to the Government as per Part I of First Schedule of the Act (please see screenshots below).

No alt text provided for this image
No alt text provided for this image

The Government has, in fact, introduced the new tax regime not by altering the Part I of First Schedule above, but instead by introducing the new regime as a new section (Section 115BAC). As long as Part I of First Schedule is changed/amended with the rates mentioned in 115BAC, the employer needs to follow the old regime for TDS.

Can I change choose old regime in the years to come, if I choose the new regime during FY 2020-21 (AY 2021-22) during income tax returns?

No, 115BAC mandates that in case of individuals and HUFs who have income either from a business or a profession, once this option is exercised, they will have to continue with the new regime for that year and all subsequent years.

(with inputs from multiple resources and people, including Sreelal).

Also published at LinkedIn and Medium.

Work From Home Musings

Here’s the snapshot of my WFH experience (though I’ve done it in the past, not as many continuous days as this time).

Work From Home, Working From Home
Image Courtesy: www.entrepreneur.com
  1. Gained weight. I was on a consultant diet for the last three weeks and had lost 3 kgs. Looks like I eat at leisure while at home and gained 2 kgs over the last one week.
  2. I eat my meals on time, but while at the office I am known to procrastinate meals and eat them all together later. However, I drink less water while at home. And I miss pantry talks.
  3. Missing the office AC. The room where I’ve set up my work from home corner is damn hot. Internet at the office was heavenly, too.
  4. Missing my people around, especially the G&A team of FullContact. Meetings having been moved online, I’ve started missing meeting people in real. Added to it, I am in HR.
  5. I fail to switch to work attire though many on the web suggest doing so.
  6. Productivity swings. At times, I am underproductive while productivity soars up sometimes.
  7. Feeling unnaturally sleepy after lunches (while at the office, it doesn’t happen quite often).
  8. Kid at home & Working at home together is a bad idea.
  9. Last but not the least, I am living two more days in a month. I have a two-hour transit daily, multiply that by 24 and you get 48 hours = 2 days!

Why you should NOT celebrate the International Women’s Day with a cooking competition at the Workplace

The International Women’s Day is around the corner, i.e. on March 8, 2020. That being a Sunday, most organisations have decided to celebrate it on the Mon, Mar 9. It’s usual for every HR team to make a plan and celebrate the day certain set of programs and competitions within the office. We do, too, at FullContact. This post is not to talk about what we do, but what one should do.

No alt text provided for this image

(Image courtesy: http://www.durocherflorist.com)

How to?

I have seen many messages by HRs asking for ‘what do you do for women’s day’; so that we can replicate questions. Well, sometimes discussions like these are about sharing ideas, but many a time, they end up being a means to do something on the Women’s Day as an engagement activity (oh boy, a term that has lost its charm!).

Let’s think for a moment. Why do we need to celebrate Women’s Day? Is there a problem that we are trying to address at our organisation? It could be an equality issue. It could be an inclusion concern. It could be a facilities concern that male employees have access to but not women for their gender. Do you have such an issue at the organisation that’s unfair to your women employees? That’s what you should discuss and target to resolve.

Who to?

Usually, HR department takes care of conducting the engagement activity on the Women’s Day. Most organisations have an HRBP structure these days and why don’t we do it not on our shoulder but as a collaborative activity? First and foremost, stop planning the day with the help of male employees alone. They might be missing much of the context as to why we should ‘celebrate’ a day for women employees—why don’t you call in volunteers from among your women workforce to plan, better, a women’s day? They know their problems at the workplace!

What to

What to do on a Women’s Day will vary from organisation to organisation. As I said earlier, your intention should be to celebrate the successes of women, being an inspiration to women in the organisation, AND to try and resolve concerns your women employees have in terms of equality and inclusion.

Events such as cooking competition, best saree wearing competition, etc. are, in my personal opinion, are regressive in nature. A patriarchal society like ours has celebrated such forcefully collocated chores and events to women. As progressive organisations, our intention should not to celebrate and promulgate such practises but to address the issues that are created by such implicit biases.

HRs, think about what you want to do at your organisations. I am sure you will find something better than a cooking competition!

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Still, give me some ideas!

I’ll begin with a few from the list of events that our team discussed Women’s Day Week #SheIsUs at FullContact this time (fully planned and owned by our non-HR members):

  • An AMA session where any questions about inclusion, equality at the workplace is answered and acted upon.
  • Select documentaries on inspirational figures from among women leaders around the world.
  • Inspirational Women stories from among our own members.
  • As part of #FullContactThanks, a day dedicated to thinking about and acknowledging one woman in our members’ lives.
  • Inspirational women leaders having a conversational meeting with the whole of the office where we will try to address some implicit bias issues.
  • Sponsor a girl child program with equal contributions from the organisation and the members.
  • Motivation to go out and be outdoorsy to those who didn’t get a chance to do so—clubbed with #HealthyFullContact.

Second Image Credit: Wikimedia Commons

Also published on LinkedIn and Medium.

Did your employer ever deny the Experience Certificate? Read on.

Indian labour laws are, majorly, employee-centric than employer-centric. Though this is the state of the act, most employees are not aware of their rights per various labour laws of the land. Or else, many employers purposefully do not educate their employees of the latter’s rights at the workplace.

One of the major threats many young professionals face from disgruntled employers is ‘we will not issue the experience certificate unless you do x or y‘. Not issuing an experience certificate is, unfortunately, used by many HRs and management as a tool to get something done by the employee. This something could be repayment of what the employee owes to the company, the employee not serving the notice period, etc.

Another common practice among some SMEs (I must admit that this trend is on a decline now) is to keep the originals of the employee’s certificates and mark lists with them until the term of employment/resignation. This is to make sure that the employee does not look for alternative employment whilst employed at the master organisation. Poor employee, s/he believes that the organisation has rights in their limit to do so and obeys this demand.

As it turns out (and it has always been like that), NO EMPLOYER is entitled to DENY experience certificates (service certificate in legal terms) to an employee or a former employee. If the employee demands such an experience certificate during or after the term of employment, the organisation is BOUND to issue one. To cite the labour law, 2J(3) of Kerala Shops and Commercial Establishments Act, 1961 mandates that the employer shall issue the service certificate in Form BE, within seven days from the receipt of such a request from the employee (every state has its own S&CE Act, and they will have similar provisions).

In a nutshell, employer cannot deny a service certficate (experience certficate) even if the employee is absconding or under a formal domestic enquiry for a gross misconduct. If the employer does not follow the request, the employee has the right to contact the District Labour Officer or the Labour Court thereafter for redressal.

Now, Section 5E of the aforementioned act says:

5E. Prohibition of retaining education certificate or experience certificate.—No educational certificate or experience certificate in original received from an employee shall be retained by the employer of any establishment at the time of appointment or during the course of employment.

This means, no establishment has the right to retain the originals of the experience certificate and/or educational certificates of their employees. Copies, however, can be maintained for record purposes, but originals have to be returned immediately after verification.

Ever denied justice? Talk to your HR first. If they do not fall in line, you now know what to do.

Also published at LinkedIn and medium.

Musings of an Engineer-turned-HR: Here’s what the budding HRs should know

It was on a not-so-fine day that Arjun, CEO of Profoundis and my collegemate met me at Lulu Mall in Kochi. I was going back to Bangalore, where I worked at Oracle as a Software Engineer for around 3 years then, and I had no clue what Arjun had to offer. He asked me if I would like to join as the Head of HR of Profoundis, which was about to be acquired by FullContact, Inc.

I personally believed that I had the traits of an HR (though when I look back now, most of those thoughts were out of place ;-)). I had a dilemma during the final year of study of my graduation whether I should pursue MBA or MTech. After a lot of articulation and inner discourse I decided to pursue MTech, which I do NOT regret now. I ended up in IT, as I assumed, but I never felt Software Engineering was my realm. Having these excruciating thoughts to jump out of my engineer role coupled with Arjun’s offer, I didn’t have a second thought. I had my personal reasons to move to Kochi, too.

If I do not say that I was apprehensive, rather confused, about my capacity to be a Head of HR at the very beginning of my HR career itself, I wouldn’t be doing justice to me. I did a lot of reading afterwards, which in fact Arjun asked me not to. He said they wanted an unconventional HR, who doesn’t go by the books, and recommended that I be not distracted and misinformed by the literature. However, I did my fair share of reading before I joined Profoundis.

What followed was a roller-coaster ride. As I write this, I can feel the cold feet I’d when I first entered the Profoundis office. But I’d something in store – an amazing team who believed that people operations is fundamental and pivotal to any business. There started this small journey of my HR career, which is now at the fourth year! The three years have been of immense learning, understanding, mistakes, corrections, unlearning and what not! I would like to scribble down for the budding HR fellows, who might have as bad a cold feet as I’d on my first day, as to what to expect, what to ignore, what to render on an HR job. Here we go:

Prepare to Unlearn and Re-learn

One might have learnt many things about HR and processes in their text book; or they might have been told that this is how the ideal HR function looks like. Be ready to face the fact that HR is different across organisations depending on the nature of business, nature of the workforce, locale and the priorities of the leadership. What you learnt in books could be obsolete by when you join the HR job – so be ready to remember/forget what you learnt and start afresh on many things—let’s preserve and remember what’s still required. Be ready to read and re-read the latest books, trends, researches, blogs, etc. so that you stay up-to-date.

HR is not just about compliance

The general notion that many have is that HR is all about recruitment and compliance – this is a myth. HR has over the last two decades evolved as a business function. While compliance plays an important role in the success of an HR team, treating them as the core function of HR is erroneous. Compliance is an assumed-to-be-required function of HR. It’s very basic. HR’s more to it. But remember—compliance is a culture. Nurture it, but that’s not only what you’re defined by.

Culture is your dad, business is your mom

It’s the business leadership and the HR leadership together that decide the fate of an organisation. If one of this duo fails, either you will end up with a zero or negative business growth or a bunch of unsatisfactory people. The two are complementary to each other—or, rather, co-existent. HRs (should get a chance to) decide the culture of an organisation, while they participate in deciding the business destiny. Gone are those days when HRs come into play when someone needs to be hired, reprimanded or fired. Starting from talent acquisition to talent development to talent retention to talent nurturing to making the workplace a great experience for your members depend on how the HR team is envisaged and functions. Your job exists because the business exists

Find your path to heaven

One may define the success of their career by multi-factors. For some, it could be the happiness of their members, achieving KRIs, promotions and merit increases, and what not! But ultimately, if you ask me, the end result of one’s actions should be such that it makes him/her happy.

Learning is the Key

You need to invest some time to learn. To learn from others, your peers, leaders, fellow HRs, blogs, and what not! Make sure you are part of the communities of your liking. I have learnt a lot from the fellow HRs through NIPM, WhatsApp groups, meetups at Infopark, conferences, etc. Whenever you’re part of such a gathering, make sure you find (rather than it giving you; thanks to Anish for the usage) some takeaway as learning. You may also follow some really good HR blogs like PeopleMatters, RBL, etc.

Learn from marketers

It’s high time HR team learnt from the Marketing teams on various fronts. Starting from employer branding, HR should look at how the marketing team hustles in getting the product into the market and reach the right targets. In my opinion, Marketing teams are the ones who first use all the theories and tools of human interactions, technology, and result-oriented-action-plans in any organisation. They are leaders in many respect – for example, take the case of Conjoint analysis which helps the product organisations decide how their product should be. HRs can very well adopt this (and many organisations have already done so) technique to define the happiness factors of their members—the benefits, the facilities, the factors by which they will leave the organisation, etc. One must look at how the marketing team performs in their organisation and imbibe what can be imbibed into their HR team—be it theories of human interaction or defining success of one’s function.

Not every grey hair deserves your ears

Keep the thought that every grey-haired man is a mentor out of your minds; it’s the grey matter that matters. You might need a mentor who can lead you through your HR career—since you’re just taking your baby steps—but that doesn’t mean that you should lend ears and years to those who pretend to be mentors. Try a few, leave them it doesn’t work. But trust me, having a good mentor is always worth the effort—but the call is yours.

Do not forget to live

When you strive to have a great work-life balance for your members, do not forget to have a life for yourself. Chill, keep calm and just be yourself. Have an introspection of whether you hate Mondays, or super happy on Fridays—if the answer is a yes, you should consider switching the job. At the end of your life, what matters is whether you have been happy throughout and that happiness is defined by you and you alone.

Also published at https://www.linkedin.com/pulse/musings-engineer-turned-hr-heres-what-budding-hrs-t-a-shrm-cp/?published=t

Training Your Employees to Take up Jobs at Other Companies? Yes, Amazon does it!

The Last Mile has always been a concern for all the realms of ideas. Today, let’s have a look at one of the Last Mile (at least, I would prefer calling it so) stretch of an HR concept.

Many organisations see training as an investment with a target ROI to the business. While this is an agreeable concept, IMHO, training is an ‘engagement’ (may not be in its traditional meaning) activity. When an organisation trains an individual, s/he is seen as an asset and thus feels more valued in the organisation. Plus, training offers avenues for self-exploration and self-improvement. Training, if done at the right metrics, certainly can improve the engagement dynamics.

Amazon went to that extra mile when it comes to learning. They are now offering company-sponsored learning budget to employees to TAKE UP JOBS IN OTHER COMPANIES. Yes, you heard that right!

Amazon found that there is a chunk of their employees who are earning less than the average of salaries. Those employees may leave the organisation owing to this concern. Most organisations would let it go—which is the start of that ‘extra mile’—as such. Amazon decided to let the employees take up a course of their choice that would equip themselves with skills that will land them in a better job—at the cost of Amazon!

The idea behind this is pure love; to let the employees empower themselves who will later be implicit ambassadors of Amazon. Or at the least, that’s the ‘human’ part of HR 🙂

#humanresources #LnD #training #employeeengagement