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2018-09-08 23:59:41HR Policies and LawsEnglishWhy are salary increments important for employees and for small business owners? How are they calculated and how do businesses factor them... Business Term: Salary Increments

Small Business Term: Salary Increments

1 min read

A salary increment is a percentage of an employee’s yearly pay. Say you’re compensated Rs 1,000,000 annually; if you’re paid weekly, your salary increment would be approximately Rs 19,230. This figure can be found by dividing the base yearly salary by the 52 weeks in the year. Salary increments are very high on an employee’s wishlist, so let’s learn something more about them.

Salary increments can be used to raise or lower an employee’s pay. For instance, if you received a raise of Rs 33,000 to your base salary, your salary increment would go go up by roughly Rs 634 per week. A salary increment can also be a single payment awarded as a bonus. An employer may also offer a salary increment in order to offset the cost of expenses such as health insurance. Employers may also provide salary increments in exchange for skill-enhancing endeavors such as taking a class.

It’s important to pay attention to salary increments because they play a major role in your company’s cash flow. Being aware of salary increments helps you to get an accurate view of your company’s current financial situation, and it empowers you to make informed decisions on how to fairly compensate your workers.

Providing salary increments can also be a powerful motivator to keep your team inspired to perform their best. You can vary salary increments to reflect the employee’s performance — if a worker develops new skills or takes on new responsibilities, you can adjust their salary increments accordingly. This helps your team to feel like additional work isn’t going unnoticed, naturally improving morale and retention rates.

Understanding salary increments is an essential part of employee compensation, so be sure to use those figures in addition to yearly salaries. It’s a great way to break down and analyze your payroll procedures.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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