How to become employer of choice not chance?

How to become employer of choice not chance?

“It is not chance, it is choice which lead to destiny.”

How to become Employer of choice? This is burning question, mission and matter of discussion for the corporate as well as academicians. HR luminaries and top hunks from management are burning there oil to achieve this overwhelming task. Employer of choice it is not one more management funda for discussion and presentations it is need of hour.

We are living in era of GPL and cut throat competition where employees are having choices and they do not hesitate to use it. There is only one thing which differentiates normal company form great company that is right people. Right people not only give competitive advantage to company but this is factor which competitors find difficult to imitate. Problem with right people is they are very difficult to hire and brutally hard to retain. It is challenge for every HR and employer to attract and retain right people but question is HOW? What should they do so that they not only attract right people but retain them by there choice.

There is neither direct answer to this question and nor universal solution which fits to all organizations. Every organization will have to do there autopsy to find out there key to success. There are some core fundamentals which will remain same to all and employer should keep it in mind while framing there HR polices. We can call these fundamentals as F7 for our convenience. They are as following:

1) Financial Rewards

2). Fulfill Social Responsibility

3). Friendly Environment

4). Flexibility

5). Fast learning

6). Feedback

7). Future Growth

Financial Rewards: Some of my readers are thinking why I had given financial rewards so much importance and kept it at top position. Whether we agree or not MONEY matters and beauty of money is it attracts and helps HR in hiring. Employees leave organization because of manager and other factors but while joining they give importance to Money. Money is tangible and employee can quantify it while other factors are difficult to gauze, uncertain and futuristic. In retention also financial rewards play vital role. Right people want differentiation and money is good yardstick for differentiation. Employer must not ignore importance of financial rewards. We should use it carefully so that it become boon for employer and employee.

Fulfill Social Responsibility: It is human tendency that we would like to associate with organization and persons who we keep in high regards. Organization by fulfilling social responsibility not only helping people and society same time they are building brands for them self. The Brand which people love, respect and want to be part of it. It will give cut edge to employer at a time of attracting right people.

Friendly Environment: Era of bureaucracy and long hierarchy are thing of past. Organization must have employee friendly environment. Where they feel free to have and share there thoughts, believes and feelings. Where they are respected and recognized as a person and not because of post. There must be fun at work employee must not feel bore, frustrated and exploited. When employee will be happy they will make your customer happy and when customer will be happy your report card will be happy and cycle will go on and on.

Flexibility: People policy must be flexible not only in paper but in spirit also. Flexibility in pay, flexibility in timing, Flexibility in leave etc people policy should be such that it give flexibility to employees which enhance there performance and go in hand-hand with company goal and missions.

Fast learning: Change is only constant so continuous fast learning should be integral part of company culture. Employer should motivate and provide diverse source of learning to employees so that they can enhance their performance and potential. Learning will not only provide new challenges to employees it will also prepare them as a future leaders.

Feedback: Proper and continuous feedback is must for every people and organization So that they could know where they stand, how they stand and what to do next. Feedback is mode of communication which keeps people focused and it removes ambiguity. It helps employees in achieving their goals and sends message that employer care for them.

Future Growth: People want growth in personal and professional life. Employer must have growth/Succession plan for employee and he must prepare employee for it without it will be difficult to retain employee.

Leave Balance Issue

I am getting leave one day per month, now I’m in notice period. I have 10 days leave balance. Since I’m in notice period, company is not calculating current month of leave. They are ready to pay only for 10 days not for 11 days…Should I get 10 days pay r 11 days pay?

As per Section 79 Clause 1 and 1 (i) of Factories Act, 1948 if employee worked for a period of 240 days or more in a factory he shall be allowed for leave with wages. In case of an adult leave will be calculated at the rate of one day for every twenty days of work performed by him. There is no direct nexus between notice period and leave falling in employee bucket. According to me you are entitled for 1 days leave if you had worked more than 20 days in month during notice period. (In your case total leave will become 11 days)

Basic purpose of notice period (for employer) is that the organization can have enough time to find a replacement and notice period serving employee can train the replacement for that particular position. Notice period do not give rights to management to discriminate employee and arbitrary make such policy which are against the basic rights of employees.

Organization should [must] not indulge in such practices. It’s not only illegal, unethical but it can lead to culture where employee leave organization without serving the notice period and it can also hamper the image of organization. This will have more devastating effect on organization in long run and I think no management want this.

Whether the additional degrees affect salary increment or not?

I am a Science post graduate working in Pharmaceutical Company as Quality control officer. Now I have another degree i.e. MBA (HR). I want to know, Whether HR dept. would consider me for good salary increment because of this additional degree (MSc.+ MBA) or not? And do you think MBA in Operation Management would be more beneficial than the MBA in HR for me?

First of all, Congratulation for your MBA. It is good you have earned and learned something new. Now directly coming to your question- Whether additional degree will fetch you more many or not. It totally depends on your organization policy. Most of the good pvt organization want and stimulate there employees to go for further education. In short run you might not get direct monetary reward but in long run it will defiantly prove asset for you. As you have done MBA in different filed then your current profile. I believe it will be plus point for you. At top level management want that employee should have diverse knowledge and experience. You have to prove your self and through your MBA you have to add value to the organization. Reading without reflection is like eating without digestion. So through your hard work and dedication you have to show management that you are not only having MBA degree but ample of potential. Believe me forget about HR, top management will run for you.

Money is important but learning is far more important than it. I believe when you signed for MBA your prime concern was to learn something new. You have done it now you have to leverage what you have. Fundamentals of HR are not only helpful for HR. They are very much vital to all of us irrespective of our job profile. So my friend doing in MBA in HR is always beneficial.

I hope you will not restrict or limit your self in one or two fields. You will continue your journey of learning whether there is increment or not. Go for excellence success is the by product. It will come today or tomorrow.

ESI: On which compontens contribution is payable

Pls update me about ESI is not applicable on what components.

E.S.I. Scheme is social security legislation and it is contributory in nature. The contribution is paid by both employer and employee at a specified rate. The rates are revised from time to time. Currently, the employee’s contribution rate is 1.75% of the wages and that of employer’s is 4.75% of the wages.

As per Section 2 (22) wages means “all remuneration paid or payable, in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled and includes any payment to an employee in respect of any period of authorised leave, lock out, strike which is not illegal or lay-off and other additional remuneration, if any, paid at intervals not exceeding two months, but does not include - (a) any contribution paid by the employer to any pension fund or provident fund, or under this Act.”

Definition of wages consist of two parts, first part is including components and second part exclude some things from wages such as contribution to pf fund etc.

II. The following items will form part of the wage both under Section 2(9) i.e for considering the employee for the purpose of coverage and Section 2(22) of the ESI Act for the purpose of charging of contribution:-
· Suspension allowance/subsistence allowance
· Overtime allowance
· Inam/ex-gratia payment:
· Wages paid during layoff:
· House rent allowance
· Night shift/heat/gas & dust allowance:
· Medical allowance
· Newspaper allowance
· Education allowance:
· Drivers’ allowance
· Food/milk/tiffin/lunch allowance
· Gazetted allowance
· Wages and dearness allowance for unsubstituted holidays:
· interim relief
· Attendance bonus
· Matinee allowance which is being paid to employees in Cinema Houses
· Compensatory allowance.
· Cash handling allowance paid to Cashier.
· Supervisory Allowance.
· Additional pay paid to training staff.
· Charge allowance
· Steno/Typist allowance
· Plant allowance
· Honorarium for looking after the hospital/dispensary
· Computer allowance
· Gestetner/Photocopier/Printer allowance
· Personnel/Special allowance
· Machine allowance
· Convassing allowance
· First-aid allowance
· Personnel allowance
· Area allowance
· Exgratia payment if payment is made within an interval of two months.

II. The following items will not form part of the wage either under Section 2(9) or under Section 2(22) of the ESI Act:
· Washing allowance:
· Annual bonus:
· Incentive bonus:
· Production bonus:
· Annual commission
· Conveyance allowance
· Service charges
· Exgratia payment during strike for travelling expenses
· Saving scheme
· Payment made on account of un-availed leave at the time of discharge.
· Commission on advertisement secured for newspapers, if not paid to the regular employee.
· Fuel allowance/petrol allowance
· entertainment allowance
· shoes allowance
· payment made on account of gratuity on discharge/retirement.
· Payment made on encashment of leave.

Can Salary be deposited & then withdrawn by company?

Amount once credit in the account of employee cannot be withdrawn without permission of said employee. If by mistake or due to error of employer such thing happen then also law do not permit employer to take arbitrary action. In contract Act there is specific provision to deal with this sort of situation. Section 72 of Indian contract Act states that payments or delivery made under mistake or coercion must be made good or be returned. In Sri Shiba Prasad Singh v. Maharaja Srish Chandra Nandi it was made clear that money paid under mistake is recoverable whether the mistake is of fact or of law but by lawful way.


Some of my friends will ask why we should not recover amount directly from the account of employee. When we can? Yes, you can recover amount from account of employee if you have good term with bank but it can create legal issues for employer and bank. To have bird eye view of issue we have to understand few points:

1. There are three parties in this case. i.e Employer, Employee and Bank.
2. What was the mistake due to which wrong amount credit to employee account and by whom this mistake was done?
3. Is there any clause in agreement which stipulate that employer or bank can recover amount back from the account of employee. If amount credit by mistake.

Employer and employee are having master and servant relationship. Same time Bank and employee are having customer (consumer) relationship. So we have to take into consideration not only employment law but customer, contract and banking law also.

If mistake was on the part of banker than he can recover amount back from the customer (employee) because in standard contract there is always clause, which give right to banker to recover back amount which is credit by mistake. But I am not sure whether there is any clause in contract (salary account agreement) which gives right to employer to recover back amount from employee. If there is no such clause then employer legally cannot recover back amount from account of employee whether it credit by mistake or not.


If we assume there is some sort of agreement like this then also how can bank recover back amount on recommendation of employer because mistake was on the part employer not on part of bank. So on this ground bank cannot recover amount from customer account.

Now coming to nature of mistake first, If mistake is like in place of crediting Rs 1000 to employee account employer had credit Rs 1200 then employer can adjust excess amount with next month salary (if possible). Second, if employee left the organisation after taking salary and his notice pay is due then amount which employee had taken is salary and notice pay is compensation. They are legally two different things so employer should recover notice pay in full and final settlement as per rules.

In a regular course employer can deposit amount into employee account but cannot withdraw the same. It can be withdrawn only when it mistakenly credited by bank. So insist of recovering amount from account of employee with help of bank. Employer should recover money directly from employee by proper and legal way to avoid any legal hassle.

Provident fund and Overtime Allowances

Whether Provident fund can be deducted on Overtime Allowances?

In PF Laws there are recurrent changes which involve more biting than a reasonable person can eschew. The practical difficulties of executing PF law can only be perceived and felt at the point of implementation.

There are some issues in minds of young HR guys whether overtime would form part of basic wages under the EPF laws. Basic wages are ordinarily susceptible to PF deduction. As per Section 6 of EPF Act and related law, PF is deducted on basic pay; DA; Retaining allowance; and cash value of food concession. Overtime allowances do not come under preview of above mentioned terms and Section 2 (b) (ii) of PF Act specifically stated that overtime is excluded from the definition of Basic wage.

The Supreme Court in Bridge and Roof Company (India) Ltd. v. Union of India, 1962 and Jay Engineering Works Ltd. v. Union of India, 1963 “very aptly unfolded the inter woven components of basic wages vis-à-vis their susceptibility to the Provident Fund Contribution. The theory that has been propounded is very obvious and simple and is good for universal application. It has been ruled that whatever is payable to all concerns and earned by all permanent employees, is included for the purpose of contribution under section 6 but whatever is not payable by all concerns or may not be earned by all employees of the concern is excluded for the purpose of contribution, irrespective of anything.” By way of example it was held that overtime allowance, though it is generally in force in all concerns is not earned by all employees of a concern. It is also earned in accordance with the terms of the contract of employment but because it may not be earned by all employees.

This is an Acid test which has been laid down by the Apex Court, and if we were to apply it to the overtime payment, then some discrepancies would surface. So PF cannot be deducted on overtime allowances.

Vulgar salary-What the hell it is?

Recently when I was scanning through leading newspaper I came through a word “vulgar salary”. As a HR profession I heard various names of salary such as fair salary, minimum salary, executive compensation, wages blah ..blah but this is fast time I heard term vulgar salary. How can salary be vulgar? I don’t know and don’t want to know because whatever you call it I love my salary. Which I get in my account on first day of every month.

For my readers term vulgar salary is coined by one of the cabinet minister of India. He was referring to high pay packages of CEO’s. High pay packages are burning issue all over the world. The gap between the salary of entry level employee and top hats are growing day by day. It is not good for developing country in long run.

To curb and to regulate high compensation packages new company law is in the pipe line. Hope it will give some direction but government has to see pros and cons of it before coming to any point. Till then top hats please enjoy your vulgar salary.