Question

Dear HR Professionals,

We have a salary reduction exercise due to the downturn in our Industry in 2015 and have briefed the staff on the temporary salary reduction measures until further notice. HR then issued individual Addendum on the reduced salary for staff acknowledgement.

Recently, the HOD of Finance wishes to adjust the pay of his team and recommended an adjustment of $200 to one of the staff who has gone through the salary reduction previously.

From HR's perspective, we will just revise the new salary with the additional $200 from the staff latest basic pay. However, the HOD disagreed with our formula and insisted that $200 should be added to the original basic (before reduction) and then reduced with the same percentage to derive the new basic. His rationale of such a method is to address the concern of the staff who may think that his/her salary has been permanently reduced instead of the original temporary measures.

However, HR disagrees to such formula as there was no indication from Management that the pay will be reinstated (though it was informed that it will be temporary), and even if there is, will be reinstated to the original value. Kindly advise the correct method to adjust the new pay.

Thank you.

Joel

Reply 1

Address this issue at Management level to come to a corporate discussion cum review. It is always good HR practice to be seen as fair to all employees who are affected and agreed by this exercise. It should not apply only for a single dept and for 1 staff who falls under the same agreement. It does not reflect well for Finance HOD who is seen as biased.

RH

Reply 2

To help me to understand your scenario, let me use an example below to illustrate:

1) Employee A salary was $5000 before the temporary salary reduction.

Temporary salary reduction was 10% of $5000 so the new pay is $4500.

2) HOD wants the $200 to be added onto the original $5000 to the increased pay is $5200, less 10% reduction so nett new pay is $4680.

3) HR prefers to add the increase of $200 to $4500 = $4700.

From the example above, it appears HR's formula gives the employee a higher nett new salary of $4700 (versus HOD's formula of $4680. Which figure ($4700 vs $4680) will the employee prefer?

AL