Fixed salaries, another casualty of pandemic3 min read . Updated: 16 Sep 2020, 09:14 PM IST
- Organizations across sectors are increasing the ratio of compensation linked to employees’ performance
- HR experts say companies are beginning to realize that salaries and benefits need to be reassessed and new heads introduced in order to ensure employees get their due
Mumbai: Fixed salaries have become a casualty of the pandemic as more companies try to cut employee costs and link pay to performance in an economy that sliding. Conveyance and meal allowances aren’t being paid out, and the proportion of variable pay has been increased at a time when employees work longer hours from home. But organizations are now trying to rethink the incentive components of salaries to make them relevant to the world of remote working. HR experts say companies are beginning to realize that salaries and benefits need to be reassessed and new heads introduced in order to ensure employees get their due.
Media tech company Amagi realized it couldn’t pay out conveyance and fuel reimbursements since people weren’t travelling to office anymore. “From a compliance perspective, these allowances were no longer were valid, so we started looking at what else we could offer," said Amagi HR head Ashish Kolvalker. Many employees had moved back to their hometowns in Tier 2 and 3 cities and connectivity was an issue. “So, we tied up with a leading broadband provider that our people can get connections from anywhere without any charge," he says. The company is tying up with a second service provider soon. It also plans to increased health insurance cover for its staff.
For certain job roles like sales, for instance, companies are now paying as per conversions or targets instead of a fixed salary. In telemarketing as well, the compensation is based on number of successful calls made, said Sahil Sharma, co-founder, GigIndia. “For mid-skill jobs, companies are beginning to map estimated results for each profile with gig workers being paid according to the percentage of the results achieved every month," he says.
As health concerns have increased, employees can expect to see medical and health insurance cover being increased. “We have seen 35-40% companies taking either the entire additional cost of insurance, having a co-pay model, or giving employees the option of increasing the cover for themselves and their families," says Vikas Sapra, chief payroll delivery, PeopleStrong. Some are covering the cost of covid-19 testing for employees and families. On the flip side, organizations have capped the leave encashment facility this year, said Navneet Rattan, director, performance and rewards, Aon Consulting.
Organizations across sectors are increasing the ratio of compensation linked to employees’ performance. About 20% companies are looking to change their variable pay plan, going by a Workforce and Increments Trends Survey conducted by Deloitte Touche Tohmatsu India. “The percentage varies depending on seniority of the role, but it’s a way to increase performance and keep a tight check on costs," says Sapra.
Reimbursements like meal coupons, LTA and travel allowance, which are part of the salary and employees claim against bills, come with tax benefits. But remote employees won’t get this exemption as they won’t be able to produce bills. “How these structures get incorporated into the tax system will fundamentally dictate how the CTC structure changes. Globally, some countries have recognized some amount of remote working set-up expenses as tax deductible expenses. These kinds of changes might be very useful in India as well," says Anandorup Ghose, Partner, Deloitte Touche Tohmatsu India.
Another trend Sapra says we’re likely to see in the next six months is location-based pay. In May, Facebook announced pay grades depending on where its US-based remote employees live. “We may see this when organizations hire," he says, but employees may push back. “While cost of living may go down in smaller cities, employees in India at a broader level may not be willing to accept lower pay," he says.