Hi Richuka,
Thank you for this suggestion as well, as I need to present this in front of my management. Requests for salary advances, even genuine ones, are still coming in after the revision of my policy.
I would like to request you to please elaborate more on this. How should I proceed, as I might face the challenge of deducting money from my employees? How will the deductions happen – yearly, monthly, etc.?
Best Regards,
Tarun
From India, Delhi
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2Thank you for this suggestion as well, as I need to present this in front of my management. Requests for salary advances, even genuine ones, are still coming in after the revision of my policy.
I would like to request you to please elaborate more on this. How should I proceed, as I might face the challenge of deducting money from my employees? How will the deductions happen – yearly, monthly, etc.?
Best Regards,
Tarun
From India, Delhi
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Hi,
I don't agree with Punit. It's better to make a policy and keep it transparent. One of the roles of HR is to create systems and processes, ensure fairness and transparency, and communicate the same to employees. Hence, you prepare a policy and inform employees about it. Few points can be inbuilt in it:
1. Max 3/4 times in a year
2. Not more than 1 time in a quarter
3. Not more than 50% of salary
4. One important point: Ensure to recover all the amount from next month's salary. What if an employee leaves? Why have hassles? Especially in today's scenario, why increase the financial burden on the company? Hence, it should not be more than the salary being credited to the employee.
Even if an employee takes it as a right, he works within guidelines which smoothen the entire process. Hope that helps.
Regards
---
Hi Tarun,
As per my experience, there should not be any policy for salary advance because if you put down the policy, then employees start treating it as their right. So have a policy as a backend which is available only to HR and top management.
The policy can have features like:
- Max salary advance can be given up to one month net salary.
- To be recovered immediately in the next month's salary.
- Given only in special cases such as medical emergencies with the functional head approval.
I hope the above suggestion is helpful. Please revert for any further clarification.
Regards,
Punit
From India, Gurgaon
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I don't agree with Punit. It's better to make a policy and keep it transparent. One of the roles of HR is to create systems and processes, ensure fairness and transparency, and communicate the same to employees. Hence, you prepare a policy and inform employees about it. Few points can be inbuilt in it:
1. Max 3/4 times in a year
2. Not more than 1 time in a quarter
3. Not more than 50% of salary
4. One important point: Ensure to recover all the amount from next month's salary. What if an employee leaves? Why have hassles? Especially in today's scenario, why increase the financial burden on the company? Hence, it should not be more than the salary being credited to the employee.
Even if an employee takes it as a right, he works within guidelines which smoothen the entire process. Hope that helps.
Regards
---
Hi Tarun,
As per my experience, there should not be any policy for salary advance because if you put down the policy, then employees start treating it as their right. So have a policy as a backend which is available only to HR and top management.
The policy can have features like:
- Max salary advance can be given up to one month net salary.
- To be recovered immediately in the next month's salary.
- Given only in special cases such as medical emergencies with the functional head approval.
I hope the above suggestion is helpful. Please revert for any further clarification.
Regards,
Punit
From India, Gurgaon
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Hi Tarun,
Before my reply, can I get to know whether the advance issue has cropped up suddenly or is there any problem with the frequency of the salary disbursal?
Generally, the HR Policy should incorporate the procedure for applying for a salary advance. Let me guide you through certain important points in this regard:
1. Try to link the ceiling limits of the advance to 2 or 3 times of the basic salary.
2. Give advances to employees who have served the company for at least 1 year.
3. Always make provisions in the policy to recover the advances (in part or full) against earnings other than normal salary, e.g., incentives, EL encashments, performance pay, etc.
4. No provision for a second advance unless and until the first one is cleared.
5. Always investigate the genuineness of the application. Advances should not be sanctioned at will. The associate/employees have to provide legitimate reasons for the advances, and only the section head has to give consent before the final approval from the HR and Finance Department.
6. The recovery period should be done in full or in installments. Furthermore, the recovery period should not extend beyond 6 months.
7. Try to maintain a gap between two consecutive advances (at least a year) since there will be some employees who will always try to keep their advance accounts running for their advantage.
Rest the approval's judgment.
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Before my reply, can I get to know whether the advance issue has cropped up suddenly or is there any problem with the frequency of the salary disbursal?
Generally, the HR Policy should incorporate the procedure for applying for a salary advance. Let me guide you through certain important points in this regard:
1. Try to link the ceiling limits of the advance to 2 or 3 times of the basic salary.
2. Give advances to employees who have served the company for at least 1 year.
3. Always make provisions in the policy to recover the advances (in part or full) against earnings other than normal salary, e.g., incentives, EL encashments, performance pay, etc.
4. No provision for a second advance unless and until the first one is cleared.
5. Always investigate the genuineness of the application. Advances should not be sanctioned at will. The associate/employees have to provide legitimate reasons for the advances, and only the section head has to give consent before the final approval from the HR and Finance Department.
6. The recovery period should be done in full or in installments. Furthermore, the recovery period should not extend beyond 6 months.
7. Try to maintain a gap between two consecutive advances (at least a year) since there will be some employees who will always try to keep their advance accounts running for their advantage.
Rest the approval's judgment.
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Dear,
I do respect all the above-mentioned comments and would suggest you ask for testimonials before issuing the advance salary loan. There should not be any dues on employees before applying, and they can be given up to double their monthly gross salary. It should be paid back in equal installments, and one needs to understand that the employer is just adding another benefit to the employee's pocket. It is not a financial institution or bank.
Regards,
Vipin8)
From India, New Delhi
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I do respect all the above-mentioned comments and would suggest you ask for testimonials before issuing the advance salary loan. There should not be any dues on employees before applying, and they can be given up to double their monthly gross salary. It should be paid back in equal installments, and one needs to understand that the employer is just adding another benefit to the employee's pocket. It is not a financial institution or bank.
Regards,
Vipin8)
From India, New Delhi
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There has to be some responsibility on employees and line managers. I believe this is one motivational incentive given to employees. Employees should request through a formal application, which needs to get first approval from the manager, so he/she is also aware.
You have received lots of suggestions on periodicity and process.
Lastly, you need to look into finance department problems as well. Discuss with them and draft a policy accordingly. Suggest having a cap on how much amount can be given out as advances in a month. They need to manage company finances effectively.
From India, Delhi
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You have received lots of suggestions on periodicity and process.
Lastly, you need to look into finance department problems as well. Discuss with them and draft a policy accordingly. Suggest having a cap on how much amount can be given out as advances in a month. They need to manage company finances effectively.
From India, Delhi
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Tarun,
As you want to know about the deduction procedure, you can do the deduction on a monthly basis. For the same, you need to calculate the amount that should be loaned and how much should be deducted.
1) You need to continue the deduction until the loaned amount is fully repaid.
2) Employees are not allowed to leave the job until they have repaid the loan. If they have genuine issues and need to leave early, they must repay the amount in full at once. Until then, do not provide any documents or dues. This will benefit your company by ensuring employee stability.
Regarding the new policy you mentioned, it should be a voluntary process (informal process). This means that whoever wishes to join can participate in the society. It could be in the form of a lucky draw system and should be rotated, with one person unable to be selected until their loan is repaid, while others can continue. You should discuss this with your seniors and all employees during any event to gauge their interest. Forcibly deducting the salary for this practice is not advisable.
For any further queries, you can send an email or contact me via my Gmail.
Cheers!
Richuka
From India, New Delhi
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As you want to know about the deduction procedure, you can do the deduction on a monthly basis. For the same, you need to calculate the amount that should be loaned and how much should be deducted.
1) You need to continue the deduction until the loaned amount is fully repaid.
2) Employees are not allowed to leave the job until they have repaid the loan. If they have genuine issues and need to leave early, they must repay the amount in full at once. Until then, do not provide any documents or dues. This will benefit your company by ensuring employee stability.
Regarding the new policy you mentioned, it should be a voluntary process (informal process). This means that whoever wishes to join can participate in the society. It could be in the form of a lucky draw system and should be rotated, with one person unable to be selected until their loan is repaid, while others can continue. You should discuss this with your seniors and all employees during any event to gauge their interest. Forcibly deducting the salary for this practice is not advisable.
For any further queries, you can send an email or contact me via my Gmail.
Cheers!
Richuka
From India, New Delhi
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Hi, Can any one suggest me if an employees doesn’t receive the payment for almost three month what preventive action can be taken against the management
From India, Pune
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From India, Pune
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paise paise paise money money money money,,, what to do :sad::sad::sad::sad: this piece of paper got so much value :sad::sad::sad:
From India, Pune
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From India, Pune
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It appears we are mixing two issues. One is salary advance, and the other is a loan. We are discussing salary advance.
1- Salary advance means: an employee is entitled to his monthly remuneration at the end of each month (for the month he worked). Now, due to some urgent need, he intends to take that salary in advance.
2- A loan is an entirely different issue, and the company can grant him a loan based on his circumstances, which has nothing to do with the current salary. It is to be determined how he will repay it by installment or otherwise.
SALARY ADVANCE ISSUE: must be given after the 10th of every month so that the previous month's account may be closed. This salary advance should not exceed the monthly salary.
From Pakistan, Karachi
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1- Salary advance means: an employee is entitled to his monthly remuneration at the end of each month (for the month he worked). Now, due to some urgent need, he intends to take that salary in advance.
2- A loan is an entirely different issue, and the company can grant him a loan based on his circumstances, which has nothing to do with the current salary. It is to be determined how he will repay it by installment or otherwise.
SALARY ADVANCE ISSUE: must be given after the 10th of every month so that the previous month's account may be closed. This salary advance should not exceed the monthly salary.
From Pakistan, Karachi
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