Considering the entitled benefits of employees
An HR staff or an Admin staff or an Accountant when planning the salary of employees, the most difficult and complicated problem is due to lack of proper policy related to benefits.
Normally, employers are unclear about the “allowances payable” rather than the “entitled salary” to employees.
I am relating this incident so as to take note about the problems that occurred when planning the salary of employees. “Total Reward” will be discussed later.
Sometimes the source of such problems occur due to the hierarchical communication at the workplace.
Supposing an entrepreneur during the course of a meeting tells his manager: “I approve to pay an additional 30,000 Kyat monthly to our company employees; so please proceed accordingly”.
It was understood that this approval was in accordance with the allotted budget and the concerned Managers [HR, Finance or Administration] should proceed it accordingly.
However, as per the entrepreneur’s words, it was unclear and therefore considered as a bulk amount of 30,000 Kyat and later queries arose as follows:
- “if I take leave, will my salary be deducted or not?”
- “will my salary be deducted or not on holidays?”
- “will my monthly salary be divided by 30 days or 26 days?”
- “for unpaid leave, how will my salary be deducted?”
The same queries could also arise in the case of “Meal Allowance”; if it is unclear, it is considered as a bulk amount for lack of details where problems could occur.
The majority of the people asked me such questions:
- “will my entitled salary be divided by 30 days or 26 days?”
- “will I be paid or unpaid for the weekend?”
Such issues occur at the workplaces as entrepreneurs are often confused about deduction from the entitled salary - whether to divide by 30 days or by 26 days.
At some industries, it so happens that during the tenure of a certain manager, the deduction is done by dividing the entitled salary with 30 days. And when another manager comes, the mode of deduction is changed – the deduction is done by dividing the entitled salary with working days.
The employees whose entitled salary were deducted naturally are dissatisfied but unable to utter a word.
Hence, in order to solve and clarify these issues, such questions should be raised to the boss / Manager who had spoken without details. For example, when he said an additional 30,000 Kyat monthly, the purpose of this allowance should be understood; otherwise, you may need to ask him and note down the policy / procedure so as there will be no confusion at all.
Transportation allowance
Transportation allowance is usually paid to employees to bear the transport fares to/from the workplace/home. Since it is an additional support allowance, it is meant for working days only; that is daily travel expenses to/from the workplace/home to which an employee is entitled. The daily rate is suggested.
Meal Allowance
Let me talk about the case of a Group of Company:
When this Group of Company established their Head of Office, the kind-hearted boss set up a staff canteen at the office premises. His intention was to provide lunch for his employees on working days and to avoid them to prepare their lunch boxes early in the morning before coming to the workplace. From Monday through Friday, the menu is prepared daily in such a way that there is one different meat dish, one different vegetable dish, one sweet/sour soup and one dish of fish sauce accompanied by varieties of raw or boiled vegetables.
By and by the business of this Group of Company expanded and became a huge business Firm.
The Managing Directors being under the same Chairman (boss) of the Group of Company, tried their best to fulfill their Chairman’s desire as much as possible. However, when another subsidiary department was set up, it was impossible to set up a similar canteen and prepare food for its employees. Therefore, it was decided to include meal allowance in addition to their entitled salary. Meal allowance means lunch (one meal) is provided to employees on working days only at the workplace. In other words, lunch (one meal) is not provided on the days employees are not at the workplace. The employees were then dissatisfied as they got less meal & transport allowances especially during the month of April [prolonged holidays on account of Water Festival or Thingyan].
“Allowance means it is allowed and if it is allowed, deduction should not be made”. There lies the misunderstanding among the employees - the payment for one meal (lunch) is allowed on working days and is not allowed on non-working days. In other words, the deduction is made for that one meal (lunch) for those days. From the employee’s point of view, they consider that their allowances [transport & meal] are being deducted. And from the HR’s point of view, the allowance is deducted as the employee is absent from the workplace. HR staff should note carefully when using the word “allowance” and “deduction”
To elaborate the case of getting less allowances (meal & transport) during the month of April, employees are dissatisfied: in fact, they have to eat as well even though they do not need to go to their work. Hence, they prefer to be paid for 30 days’ meal allowance and not to be deducted. In such a case, an HR should be well versed and be able to clarify & handle the issue professionally.
On working days employees are satisfied to have their meal provided at the canteen but when they have to eat at their homes, they are dissatisfied! It’s simply because they have to spend out of their pockets for their meals; thus they feel aggrieved!
The question arises at such a business firm: if an employee takes a half-day leave, will the meal allowance be deducted for that half-day or for the whole day? As for me, I would not reply to this question since this issue should have been discussed initially. For example, if meal is provided at the canteen for the employees, will they be allowed to have their meal or not at the canteen when they take a half-day leave?
In view of the event mentioned above, a policy needs to be set for the Meal Allowance at the initial phase indicating proper procedures.
Transportation and Meal Allowances are considered additional allowances and if problems occur, they are not complicated so they could be solved. I would now like to discuss about the complicated issue:
When paying the salary, instead of additional allowances, it is disbursed in different portions; as such, the problems occur as for example - The salary is fixed with 15% for meal allowance and 5% for transportation allowance (at some business firms) –
For instance,
- an employee earning 300,000 [3 lakhs] per month, his/her basic pay is 240,000 [2 lakhs & forty thousand], his/her meal allowance is 45,000 [forty-five thousand] and his/her transportation allowance is 15,000 [fifteen thousand].
- an employee earning 2,000,000 [20 lakhs] per month, his/her basic pay is 1,600,000 [16 lakhs], his/her meal allowance is 300,000 [3 lakhs] and his/her transportation allowance is 100,000 [one lakh]
From this example, a layman could think that a person holding a higher position will consume more food than those earning less pay.
How are the allowances (meal & transportation) to be deducted from the employee’s salary? When an employee takes leave without pay or takes maternity leave, will the allowances (meal & transportation) be calculated for 30 days or 26 days?
In fact, it should be understood that allowances are added benefits to the salary of the employees. Consequently, rules & regulations should be fixed accordingly from the very beginning. Therefore, HR personnel should be knowledgeable of such cases that are likely to occur and solve them efficiently at the workplace.
I wish all HR personnel of all business firms not only to encounter any difficult problems but also to have a clear understanding of related policies & procedures.
Credit: Maw Maw Tun