Pay Adjustment

Posted in Human Resource Terms, Total Reads: 787

Definition: Pay Adjustment

A pay adjustment is said to happen when an employee’s salary undergoes a change/ amendment without a change in his/her position within the organization. There are namely two types of pay adjustments- General and Step.

General pay adjustments mean that the entire salary is increased or decreased .For instance, due to an increase in the cost of labor, there could be a government wide increase in the pay of government employees.

A second example would be that of pay adjustments due to a change in the geographical location of an employee. The locality pay is fixed by law and is dependent on the ‘cost of labor’ and not on the ‘cost of living’. The basic pay of the employee is fixed and the locality pay component is based on the employee’s grade.

 Step progressions refer to the improvement in the step of compensation of an employee. For  example if an employee is currently getting paid at step 7 in the salary range of that employee’s job position, he will now get compensated at step  6 of the salary range he is entitled to. This usually happens once a year on the event of exceptional performance by the employee. Poor performance could lead to cancellation of this progression.


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