Performance Appraisal And Salary Revision Are The Same Or Different

Dear Friends,

Please answer my question: "Are Performance Appraisal and Salary Revision the same thing or different?"

Santosh M.

Both are different. Performance appraisal is held at regular intervals, wherein increments are linked to the performance of the employee concerned. Thus, performance appraisals are individual in nature. Salary revision is the result of wage fixation through collective bargaining by the union, usually after the expiry of the existing award or settlement on wage fixation. Therefore, salary revision is universal in nature and is linked to factors like cost of living and industry norms, etc.

B. Saikumar HR & Labour Law Advisor Mumbai

Performance appraisal is a process, while salary revision is the outcome of a performance appraisal. Both are key elements of a Performance Management System.

There are different reasons for salary revision:

1. Inflation-driven revision - given to match the cost of living.

2. Service increment - usually a flat % given across the whole company; non-performance related. Item 1 may fall into this category.

3. Market catch-up revision - it is determined that the current pay structure of the company is lagging behind the market/industry, so an additional component (on top of the service increment) is given to catch up with the market to be competitive.

4. Merit increment - an additional component (on top of the service increment) given to recognize above-average performing staff.

5. Probation revision - when a company has a probation policy that states a salary revision of a certain % or amount will be given if new hires successfully complete the stipulated probation period.

6. Promotion revision - when a company has a promotion policy that states a salary upgrade (from one grade to another) to recognize an enlargement of job scope.

Have a positive weekend.

Autumn Jane

Dear Elders,

Thank you for the information. I would be grateful if you could send me an ideal performance appraisal form for a fast-food restaurant company.

Best Regards,
John, KSA

We provide actuarial consultancy in the area of employee benefits, wherein compliance with the Accounting Standards of the Institutes of Chartered Accountants is applied. The most important institute in the Indian context is The Institute of Chartered Accountants of India. The relevant accounting standard applicable to accounting for employee benefits issued by The Institute of Chartered Accountants of India is Accounting Standard-15 (Revised 2005). Some of the important employee benefits involving actuarial treatment are:

- Gratuity
- Leave Encashment
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As the annual financial statements, such as the Balance Sheet and Profit/Loss Statement of your clients, are available for the close of the financial year as on the services we offer will be needed by you, and we will be happy to provide our services if needed. For further details, we request you to visit our website at www.mlsohiactuary.com.

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