11th BPS - What is Performance Linked Pay (PLP) Structure ? - 11th Bipartite Wage Revision - Latest News

Breaking

Post Top Ad

Enter Your Email & Get 11th Bipartite Updates Immediately:

Thursday, 29 August 2019

11th BPS - What is Performance Linked Pay (PLP) Structure ?

In recent meeting of 11th Bipartite wage revision for public sector bank employees, the Indian Bankers Association (IBA) has coined the Performance Linked Pay Structure (PLP) and insisted and advised to the Bankers' association to incorporate it to their charter of demand.

The performance linked pay structure will be based on many criteria like Return on Assets, Operating Profits, YoY growth etc. Many of the banks has advocated about the PLP.

Read - IBA Agreed on 10% Hike with Performance Linked Pay (PLP)

IBA detailed their proposal as under :

1. Category of Banks
2. Percentage Increase YoY in Operating Profit
3. Return on Assets (ROA)
4. Payout as Annual Increment on Establishment cost
5. IBA will payout as Maximum of 8.2% and Minimum of             1.4% as annual increment on Establishment cost.
6. The Annual increment will be paid addition to the existing        6% hike which would be fixed component.

What is Performance Linked Pay :

Take an example -  consider the Gross Salary as Rs 100 in Scale I with any of the Public Sector Bank. Gross salary includes Basic Pay, DA and HRA.

As per IBA offers of 10%  Fixed Hike in salary :

The salary after fixed hike will be : Rs 100 + Rs 10 = Rs 110 (No DA merging is considered yet)

The Gross Salary with Fixed hike of 10% will be paid after 11th Bipartite to all the employees irrespective of any criteria : Rs 110

Performance Based Annual Increment 

This is where IBA has twisted the 11th Bipartite Negotiation, as per IBA proposed complex formulae, all the banks are categorized on the baisis of performance components i.e. Return on Assets (ROA) and Profitability majorily.


As per offer given by IBA :

Category 'A' Bank :

All such banks which are having Return on Assets (ROA) greater than Zero and Percentage increase in YoY Operating Profit higher than 15%. 

The base year considered for the calculation is 31st March 2018.

Mandatory Criteria : 

Operating Profit : > 15%      |  ROA - >=0

Category 'B' Bank :

Similarly, for category B banks the criteria are :

Mandatory Criteria : 

Operating Profit : 7.1 - 15%  |  ROA - (-)0.24 - 0

Category 'C' Bank :

Similarly, for category C banks the criteria are :

Mandatory Criteria : 

Operating Profit : 0.01% - 7%  |  ROA - (-)0.75 - 0.25


Percentage of Increment Paid on Annual Basis


All such banks, which are having YoY Growth in Operating Profit/Net Profit higher than 15% with ROA of '0' and above will get the annual increment as 8.2% on Establishment cost of 30 days.

For e.g. Indian Bank having ROA as 0.53 with positive Net Profit. It will achieved both the criteria as on 31st March 2018 hence qualified for "AA" category.

The Annual increment offered to this bank as per new scheme will be 8.2% of 30 days establishment cost. 

What is an Establishment cost ?

This is the cost incurred on the staff expenses in general by the organization.

Hence these two Banks' employees will be paid '8.2%' on establishment expenses of average 30 days.

Formula Explains :

Suppose the Establishment expenses of Vijaya bank as on 31st March 2019 is Rs 100 and there are 50 employees in the Bank, in such case the 

Annual Increment with new formula will be  :
For e.g. in Indian Bank

Establishment Expenses For Year  : Rs 100

Establishment Expenses of 30 Days : 100/365*30 = 8.21

Increment for each employees : 8.21/50 = 0.16

Gross Salary of employees as on 31st March 2018 : Rs 100

Gross Salary with Annual Increment : Rs 100 + (Rs 100 X 0.16)  =  Rs  116 (Other than Fixed hike)

Annual Increment offered to each employees in "AA"category bank will be 0.16 factor. Similarly each of the bank will be classified and paid as per their categories.

We will uodate the details salary structure of all the banks based on ROA and profitability soon.

Subscribe to get the notifications at earliest !!!

No comments:

Post a Comment

Get 11th Bipartite Daily Updates, Enter your email address:

Followers

Post Top Ad