Amanda Chua, Author at Omni HR

The Thai government announced their plans to increase the daily Thailand minimum wage to 400 baht. Thailand’s minimum wage was last increased in October 2022 and it was brought up to 328 – 354 baht in different areas.

This increase has brought about the need for employers to be informed on changes in minimum wage Thailand, restrictions around them, and the wage tiers their companies fall into.

In this guide, we’ll break down all you need to know as an employer about Thailand’s minimum wage.

What is the average salary in Thailand?

First, let’s talk about the average salary in Thailand.

The CEIC data reports updates monthly and it shows that the average salary in Thailand is around 14,793 baht per month as of March 2024. This payment includes a minimum of 13 paid public holidays and up to 30 days of sick leave.

Although when compared to other Southeast Asian countries, Thailand’s average salary is higher than Vietnam and Cambodia, but lower than Malaysia and Singapore. There is also a significant gap in income distribution as there are families earning less than 2,802 baht per month, which is below the poverty line.

The average salary in Thailand also varies across different states and industries within the country. Bangkok offers the highest average monthly income at around 19,000 baht and in other areas, the average salary ranges from 13,000 to 15,000 baht depending on the cost of living.

Who sets the Thailand minimum wage?

The Ministry of Labour has a committee in charge of Thailand’s minimum wage, those on this committee include representatives from the government, employers, and workers.

National wage committee

The national wage committee was set up to ensure pay equity and a fair living standard for employees while considering employers’ economic realities.

Its main duty is to assess the cost of living in Thailand, get feedback from employers, workers, and company stakeholders, use the information to propose new minimum wage rates, and then submit their proposals to the cabinet for approval.

Cabinet approval

The cabinet’s duties are to review the proposal submitted by the National Wage Committee and based on the justification that the minimum wage rates are fair and reasonable, they approve or reject the proposed rates. It’s also their responsibility to announce the new Thailand minimum wage rates.

What are the wage tiers for Thailand minimum wage?

There are 4 wage tiers in Thailand’s minimum wage system and the structure is categorized based on the development level and economic state of the regions.

This system is in place to ensure employees and workers are paid the right compensation that benefits their environment. Here’s a brief explanation of the four tiers:

Zone 1

Bangkok and its surrounding regions, such as Pathum Thani, Nonthaburi, Nakhon Pathom, Samut Prakan, and Samut Sakhon, are included in Zone 1. Thailand has the highest level of economic development and the highest cost of living because of their strong concentration of commercial and industrial businesses in these locations.

The Thailand minimum wage in this zone is at the highest to accommodate the expenses of the skilled workers.

Zone 2

The minimum wage Thailand for Zone 2 is slightly lower than for Zone 1. The regions in this tier are also known to house industrial and tourism companies which are also economically significant but they are not as widespread as in Zone 1. Provinces in this area include Phuket, Rayong, and Chonburi.

Zone 3

Zone 3 covers provinces in Thailand that are less economically developed compared to Zones 1 and 2 although these areas are still important in terms of regional commerce and agriculture. Thailand’s minimum wage in these places is at a moderate level, some of the regions in this zone are Khon Kaen and Chiang Mai.

Zone 4

Most of the regions present in Zone 4 are the rural and economically underdeveloped provinces, in the Northern parts of Thailand. The economic activity is primarily agriculture and living expenses are lower in this area. The minimum wage Thailand for this tier is the lowest among the four zones, reflecting the lower expenses associated with living in these regions.

What are the exclusions and variations on the Thailand minimum wage?

Thailand’s minimum wage rules and regulations were created to protect workers by ensuring fair compensation. However, specific exclusions and variations apply to different worker categories:

International workers

As an employer, international workers are not subjected to the same minimum wage regulations as local workers. Their compensation is usually higher and the wages are negotiated based on country of origin, experience, and demand for their skill set.

In this case, the Thailand minimum wage requirement can be superseded by mutually agreed-upon salaries that acknowledge the individual’s specialized skills and value to the organization involved.

Migrant workers

In Thailand, some migrant workers come from neighboring countries like Cambodia and they also have minimum wage laws that bind them. They are only entitled to the Thailand minimum wage if they are employed for at least one year full-time.

Part-time workers

For workers who work based on hours, their minimum wage is divided based on how long they worked and most times it may not include benefits and protections like health insurance and paid leave.

When hiring part-time workers, employers must calculate wages based on the actual hours worked, taking into account the flexible working schedules while ensuring they meet the minimum wage requirements.

Skilled workers

Thailand minimum wage for skilled workers is significantly above the minimum wage for others. This is because they consider expertise and qualifications.

According to the laws, the daily wage they get is between 465 and 700 baht, depending on the job. Even though the salaries paid by employers are negotiated individually because of the different skill sets and experience every individual has, some industries may also have standard wage scales or agreements for skilled positions.

How to calculate overtime for Thailand minimum wage?

Now that you know the different variations of the minimum wage Thailand, we’ll go into calculating overtime for Thailand minimum wage.

Standard work hours

The standard work hours for most companies are typically 8 hours per day cumulative to 48 hours of work in a week.

Any work done beyond these hours qualifies as overtime and an employee has the right to demand pay from their employer. If a worker works 10 hours on any day, the extra two hours are considered overtime.

Overtime pay rate

When it comes to overtime pay rate, a worker’s regular hourly wage is multiplied by 1.5 times the normal wage.

For example, Amara works 8 hours and earns 400 baht per day.

For an additional hour of work, she will receive 75 baht in overtime compensation.

Holiday and rest day overtime

For employees, working during holidays and rest days counts as overtime and employers are expected to pay them more when they work on these days.

For workers who work on such days, they will be paid twice their daily minimum wage and three times more if they work more than eight hours (which counts as overtime also).

What happens if an employee’s wage is less than Thailand minimum wage?

It is against the law to be paid less than the minimum wage Thailand. The Labour Protection Act of 1998 protects all workers, although people working with the state and government are excluded.

Employers must ensure that all employees receive fair and reasonable wages in accordance with the minimum wage Thailand to avoid violating regulations and potential legal consequences.

Penalties for Paying Below Thailand Minimum Wage

As employers, there are penalties you face if you pay employees or workers below the Thailand minimum wage. Here are some of them:

Financial penalties

There are financial consequences for employers that fail to pay their employees the expected Thailand minimum wage. As minimum wage Thailand is highly regulated by the government, violating the law can be subject to criminal penalties, which may include up to 100,000 baht in fines, six months in jail, or both depending on your cooperation.

Additional costs

Back wages and interest

Sometimes employers are required to pay back wages and interest to the employees. For example, if an employee was underpaid for several months, the employer would need to pay the difference and interest calculated over that period which is more loss for the company.

Legal fees

If the employee decides to take legal action, the employer will also incur legal fees and potential legal consequences.

Reputational damage

One of the important things employees consider before signing an offer letter is reputation. If an employer is known to pay below the Thailand minimum wage, it can substantially damage their reputation.

Potential business disruption

The risk of paying below Thailand minimum wage can be deeper than it looks. The time and resources spent rectifying the deed and sorting legal issues can severely impact operations and disrupt company growth.

As management is forced to handle the situation, it can impact overall productivity and employee morale.This is why employers should abide by regulations and ensure that all their employees receive fair minimum wage.

Effortless Thailand Minimum Wage Compliance

Understanding and managing Thailand’s minimum wage requires careful attention to region and salary tier variations. That’s why it’s important to pick the right HR tool and strategy to make the whole process less overwhelming.

Omni’s suite of modules simplifies the task of managing minimum wage Thailand. Through a secure and centralized employee database, HR teams can quickly access accurate employment contracts and necessary documents for calculating minimum wage adjustments.

Omni provides a comprehensive payroll solution tailored to Thailand specific requirements. With features like support for Thai baht and automated tax calculations, Omni enables HR teams to streamline their payroll processing and ensure compliance with varying minimum wage Thailand requirements across the region.

Start your 14 day free trial today!

Book a demo with our team to learn how our automation can help you remain compliant and reduce your administrative workload for all of your People management needs.

A compensation system goes beyond just salaries and wages. Providing additional benefits is considered best practice as it can enhance employee satisfaction, motivation, and employee retention. One such category of benefits is de minimis fringe benefits, which are small perks provided to employees that are exempt from taxation due to their minimal value.

This article provides Philippine employers with all the essential information about de minimis fringe benefits, including their advantages, tax implications, and examples of common perks.

What are de minimis fringe benefits?

De minimis fringe benefits are a form of employee perks that are tax-free and provided by Philippine employers as a way to support the welfare of their employees.

They are provided on an occasional basis and held in little value that it would be difficult to track and tax these benefits.

Employers are not legally mandated to provide these non-taxable benefits. It can be done on a voluntary basis as a way to drive employee performance and boost engagement in the workplace.

However, the Bureau of Inland Revenue (BIR) has outlined various laws and regulations that must be followed for employers who choose to support their workforce with these benefits.

The legal basis for de minimis benefits in the Philippines can be found in section 33 [c] of the National Internal Revenue Code (NIRC).

It is important for employers to navigate these laws carefully to ensure compliance and mitigate potential lawsuits.

Examples of de minimis benefits include movie tickets, catered lunches, break room snacks, t-shirts, coffee cups, and similar items.

Relevant reading: The Employer’s Guide to Labor Codes in the Philippines

What is the difference between fringe benefits and de minimis fringe benefits?

Fringe benefits are quite similar to de minimis benefits except that fringe benefits typically provide substantial and tangible value to employees and are often subject to taxation, whereas de minimis fringe benefits are minimal in value, provided infrequently, and are usually exempt from taxation due to their insignificant value.

Fringe benefits are taxed at a 35% rate while de minimis benefits remain tax-free as long as it doesn’t exceed the limits prescribed by BIR.

Examples of fringe benefits included in an employees benefits package include retirement plans, employee stock options, health insurance, child care assistance, wellness programs, etc.

Read next: HR’s Guide to Fringe Benefits

What are the examples of de minimis fringe benefits?

Under the Revenue Regulations No. 11-2018, the BIR has outlined 11 types of non taxable de minimis fringe benefits:

Monetized unused vacation leave that doesn’t exceed 10 during the year for private employees.
Monetized unused vacation and sick leaves for government officials and employees.
Generous employer giving medical cash allowance to dependent employees that doesn’t exceed ₱ 1,500 per semester or ₱ 250 per month.
Rice subsidy of ₱ 2,00 or one sack of 50kg rice amounting to not more than ₱ 2,000 per month.
Uniform and clothing allowance not exceeding ₱ 6,000 per month.
In case an unfortunate event happens, the actual medical assistance provided by the employer not exceeding ₱ 10,000 is considered to be de minimis as well.
Laundry allowance that doesn’t exceed ₱ 300 per month is also part of de minimis fringe benefits.
If you are an outstanding employee who receives an award and non-cash tangible personal property valued at less than ₱ 10,000, you will enjoy tax-free benefits.
Gifts given during Christmas and major anniversary celebrations not exceeding ₱ 5,000 per employee per annum.
Another non taxable de minimis fringe benefits would be daily meal allowances for employees who work overtime or in a graveyard shift. The allowance shouldn’t exceed 25% of the basic minimum wage on a per region basis.
Benefits received by an employee under a collective bargaining agreement (CBA) and productivity incentive schemes combined not exceeding ₱ 10,000 per employee per taxable year is also a part of the non-taxable compensation.

It is important to note that all other benefits not listed above shall not be considered as de minimis benefits and therefore are subject to income tax and withholding tax on compensation income.

What benefits are not considered de minimis fringe benefits?

In the Philippines, benefits that do not qualify as de minimis fringe benefits typically include those that exceed specified limits or do not fall within the categories defined by the Bureau of Internal Revenue. Here are some benefits that are generally not considered de minimis fringe benefits:

De minimis fringe benefits are subject to specific monetary limits set by the BIR. If cash allowances for medical, rice subsidy, or uniform/clothing exceed these limits, they are no longer considered minimal in value and therefore do not qualify as de minimis fringe benefits.
Transportation assistance such as the use of company cars that doesn’t also exceed the de minimis threshold.
Free membership in clubs or gyms that doesn’t exceed its de minimis limits.
Regular bonuses, performance incentives, and other significant monetary rewards are not de minimis.
Tuition fees or substantial educational allowance involve significant financial support. These benefits are considerable in value and often ongoing, which makes them ineligible as de minimis fringe benefits.
Gifts, prizes or awards of substantial value are also not considered as de minimis fringe benefits.
Housing and regular transportation allowance are provided on a frequent basis and have substantial value. This disqualifies them from being de minimis.
Bonuses and performance incentives are typically substantial in amount and intended as significant rewards for employee performance. They are not considered minor or infrequent and thus do not meet the criteria for de minimis benefits.

What are the tax implications of de minimis fringe benefits?

In the Philippines, the tax implications of de minimis fringe benefits are governed by the Bureau of Internal Revenue regulations. Here’s how they are treated:

For employees

De minimis benefits are not subject to federal taxes, therefore employees don’t have to include them as part of their taxable income. There is also no filing process required as these benefits are automatically exempt from taxation due to their minimal value and infrequent nature. This means that employees receive these small perks without any additional tax burden or the need to report them separately on their tax returns, simplifying their financial and tax management.

Additional reading: Preparing for ITR Philippines

For employers

Employers typically need to withhold income taxes from employees’ wages and report these amounts to the tax authorities. However, because de minimis fringe benefits are exempt from taxation, employers do not need to withhold any income taxes on these specific benefits. This simplifies the payroll process and reduces administrative burden associated with employee compensation.

They must ensure that the benefits provided comply with BIR Revenue Regulations No. 3-98 and any subsequent amendments. These regulations specify the types and limits of de minimis benefits that qualify for tax exemption.

Also for compliance purposes, employers should maintain accurate records of all de minimis benefits provided.

Overall, de minimis fringe benefits offer tax advantages for both employees and employers, making them an attractive option for providing employee perks.

Learn more: HR’s Guide to Payroll Taxes in the Philippines

What are the advantages of offering de minimis fringe benefits?

Here are the various ways employees and employers can be impacted by de minimis fringe benefits:

For employees

Boost employee morale and engagement

Employees are happier and more engaged with their work when they receive small perks. These de minimis benefits, such as free coffee, small holiday gifts, occasional free meals, or recognition awards, make employees feel appreciated and valued.

Enhanced company culture

De minimis benefits help create a positive and supportive work environment, making employees feel more connected and valued. The care and attention received from employers help build a sense of community and belonging among employees.

Improved productivity

Offering de minimis benefits can be used as a tool to facilitate employee performance and productivity. With highly motivated and productive employees, companies can achieve their goals more efficiently. For example, when an employee receives a monthly medical allowance of ₱ 250, it not only helps them manage minor health expenses but also demonstrates that the company cares about their well-being. This appreciation translates into higher morale and motivation, leading to increased efficiency and focus on their tasks. As a result, the overall productivity of the company improves, enabling it to meet deadlines, enhance customer satisfaction, and ultimately achieve its business objectives more effectively.

For employers

Cost effective way to reward employees

Small businesses or startups on a tight budget that are looking for a low-cost yet impactful way to reward their employees should consider de minimis benefits as part of their benefits package.

This is because these benefits are of minimal financial value, making them relatively inconsequential to both the employer and the employee. The cost of providing and accounting for them is often negligible.

Attract and retain top talent

De minimis as a form of additional perks can become a part of a company’s offerings which makes it more attractive to potential hires.

Employees can increase job satisfaction and retain current employees by customizing their de minimis benefits package to fit their preferences and needs. For example, offering options such as a monthly rice subsidy, small holiday gifts, occasional free meals, or transportation reimbursements can make employees feel valued and cared for.

Tailoring these benefits to individual preferences not only shows that the company is attentive to their needs but also enhances their overall work experience, leading to increased loyalty.

Read next: 24 Creative New Employee Welcome Kit Ideas

Reduced absenteeism

Absenteeism has a significant impact on the Philippines workforce, with companies often facing decreased productivity and increased operational costs.

A way for employers to address this issue is by offering support to their employees through small perks such as free snacks, occasional paid time off for personal errands, or small wellness benefits.

Employees who feel valued and appreciated are more likely to have higher attendance and lower absenteeism rates. This contributes to a productive and consistent work environment.

Unlock the Power of Benefits with Omni

Employee engagement affects every aspect of your organization, from culture to morale, productivity to innovation, investing in your employees by providing de minimis fringe benefits is a sure fire way to improve your business functions and drive growth.

It is clear that de minimis benefits enable businesses to attract, recruit, motivate and retain highly skilled employees. It also results in increased employee satisfaction and loyalty, thereby reducing attrition rates. Omni gives you the tools and resources you need to build a well-organized, engaged workforce and effectively implement your fringe benefits programs.

Omni streamlines not just your de minimis fringe benefits efforts but also automates time-consuming and repetitive tasks, and frees up your valuable time and energy so you can focus on what really matters — strategically engaging and nurturing your team.

Omni’s time off management capabilities help managers and HR teams swiftly navigate employee leave management. Omni’s platform allows you to approve leave applications on the go and keep track of who’s in and out of the office with at-a-glance scheduling.

Our employee self-service portal empowers employees to submit their time off requests, which automatically routes to the appropriate manager thanks to customizable approval workflows. With automated calculations, employees and managers can easily view leave balances in real-time, and track how many vacation days they have left without having to go through HR.

Book a demo with our team today!

Want to boost employee engagement? Download our free HR Calendar 2024 for more inspiration!

Bias when it comes to employee performance in the workplace is constantly being tackled by company management, when done right employee’s can get more productive and motivated with efficient performance reviews.

To ensure every employee gets fair and objective comments for their works, it’s best to perform a performance review calibration as it assures consistent standards and criterias are being used when evaluating performances.

In this article, we’ll be discussing what you stand to gain with performance review calibration and how you can effectively implement it for your teams.

What is a performance review calibration?

Performance review calibration involves the steps and actions done to ensure that employee performance evaluations are accurate, uniform, and fair in a company.

This calibration is done for every employee to be evaluated using the same metrics and criteria. During the process, team leaders and managers gather to compare their assessments, while also exchanging viewpoints and thoughts to create a shared knowledge of each employee’s performance.

After reviews are gathered, calibration talks usually take place so managers can update and align their rankings with the uniform rating standard.

Read next: A Guide to Mastering Performance Management

Why is performance review calibration important?

After knowing what the performance review calibration entails, why is it important to teams? Performance calibration is necessary because no matter how data-driven your evaluation process may be, the team leads and managers can be subject to unconscious bias.

Organizations use it to promote employee trust, achieve corporate success, and lower legal risks related to unfair or inconsistent evaluations.

It’s also important to encourage a transparent and accountable company culture that prompts managers to hone their assessment abilities while matching talent development to organizational requirements.

Performance review calibration can help employees have access to clear expectations, receive reliable feedback, and be evaluated on general grounds.

When a company prioritizes calibration it shows that it cares about the success and advancement of its employees, which in turn produces a workforce that is more engaged, driven, and productive.

Additional reading: 5 Common Performance Appraisal Mistakes to Avoid

What are the benefits of a performance review calibration?

Performance review calibration has many benefits that improve the evaluation process, contribute to a fair and equitable work environment, and drive performance results. Here are some benefits you should see:

Reduce bias

Practicing performance review calibration can help remove any personal biases and stereotypes that can influence evaluations. The team leads and managers are enjoined to focus on objective criteria, ensuring that evaluations are fair and unbiased.

Standardize evaluations

The standardization of evaluation enables fair comparisons and informed decisions when it comes to employee performance. It also ensures consistency in evaluation criteria and standards across the organization irrespective of the teams involved.

Fairness and equity

Fairness and equity in the workplace are some of the core company cultures organizations try to build. Doing performance review calibration can help to promote fair and equitable treatment of all employees, regardless of demographics or backgrounds, and eliminate every form of discrimination.

Read next: The Pay Parity Guide for HR

Improve credibility

The credibility of every organization hinges on a lot of internal factors and performance review is a part of them. When a company demonstrates a commitment to ensuring employees are well-evaluated, their credibility can also get better.

What are the performance review calibration methods?

They are simply methods that can be used to practice performance review calibration for teams. Here are some of the calibration methods:

Anchoring

For this method, performance review calibration is done by using a benchmark or “anchor” to evaluate employee performance. The benchmark could be a high-performing employee, a specific project, or a certain metric.

In this method, you can also establish a rating system by adopting or adapting existing scales, such as Behaviorally Anchored Rating Scales (BARS) or numerical scales like binary or Likert scales.

BARS evaluate specific job-related behaviors to minimize bias, while numerical scales assess performance on a spectrum. Whichever one suits your organization, apply it consistently to ensure fairness and accuracy in employee evaluations.

For example, the anchor for your marketing team’s performance can be a top-performing campaign, this is used to evaluate the performance of every other campaign making sure that they are all considered on uniform levels.

Forced distribution

In this performance review calibration method, managers are forced to place employees into a bell-curve distribution; it’s like a distinct performance bracket, typically ranging from poor to excellent. Theoretically, a fixed percentage of employees fall into each bracket.

The goal of this calibration is often to:

Identify and develop high-potential employees
Recognize and reward top performers
Address and improve low performing employees

Forced distribution is often coined as controversial and as some companies think it may lead to creating a culture of competition, it can be harmful to teamwork and collaboration within the workplace.

Learn more: The 4 Pitfalls To Avoid When Conducting Performance Reviews For The First Time

Rank order calibration

Using this method involves ranking employees in order of their performance, from highest to lowest, without using a specific distribution or anchor. This performance review calibration approach focuses on relative performance, where employees are evaluated compared to their peers.

Here’s a brief rundown of how it works:

You gather a group of managers or team leads to evaluate employee performance.
Ask each of them to rank the employees in order of their performance, without assigning specific scores or ratings.
You then proceed to combine the rankings from all of them to create a master list, which shows the relative ranking of each employee.
This collective ranking is then used to identify top performers, average performers, and underperformers.
You can also adjust the ranking as needed, based on discussions and consensus among the team leads and managers.

How to perform an effective performance review calibration?

Now it’s time for the heavy lifting, how can you do an effective performance review calibration for your team? We’ve got you covered by breaking it into 3 major steps.

Preparation

This is done before performance review calibration. You should define your objectives, review performance criteria, and collect relevant performance data. This preparatory phase sets the stage for a productive performance review calibration meeting ensuring everyone involved in rating is on the same page.

1. Define calibration objectives

Clearly state your goals for the calibration process. Is the goal to increase accuracy, decrease bias, or improve the consistency of the review? Defining the specific goals and objectives can aid in keeping direction and concentration.

2. Review performance criteria

You should ensure the performance review calibration criteria are understood by the managers and team leads. Reviewing this will ensure that employees are being evaluated using the same criteria.

3. Collect relevant data

Then you compile all relevant performance information such as employee accomplishments, feedback, comments, and assessments. The basis for talks about calibration will be dependent on the information retrieved.

4. Complete initial performance evaluations

Managers and team leads should also be strict about completing initial performance evaluations based on the collected data. This can help to remove unnecessary bias and promote the evaluation based on employee performance.

Calibration Meeting

This is the major phase of the performance review calibration. You can proceed to schedule a meeting with all managers and team leads to discuss and finalize the performance evaluations.

1. Present initial performance ratings

You can start by sharing the initial ratings to spring up a discussion in the meeting. This is also helpful for first-time managers who haven’t been involved in former performance ratings.

2. Facilitate group discussion

Once the discussion gets started, you can then begin to address discrepancies, biases, and concerns with the calibration. You want to make sure everyone involved states their opinion and agrees so the reason for the evaluation won’t be defeated.

3. Perform rating adjustments

As soon as you’ve been able to reach a consensus, you can begin to adjust the performance ratings concluded from the discussion.

Post Calibration

These are the things that need to be done after the performance review calibration is completed

1. Finalize ratings

Make sure you confirm and finalize performance ratings, they must accurately reflect employee performance without bias.

2. Document the calibration process

You should keep a record of the calibration process and this can include objectives, discussions, and outcomes. You can later use this to track the progress of the calibration and identify more areas for improvement.

3. Communicate outcomes clearly

Also, you should share performance evaluation outcomes with employees, the calibration is done for them and they should be able to provide feedback and know on what grounds they get evaluated.

4. Regularly review the calibration process

The last step you should incorporate is to schedule regular reviews of the calibration process to ensure it remains effective and fair. Adjustments may be needed as your company grows and it’s important to maintain a reliable performance evaluation system.

What are the best practices for performance review calibration?

You should know by now that performance review calibration is a big deal for companies who are looking to get better with employee performance. To get it right, follow these best practices:

Conduct sessions in a neutral environment

You should pick a neutral location where all participants feel comfortable and unbiased to do the calibration sessions.

Ensure you avoid locations that may give one manager or team lead an advantage over others. Doing your discussion in a neutral environment encourages open discussion and a collaborative atmosphere.

Consider having a trained facilitator

If you’re just getting started with this process, you can also consider hiring a trained facilitator who understands performance review calibration and can manage the discussion effectively. They can make sure the session stays focused, objective, and productive.

Base discussion on objective data

It’s also best to ensure the discussion is based on objective performance data, such as metrics, goals, and feedback. This data is like the evidence to support evaluation decisions, reducing bias and subjective opinions. All participants should have access to the same data to produce a fair discussion and conclusion.

Ensure clear communication

When it involves the matter of employee performance, there should be open and clear communication among all participants. The managers and team leads should feel comfortable sharing their perspectives, concerns, and questions about the process.

Achieving Consistent Evaluations with Omni

Implementing performance review calibration into your performance management strategy is an impactful effort towards team effectiveness.

Leveraging automation allows you to streamline your processes while gaining actionable insights for continuous improvement and team effectiveness.Through leveraging the power of automation, Omni allows HR teams and managers access to performance data that drives targeted approaches to swiftly addressing performance gaps and fostering growth within your organization. Our comprehensive and highly customizable performance review capabilities arm your team with the tools necessary to maintain regular performance analysis, and keep employees informed and motivated year round.

Book a demo with our team to learn more about how Omni can improve your performance management and help address performance gaps to foster a culture of continuous growth.

Start your 14 day free trial today!

For more support in your performance management journey, download our free Ultimate Performance Review Template and get started on improving your team performance today.

The Expedia 2023 report suggests that there’s work to be done for annual leave management and regulation, which is where an annual leave planner comes in to play. The report found that Asia Pacific’s ratio between vacation days used to vacation days allotted in 2022 is:

Hong Kong: 25.5 days vs 21.5 days
Australia: 18 days vs 21.5 days
Singapore: 14.5 days vs 17 days

Based on these insights, Singapore has one of the lowest rates when it comes to applying for leave, whereas Hong Kong has the highest rate, taking four extra leave days on average. This guide will introduce you to the concept of an annual leave planner, and we’ll also provide you with a free downloadable template to get you started.

What is an annual leave planner?

A staff annual leave planner or staff holiday planner is a tool that many companies use to manage annual leave entitlement. In essence, it provides a rundown of the approved time off and employee absences, and also enables HR teams to efficiently manage manpower.

This management tool may be a HR software or a manual one (like Excel spreadsheets). It all depends on the size and nature of your business.

What are the benefits of using an annual leave planner?

Understanding the value of a staff annual leave planner will help you evaluate the efficacy of implementing this tool and see its effects on your daily processes. Here are the main benefits of using one:

Increase efficiency

With a staff annual leave planner, you can have a more efficient employee leave management. Streamlined leave management systems empower employees to manage their own time off, reducing administrative burden.

Additionally, a leave planner that tracks all employees’ time offs from one department allows team members to know who’s leaving when, making it easier to coordinate handover tasks, increasing efficiency. This is especially needed during festive seasons when many employees may apply for annual leave.

Read next: HR’s Out of Office Checklist

Reduce absenteeism

If your company has high levels of absenteeism, a leave management tool like a staff annual leave planner can serve as a central database, offering you data-driven evaluations. The absentee rate classifies time offs according to their types and tells you how many days each employee is absent.

By analyzing employees’ time offs according to leave types, you can identify absence patterns and employees who have this problem. For example, the annual leave planner can reveal which employees call in sick often, and you can use the planner to demonstrate their remaining paid sick leaves for them.

Foster a culture of fairness

A staff annual leave planner promotes fairness in the workplace. It ensures consistency in the implementation of leave policies for all employees. This is especially important in big corporations with various departments where it can be difficult to ensure that all managers are fair otherwise.

Boost employee morale and engagement

How can an annual leave planner boost your employee morale and engagement levels? The staff annual leave planner informs employees about their remaining PTOs. This way, they can use them reasonably and return refreshed, energized, and motivated to work.

Another perk of having a solid tracking tool is the communication and valuable analytics, which can help you assess employee engagement levels. To illustrate, you can note when employees aren’t using their time off and are at a risk of burnout. In turn, this promotes an engaging company culture.

What are the types of staff annual leave planner?

You should choose one of the two main types of leave planners according to your company’s type, size, and budget as follows:

Manual spreadsheets

One of the easiest ways to start is using an Excel spreadsheet as your staff annual leave planner. You can build it from scratch or use a free downloadable template like ours and build upon it!

Once that’s done, you can use it to store and organize your data. You’ll need to enter your employees’ leave data and categorize their holidays based on leave types manually. With each employee time off request, you’ll need to approve, file requests, and update the data.

Naturally, manual spreadsheets are prone to errors and are time-consuming. A single incorrect formula can create a pattern of mistakes in annual leave records. Also, they increase the chances of a missed leave request, as your employees may use email or verbally submit their requests (instead of entering them directly into the system).

Another point is that spreadsheets are for data storage. They don’t highlight important and deeper issues (like absenteeism), so you’ll need to manually run reports for that. You also have to manually cross-check various spreadsheets for workforce planning purposes while employees are absent.

Leave management software

An HR software that acts as a staff annual leave planner takes the stress out of the equation. Leave management systems can be cloud-based and easy to access with mobile apps and push notifications.

You can set quotas for each day and see how many hours are booked. The system automates the approval, filing, and tracking process, adding the annual leaves to your leave planner within seconds for you and everyone to see. Also, some HR software allows you to lock certain days with high workloads or multiple leaves in order to ensure operational efficiency.

With a staff annual leave planner software, you can notice attendance and absence trends, act proactively, and adjust policies and procedures to improve welfare and avoid performance drops. You can also have an error-free tracking system.

Factors to Consider When Choosing Your Annual Leave Planner

Ask yourself the following questions when choosing the staff annual leave planner system in order to ensure it accommodates your business needs.

1. How big is your company?

Manual spreadsheets (like our free downloadable template) make sense for small and medium-sized enterprises. After all, tracking net leave balances for a relatively small staff won’t be much of a hassle.

Otherwise, a staff annual leave planner software system is more equipped for large businesses. It automatically tracks leaves for employees and eliminates the chances of error. If you subscribe to one, make sure the software is built to support teams of your company’s size, and is able to expand as you go.

2. Do you have any budget constraints?

Creating a staff annual leave planner using a free spreadsheet template like ours is always an option if you have a small budget.

However, if you have a bigger budget, we recommend you look at staff annual leave software subscriptions. They may cost as little as $3 per employee and as much as $5 per employee and more each month. With some vendors, you’ll need to request a quote to get informed about their pricing.

3. Are your leave policies complex?

If your leave policies are complex, a manual spreadsheet might mean that you need to spend a lot of time approving and filing leave requests while sifting through your leave policies to ensure everything is in check.

Instead, an annual leave planner software can automate these processes. It can process and file these leave requests while adhering to mandated regulations and company policies. Software providers may also offer regulatory compliance to ensure your policies align with labor laws.

4. Do you require a high level of customization?

If your organization offers leaves that are not the typical ones (such as PTO and off in lieu), you may want to find an annual leave planner that allows for customization.

So, if you’re working with a ready-made planner template, you might have to make a lot of changes to it before it can be used beneficially. Therefore, it would be wise to invest in a staff annual leave planner software with customizable features to suit your unique needs.

5. How will you communicate it to your employees?

How will you communicate leave policies and leave balances to your employees? Are you going to use a spreadsheet as a staff annual leave planner? If so, how will employees access their leave data? Otherwise, you might need a software system with an internal communication tool for remote teams.

6. Does it adhere to data security standards?

Security is a no-brainer when it comes to sensitive employee information. Consider whether the staff annual leave planner that you are implementing adheres to local data laws and your organization’s data security standards.

It’s crucial to choose a staff annual leave planner that keeps your employee data secure. This can include encryption technology, storing it on secure servers, and offering access controls to permit authorized access.

Relevant reading: Employee Data Management: How HRIS Can Help Achieve Accuracy and Security

Implementing an Annual Leave Planner (with Template)

Now that we’ve established important considerations, here are some steps to guide you in choosing and implementing your preferred leave planner and maximizing its benefits.

1. Define your needs

How many employees do you need to track annual leave data for? Do you need customization options? Perhaps you want to add sabbaticals or training as a leave type. Maybe you want a maximum absence rule for your customer support team that’s lower than other departments. These considerations are important when it comes to establishing your annual leave planner.

2. Choose your planner

After understanding your needs, the next step is to choose a planner that ticks all your boxes and is easily accessible. Find a suitable annual leave planner software option that supports businesses like yours, or you can create your own spreadsheet tracker.

If you’re not too sure where to begin, our free annual leave planner template is a great place to start!

Download our Annual Leave Planner template now!

3. Set up your planner

Once you’ve established your annual leave planner, the next step is to populate and import relevant data. These include employee data, leave policies, and leave types.

For example, you might enter the data for your staff of 50 employees and attach company leave policies for easy access. This could be something along the lines where “no more than 15% of any department can take leave at the same time.”

4. Communicate and train

With the planner up and ready to go, it’s time to communicate the new planner with your employees. It’s important to store the planner in a secure but easily accessible location, such as the company’s intranet.

Make a company-wide email announcement about the planner, and hold an education session for it. Finally, train your managers in your leave policies and how to use the planner so that they can educate employees about them.

5. Implement and monitor

Finally, you can implement the staff annual leave planner and track leaves with the system. If you opt for our free template, it is best practice to regularly monitor the data to ensure that it’s accurate and updated, while also making changes to ensure the leave planner can adapt to your business’ evolving needs.

Maximize the Benefits of Leave Management with Omni

Leave management systems offer a practical solution to reducing administrative work and streamlining People management processes.

Our employee self-service portal empowers employees to submit their time off requests, which automatically routes to the appropriate manager thanks to customizable approval workflows. Our user-friendly mobile application further simplifies the process, allowing employees to apply for time off requests on the go.

For further leave management ease, Omni seamlessly integrates with common work tools such as Slack, enabling managers to manage time off approvals with a simple push of a button. With automated calculations, employees and managers can easily view leave balances in real-time, and track how many vacation days they have left without having to go through HR.

Our localized solutions and inter-connected system integrates your leave management efforts with payroll processing, facilitating automatic, accurate calculations and compliance with local regulations for various regions.

Book a demo with our team today and we’ll walk you through our platform’s capabilities and demonstrate how Omni can transform your leave management processes, saving you time, reducing administrative burdens, and enhancing overall efficiency.

Not ready for automation yet?

Download our Annual Leave Planner template now!

Backed by the Malaysian Employment Act, workers in Malaysia enjoy legal benefits that protect them during employment and unemployment. The Employment Insurance System (EIS) contribution is one of these benefits.

Like any other employment regulation, it has its requirements and processes that every employer must follow while ensuring their employees do the same. As an employer looking to grow your business legally, you must understand the financial implications of the EIS contribution. Failure to comply could result in a penalty.

Hence, this article aims to answer all your questions concerning the EIS scheme. From knowing how to determine eligible employees to understanding the contribution rate, this piece will help you navigate the EIS for proper implementation.

What is the Employment Insurance System (EIS)?

The Employment Insurance System (EIS) is a Malaysian scheme that provides financial assistance to employees who have lost their jobs. Its main aim is to serve as a makeshift source of income for retrenched employees until they find another job.

It was established on 1 January 2018 and is managed by the governmental organization Pertubuhan Keselamatan Sosial (PERKESO), also known as the Social Security Organization (SOCSO).

This monetary support is funded by monthly contributions from employers and employees. Benefits include allowances for training and job hunting. The scheme also provides additional support, such as career counseling and job matching, so retrenched employees can find another source of income faster.

The EIS scheme is a crucial part of Malaysia’s social security framework. It provides a cushion for retrenched employees and promotes economic stability and adequate welfare in the workforce.

Who qualifies for EIS contribution?

The Employment Insurance System Act 2017 (Act 800) stipulates the requirements to qualify for an EIS contribution.

Generally, eligible workers who qualify are:

Malaysian citizens, whether permanent or temporary residents.
Employees aged 18 – 60
Those who work in the private sector on a full or part-time basis
Those who contribute towards their EIS monthly
Retrenched workers

However, while the EIS contribution covers all working Malaysian citizens, some categories of employees are exempted from this scheme.

They include:

Domestic employees
Civil servants
Employees in local authorities and statutory bodies
Self-employed employees
Employees aged 57 and above who have never contributed to the Employment Insurance System. They’re also not required to contribute.
Employees who have reached the compulsory retirement age.
Workers whose fixed-term contract has expired without renewal.
Employees fired for disciplinary reasons out of misconduct.
Workers who resigned voluntarily.

Also, not all job losses are eligible for the EIS contribution. The categories of employment loss that qualifies for the Employment Insurance System in Malaysia are:

The usual retrenchment or redundancy
Voluntary/Mutual separation scheme (VSS/MSS)
Constructive dismissal
Company closure due to natural disasters or bankruptcy
Resignation due to sexual harassment, threats, or being ordered to carry out harmful duties that aren’t within the job scope

On the other hand, the kinds of employment loss that do not qualify for the Malaysian EIS are:

Dismissal due to employee misconduct
Voluntary resignation
Retirement
Unconditional termination or expiry of a fixed-term contract

Who is responsible for EIS contributions?

In Malaysia, all employers and employees must contribute to the EIS scheme, whether full-time, part-time, or contract. However, the employer is responsible for remitting the contribution to PERKOSO.

After registering your business and employees with SOCSO to participate in the EIS, deduct the contribution from your salary and employees’ salaries. Then, pay them all to SOCSO regularly.

Similarly, employees should contribute a certain percentage of their income to the EIS scheme. They should also give their employers accurate and up-to-date information to ensure their correct results when calculating contributions.

How to Pay for Employees’ EIS

Submit your company’s EIS contribution to Perkoso via the PERKOSO Assist portal. To do this:

Log in to the Assist Portal.
Click on My Sites and choose EIS-Contribution to generate an Electronic Challan cum Return (ECR).
Select Employer Contribution, and when it drops down, click on Add Contribution (Text file).
Click on the Text file, upload your EIS file, then submit it.

Once you’ve uploaded and submitted your file, complete your payment via any of these ways:

Internet banking.
Financial Process Exchange (FPX)
Direct Debit Authorisation (DDA)
Submit a money order, cheque, or postal order payable to PERKESO. The order or cheque should have your name, Employer Code, and the month and year of contribution written on the back.
Remit via your bank portal or counter with your ACR reference. Maybank, RHB Bank, and Public Bank are banks approved by PERKESO as collection agents.
Prihatin mobile app

Be sure to submit your employees’ EIS contributions by the 15th of the following month to avoid penalties. Defaulting employers may be prosecuted and punished with imprisonment for a term that may extend to two years and/or with a fine of not more than RM10,000.

What is the EIS contribution rate?

On 1 September 2022, the EIS contribution rate was capped at an insured salary of RM 5,000 monthly. This is in line with the increase of the Wage Ceiling Limit for Act 4 and Act 800 of the EIS scheme in Malaysia. Per the act, the EIS contribution rate is divided into two:

For employer

Employers should pay a total contribution of 0.4% per month. That is, 0.2% of their salary and their employees’ salary. For instance, when wages exceed RM4,000 but don’t exceed RM4,100, employees and employers will contribute RM8.10 each, making it a total of RM16.20.

For employees

Employees should also contribute 0.2% of their hourly, daily, or monthly wages to the Employment Insurance System.

However, not all income categories are subject to EIS contribution. According to PERKESO, the employees can contribute from wages, overtime, commissions, service charges, allowances and incentives, and leave emoluments.

The categories exempted from EIS contribution are travel allowance, Employee Provident Fund (EPF) contributions, expenses claim, gratuity or payment for dismissal, benefit in kind, and bonuses.

Read next: Your Guide to Malaysia Payroll

What are the differences between EIS and EPF?

The Employee Insurance System (EIS) and the Employees Provident Fund (EPF) are different social security schemes in Malaysia, and each serves a separate purpose.

For one, EPF is a mandatory savings scheme that helps employees save for retirement. It offers financial support to workers when they retire or can no longer work due to old age or declining health. It is also widely known as the Kumpulan Wang Simpanan Pekerja (KWSP) and is under the Ministry of Finance.

In addition, the EPF comprises about 9% to 11% of employees and 12% to 13% of employers’ monthly income. Its perks include long-term savings for retirement, potential returns on investments, tax benefits, housing and education withdrawals, and monetary support during emergencies.

On the other hand, EIS is an initiative that offers temporary financial support to laid-off employees until they find a new job. The contribution comprises 0.2% of employees’ and employers’ monthly income. Its benefits include job search allowance, training fees, and re-employment programs.

Also, EPF is withdrawable under certain conditions such as retirement age (usually 55), permanent disability, buying a house or leaving the country whereas EIS isn’t withdrawable. Employees only access the periodic payment during involuntary employment.

How do employees register for EIS and can they opt out?

Malaysian employees don’t need to register for the Employee Insurance System. Instead, the EIS contribution mandates all employers to register eligible employees as Insured Persons (IP) as part of the employers’ obligations under the Social Security Organization (SOCSO).

But first, you must register your business with SOCSO if you haven’t done so already. Afterward, upon hiring a new employee, enroll their details via the EIS portal with these steps:

Click on Add Employee.
Complete the Employee Information fields and Employee Application Status with the employee’s details, such as their name, identification number, date of employment, salary details, etc.
Click on Save to proceed to the next page.
Fill in the necessary details on the page, then save and continue.

Employees cannot opt out of the EIS because participation is compulsory for all eligible private sector workers per the Employment Insurance System Act 2017. This is necessary to support employees financially in the event of unemployment.

How does the EIS contribution benefit employees?

The EIS contribution benefits employees in the following ways:

Temporary income support

The Employment Insurance System offers these temporary income support to retrenched employees:

Job Search Allowance (JSA): This is a replacement income for those who have lost their only job. Eligible recipients will receive the allowance for three to six months, depending on the recipient’s Contributions Qualifying Conditions. For instance, the employee must have paid their EIS contribution for a minimum number of months within a specified period.

Reduced Income Allowance (RIA): This is a financial allowance for people who have multiple jobs but lost at least one, not all. Payment rates and duration are the same as Job Search Allowance (JSA). When an insured person loses all their jobs at once, they’re entitled to both JSA and RIA.

After receiving the first installment of their allowance, employees will have to prove they’re actively searching for jobs before they receive subsequent installments.

Training Allowance (TA): This incentive is paid to training recipients to encourage them to attend training sessions. It’s paid at a daily rate of RM 10-20, depending on the employee’s previous salary. But to receive this support, recipients must prove that they have attended all training sessions.

Training Fee (TF): Training service providers receive this incentive so that successful applicants will receive up to six months of training at a maximum cost of RM 4000.

Early Re-employment Allowance (ERA): This financial support is for recipients who return to work while still receiving JSA. It is worth 25% of the JSA the recipient is entitled to but hasn’t received.

Read next: How to Apply, Claim, and Select Training Programs for HRDF Malaysia

Job search assistance

The Employment Insurance System Office provides two kinds of job search assistance:

Re-employment Placement Program: Insured persons registered with the Re-employment Placement Program receive one-on-one support from a SOCSO Employment Services Officer.

Career Counseling: Here, SOCSO Employment Services Officers offer a counseling service to identify problems, such as performance gaps, that a laid-off employee may face when deciding on a future career. This counseling happens during their unemployment period or after they’re re-employed as part of the EIS active labor market program.

Furthermore, the scheme requires insured persons to enroll with MyFutureJobs. The platform matches laid-off employees with suitable vacancies. EIS also encourages applicants to attend vocational training to improve their skills and advance in their careers.

How can employees claim EIS benefits?

Employees can apply for EIS benefits through the EIS Portal or at the nearest PERKESO office. Here’s how it works:

Eligibility verification

To successfully apply for and claim their EIS benefits, the insured person must meet these requirements:

Apply within 60 days from the date of loss of employment.
Meet PERKOSO’s Contributions Qualifying Conditions (CQC), which involves paying their monthly contributions for a minimum number of months within a specified period.
Be unemployed under the categories of unemployment that qualify for EIS.

Documentation required

The documents required include:

A copy of your NRIC
Payslip for the Last six months.
Proof of loss of employment. For example, termination letter
A copy of bank account information

Claim process

Employees should contact the EIS office to claim their benefits in person or submit their application via the SOSCO Assist portal. Once approved, the applicant will receive financial support to cushion the challenging unemployment period.

Simplify EIS Compliance with HRIS

Navigating the ever-evolving regulations when it comes to Malaysia’s Employment Insurance System (EIS) can be challenging, and staying up to date with the latest mandates is crucial for HR teams to remain compliant. That’s why it’s important to have the right tools by your side.

Omni’s all-in-one HR software helps you stay up to date with the latest laws and regulations for Malaysia’s Employment Insurance System while streamlining the end-to-end employee management lifecycle. Our comprehensive payroll solution is tailored to Malaysia’s specific requirements. With features like support for MYR, automated EIS contribution calculations, and instant payroll reports, Omni can help HR teams simplify their payroll processing while ensuring compliance with the Employment Insurance System Act.

Book a demo with our team today!

Start your 14 days free trial and see how Omni can simplify the intricacies and complexities of Malaysia EIS contribution and minimize the costs associated with common errors.

In the Philippines, a common topic of discussion within organizations is the subject of Service Incentive Leave (SIL). Employers often wonder how many days they should give for SIL and how it differs from conventional sick leave and vacation days.

This article will guide you to understand what SIL is according to the Philippine Labor Code, the criteria for granting this benefit to your employees, and how it differs from other types of leave. Let’s dive into the SIL meaning and why it is compulsory in the Philippines.

What is Service Incentive Leave (SIL) and is it mandatory?

Service Incentive Leave (SIL) is a benefit your employees are entitled to after working for at least a year. The SIL entitles eligible employees who have worked for over a year to have five days of incentive leave with pay. Eligible employees can also convert their leaves to cash if they don’t use it by the end of the year.

The SIL is mandated in the Philippines under Article 95 of the Labor Code which states that offering service incentive leave to eligible employees is not optional and is a legal requirement. Additionally, service incentive leave in the Philippines is a government-mandated benefit as it gives employees a chance to maintain a better work-life balance.

With knowledge of the SIL meaning and why it is mandatory, let us examine who is entitled to service incentive leave.

Who is entitled to SIL?

As the Labor Code mandates, your employees who have worked continuously for at least 1 year are entitled to service incentive leave. A year of service is calculated from the first day of employment, regardless of continuous or broken work schedule. It includes authorized leave and holidays.

Eligible employees are entitled to 5 days of paid incentive leave per year. According to the Philippine Labor Law, the rule is that employees are entitled to five service leave credits after the end of each work anniversary year. Also, unused leave credits should be converted to cash.

The SIL is a general leave credit which may be used by employees for medical treatments, vacations, or any other personal reasons.

Who is not entitled to SIL?

Although SIL is mandatory to eligible employees, there are groups of people excluded from this benefit:

1. Government employees

SIL benefits apply only to employees in the private sector. Personnel employed in government-owned or controlled corporations are exempted from service incentive leave.

2. Managerial employees

Employees who perform managerial functions like managing an establishment and having the authority to hire or fire other employees of lower ranks do not qualify for SIL provisions.

3. Field personnel

Personnel who perform their duties away from the office environment and whose hours and days of work are not supervised by the employer are not entitled to service incentive leaves.

4. Domestic helpers and persons in the personal service of another

Employees in this category are not covered by the benefits of service incentive leave.

5. Employees already enjoying a similar benefit

Companies that offer their employees benefits similar to SIL, for example, providing more than five days of paid leave, are exempted from providing additional SIL to their employees.

6. Employees in establishments regularly employing less than ten workers

Small businesses with less than ten employees are exempted from providing their employees with service incentive leave.

With an understanding of who is entitled to service incentive leave, it is easier for you as an employer to design an employee benefits package that adheres to the Labor Code whilst rewarding employees for their service.

How to calculate SIL?

Scenario 1: Employee completes 1 year of service

After an employee completes one year of service, they are entitled to five days of paid Service Incentive Leave. For instance, if an employee starts working on 1 January 2023, they will be eligible for SIL from 1 January 2024.

The calculation is simple. Your employee must receive 5 days of SIL to be used within the next year after their first work anniversary. Also, depending on your company policy, the unused leave can be carried over to the next year or converted to cash.

Scenario 2: Employee leaves before completing 1 year

If an employee resigns or you terminate their contract before they complete their one year of service, they will not be entitled to any service incentive leave.

For example, an employee who leaves your company after 11 months of service will not be entitled to any leave benefits.

Scenario 3: Employee works for more than 1 year

Your employees who have completed one year of service must have their SIL entitlement renewed every year. For instance, if your employee has worked continuously for three years and has used up their SIL benefits from the previous years, they will be entitled to five days of SIL at the beginning of their fourth service year.

Additionally, your employees who have completed more than one year of service are entitled to prorated leave credits for any additional months worked beyond their anniversary date. This means an employee who has completed 14 months of service will be entitled to 6 days of SIL.

Here’s the calculation:

Calculate the monthly accrual rate:
- 5 days of SIL per year divided by 12 months = 0.4167 SIL per month.
Calculate total SIL for 14 months of service:
- 12 months (first year) = 5 days of SIL.
- Additional 2 months (second year) = 0.4167 SIL/month * 2 months = 0.8334 SIL, rounded to 1 day.

So, the employee would be entitled to:

5 days of SIL for the first year (anniversary).
1 additional day of SIL for the extra 2 months.

Therefore, an employee with 14 months of service will be entitled to a total of 6 days of SIL.

Omni tip for SIL: When calculating SIL, the rule of thumb is your employees must have completed one year of service. Only after they fulfill this requirement can they be entitled to service incentive leave benefits.

Now that we understand the SIL meaning and how to calculate it, let’s address a common question.

Is SIL convertible to cash?

The answer is “yes.” Unused service incentive leave can be converted to cash. The Labor Code clearly states that any unused SIL at the end of the year can be converted to its cash equivalent.

Here’s how the calculation works:

1. Determine the daily wage of your employee:

For example, your employee earns ₱500 per day.

2. Calculate the value of their unused SIL:

If your employee has 5 unused SIL days, the calculation would be:

5 days * ₱500/day = ₱2,500.

Thus, your employee will receive ₱2,500 for their unused SIL days.

It’s important to note that the encashment can occur at the end of a complete service year or when eligible employees terminate their employment contract.

How does SIL differ from sick leave and vacation days?

To clearly understand the difference between service incentive leave, sick leave, and vacation days, let us briefly define what each means.

Service Incentive Leave (SIL): This is a mandated benefit under the Philippine Labor Code that entitles employees to five days of paid leave after completing one year of service. Service incentive leave can be used for any purpose the employee deems fit.

Sick leave: This type of leave entitles an employee to a certain number of days in a year to take care of any health-related issues and is separate from SIL. The Philippine Labor Code does not mandate sick leave days. However, many companies offer them as part of their employee benefits package.

Vacation days: Vacation days are leave days you grant your employees, allowing them to rest or have their leisure. This type of leave is mostly planned and requires approval. Additionally, similar to sick leave days, vacation days are not mandated by the law in the Philippines.

Read next: HR’s Guide to Employee Leave Management

Now, with the understanding of the SIL meaning, sick leave, and vacation days, let us explore their key differences:

Purpose: Service incentive leave can be used for any purpose. However, sick leave is for health-related issues, and vacation days are for leisure or personal reasons.
Legal Requirement: SIL is mandated by the Philippine Labor Code, whereas sick leave and vacation days are not.
Conversion to Cash: Unused SIL credits can be converted to cash. However, sick leave and vacation leave can’t be converted unless permitted by the organization’s policy.

In conclusion, service incentive leave differs from sick leave and vacation days because SIL is a mandatory requirement for Philippine employers according to the Labor Code. On the other hand, sick leave and vacation days are mostly part of companies’ employee benefits packages.

What are the benefits of offering SIL?

When you offer service incentive leave to your employees, you meet legal requirements and also show them you recognize and reward their contributions. Here are some other key benefits of offering SIL:

Incentive for service

Offering service incentive leave serves as a way for you to reward your employees for their one-year work commitment. Incentive for service motivates your employees to maintain a consistent performance and stay longer with you, reducing attrition rates.

Foster work-life balance

Allowing your employees to take paid time off for rest or leisure is essential in helping them maintain their mental health and reduce burnout, which impacts their job satisfaction. Further, employees who take time to recharge will be more focused when they return to work.

Boost employee engagement and morale

Service incentive leave significantly boosts your employee’s engagement and morale, which can lead to an increase in efficiency. When you make your employees feel valued through benefits like SIL, they will be more motivated to do their work.

Putting Employee Well-being First

Offering SIL to your employees demonstrates how you prioritize their well-being. By providing paid leave, you show your employees you care about their health and overall quality of life. This commitment promotes a positive work environment.

Remember, offering SIL to your employees helps create a supportive and motivating workplace, which impacts their overall productivity and benefits the organization.

Additional resources: The Modern CEO’s Guide to Growth Through Company Culture

Promoting a Culture of Recognition and Reward

Employee recognition can boost employee engagement, which affects every aspect of your organization, from culture to morale, productivity to innovation, investing in your employees is a sure fire way to improve your business functions and drive growth.

By implementing service incentive leave in the Philippines, you ensure that you’re complying to regulations and drive employee motivation.

Omni’s time off management capabilities help managers and HR teams swiftly navigate employee leave management. Omni’s platform allows you to approve service incentive leave on the go and keep track of who’s in and out of the office with at-a-glance scheduling.

Our employee self-service portal empowers employees to submit their time off requests, which automatically routes to the appropriate manager thanks to customizable approval workflows. Omni seamlessly integrates with your team’s favorite work tools such as Slack, enabling managers to manage time off approvals with a simple push of a button. With automated calculations, employees and managers can easily view SIL leave balances in real-time, and track how many vacation days they have left without having to go through HR.

Book a demo with our team today!

If you’re not quite ready to take the leap, try leveraging some free tools to simplify your leave management efforts for free. Download Omni’s Employee Time-off Request Form Template to easily gather the information you need to manage employee time and attendance.

According to the State of Employee Engagement report, 96% of employees believe getting regular feedback is good. What does this mean for you as an HR manager looking to boost employees’ performance and engagement?

Adopt a culture of continuous feedback instead of relying on annual reviews alone. This will help employees evaluate their progress regularly and motivate them to be more efficient.

That’s the goal of a mid year review. But let’s be frank—carrying out bi-annual performance reviews is an additional workload. So, how do you balance your regular HR duties with coordinating performance assessments?

In this article, we discuss mid year reviews, showing how to prepare for one and spur organizational growth without experiencing burnout.

What is a mid year review?

A mid year review is a formal evaluation that occurs every six months or at the end of the second quarter. It assesses employees’ performance, progress, and contribution toward achieving organizational goals before the year ends.

Instead of waiting until the end of the year, this review allows managers to recognize employee accomplishments, ensuring they align with annual goals. It also spots areas for improvement, offers proper feedback, and allows employees to share concerns they may be facing with work.

This feedback system fosters open communication between employees, managers, and HR teams. It allows you to spot loopholes and achieve success before the year ends.

Why are mid year reviews important?

According to SHRM, 71% of companies still conduct performance reviews on an annual basis. While this is great, a McKinsey study found that companies that focus on their people’s performance are 4.2 times more likely to outperform their peers. They also achieve a 30% higher revenue growth and experience a 5% lower attrition rate.

Hence, companies need frequent evaluations before the more detailed end-of-year review.

Thankfully, many organizations now conduct performance reviews more than once a year. For instance, a 2020 study reports that 46% of organizations have modified their performance management systems within the past year.

Why, you ask? It’s because mid year reviews are crucial to organizational success in the following ways:

For employees

Mid year reviews offer several benefits to employees, some of which include:

Provide targeted feedback

By conducting a mid year review, you provide employees with timely feedback that helps them evaluate their performances and improve where necessary. This feedback also gives employees clear steps for adjustments so they meet or exceed expectations before the year ends.

Discuss development opportunities

A mid year review allows employees to reflect on their activities and spot performance gaps. By doing this, they know which areas need more development, discuss them with their managers, and take relevant training and courses to enhance their skills and output.

This is a win-win situation for both your company and employees because while they attain career advancement, the organization increases overall productivity.

Ultimately, it promotes a culture of continuous improvement in which employees understand that the mid year review isn’t a mere evaluation but an opportunity to learn and achieve personal and professional excellence.

Boost morale and increase motivation

Per Nectar’s report, 84% of employees believe recognition enhances their motivation to succeed. A mid year review is an opportunity to recognize and acknowledge employees’ contributions to the company through feedback. Therefore, it helps employees feel appreciated and loyal to your organization while boosting their morale.

For employers

Achieve improved performance

When employers evaluate employee performance before the year ends, they easily identify high and low-performing employees and reduce skill gaps. Furthermore, bi-annual reviews help to confirm and realign employee goals with the company’s mission and objectives to ensure everyone is on the same page. This way, they make the necessary corrections and improve before the year ends.

Early detection of issues

Imagine waiting until the year ends to review productivity, only to see a problem you could have easily avoided if you had paid earlier attention. Thankfully, regular mid year reviews save your company the stress and spot early lapses that would have hindered success.

Increased employee engagement

Like any form of communication, mid year reviews are a two-way process—you give and receive feedback. Hence, by addressing concerns while assessing employee performance, you hear them out, acknowledge their efforts, and offer solutions to their career problems.

This regular feedback and recognition during mid year reviews enhances employee engagement, boosts job satisfaction, and increases productivity. Ultimately, it reduces turnover and helps retain top talent.

6 Tips for Preparing for Mid Year Reviews

Switching from an annual performance management system to biannual reviews is an excellent way to monitor progress and focus on short-term realistic goals.

However, planning and conducting reviews can be time-consuming. Here are some useful tips to help you prepare for mid year reviews:

1. Develop a clear timeline

A mid year review is a 1-on-1 meeting between employees and managers. Hence, it should have a detailed agenda to streamline the evaluation process, provide structure, and set clear expectations for everyone involved.

Furthermore, this timeline should include updates from the last review, previous goals, employees’ performance, new targets, etc. It should also address concerns and questions raised during the review.

2. Establish clear performance criteria

Without standard criteria for measuring achievement, the process will be vague and can be easily influenced by factors like unconscious bias.

When this happens, employees will not perceive reviews as objective and transparent. Instead, they will feel discouraged and unmotivated in the workplace. Eventually, it’ll become harder for them to achieve professional growth or feel fulfilled at work.

It is important to create benchmarks, metrics, or KPIs for assessing performance. Examples of performance criteria include quality and quantity of work, punctuality, teamwork, customer service, execution and organization, professional development, timeliness, problem-solving skills, resilience, communication skills, and job knowledge.

Tailor each metric to the specific roles of employees within the organization. For example, a salesperson’s criteria can be sales targets, lead conversion rate, customer feedback, and revenue generation.

Standardizing the mid year review process by setting clear criteria ensures that performance reviews are consistent across the organization. Above all, it establishes a fair and transparent mid year review process for every employee.

3. Provide employees with relevant resources

Once you’ve developed a clear timeline and created the necessary criteria, it’s important to clearly communicate these items. Also, provide employees with relevant resources that will help them prepare for their mid year reviews. This ensures transparency while building trust and managing expectations.

Furthermore, encourage employees to assess themselves before the review. Self-evaluations allow them to reflect on their achievements and identify areas for improvement before their managers do so. It also helps them discover questions or concerns to highlight during the review, making the process more intentional and productive.

Read next: Employee Guide: How to Write a Mid Year Review for Yourself and Others

4. Ask the right mid year review questions

Asking the right mid year review questions provides a broad view of employees’ performance, strengths, weaknesses, and areas for improvement. It also ensures you carry out a balanced evaluation that addresses all aspects of performance.

Furthermore, asking the right questions presents the review as a two-way conversation, encouraging you to actively listen to employees so they feel heard and valued. Ultimately, it enables workers to express their concerns and ambitions freely.

Your mid year review questions should cover the employee’s contributions and goals and how the company can help them achieve more in the next two quarters.

Focus on open-ended questions as they give detailed answers instead of short yes/no responses. To achieve this, phrase questions with what, why, when, where, who, or how. For example:

What skills do you need to develop further?
What do you think of the feedback you’ve received so far?
What are your goals for the next six months?
How do you see the company’s culture advancing your work and professional growth?
What are your biggest challenges so far in meeting your business goals this year?
Where do you see your role evolving in the next six months?

Additional resources: 30 Mid Year Performance Review Questions to Spark Action

5. Focus on both performance and development

Tailor the review to address performance and development. For example, identify each employee’s key achievements and note their weaknesses and areas for improvements.

Then, suggest training programs, career development opportunities, or new responsibilities to help employees skill up.

6. Explore performance management software

Performance reviews can be tedious. With so much data to collect and reports to analyze, mistakes and errors may happen if done manually. Biases can further get in the way and alter the accuracy of the review.

So how do you achieve a productive mid year review without burning out? Here’s where performance review software comes in.

Using software streamlines the mid year review process, making it smoother and more efficient. For instance, it generates helpful questions and templates that HR teams can tweak for each mid year review cycle.

It also allows you to use the same rating scale and ensure that performance reviews are done within a set timeframe. Furthermore, these tools let you continuously track progress and goals. The best part is that they require little to no effort to set up.

7. Encourage managers to provide post review development plans

After evaluating employees’ skills and providing helpful feedback, a development plan can be beneficial to supercharge an employee’s performance.

Encourage managers to prepare a development plan to help employees achieve professional growth. This plan can include regular training, mentorship programs, or courses needed to upskill for better performance before the next review session.

8. Gather feedback post mid year review

Ask for feedback from managers and employees about the concluded review. This is necessary to identify areas for improvement among employees and even in the mid year review process, so subsequent ones will be better.

To gather feedback, send out satisfaction surveys to managers and employees so they can share their thoughts about the review and identify how you can refine the mid year review process moving forward.

Additional reading: 5 Common Performance Appraisal Mistakes to Avoid

Streamline Mid Year Review Preparation with Omni

When done right, mid year reviews can be a powerful tool to assess, motivate, and develop your team. Investing time and effort in refining your processes is key to achieving successful mid year review sessions that will have a positive impact on both employees and the organization as a whole.

When employees feel supported, valued, and inspired by the performance appraisal process, they can become more engaged with their work. This will lead to improved productivity and increased job satisfaction throughout your organization.

Omni’s performance management module is designed to help you streamline and automate the entire process, reducing administrative burden while offering a customized and consistent performance appraisal cycle for your team. Through the power of automation and technology, Omni helps ensure a mid year review process that mitigates bias and offers data-driven insights that maximize your employee growth and engagement. Book a demo with our team to learn how HR automation can help perfect your performance appraisal process.

Start your 14 day free trial!

Not quite ready for automated mid year reviews? Download our free Performance Review Kit for templates and guides that will help create a uniform and targeted performance appraisal for you and your team.

According to research, setting specific, challenging, and ambitious goals (high-effort, high-risk) has been found to yield better performance outcomes in 9 out of 10 cases, compared to setting easier objectives. Clearly defining and striving for demanding goals tends to drive stronger performance.

Curious about the stretch goal meaning and how to effectively implement it for your team? We’ll dive into the details on how you can integrate stretch goals into your employee development strategy, helping you unlock their full potential and drive growth.

Read next: Understanding and Implementing Quarterly Goals

What are stretch goals?

A stretch goal is an ambitious objective that requires high effort and carries a level of risk. It is intentionally set above normal standards to drive growth, see new opportunities, and gain valuable experience. By setting stretch goals, employers can help their employees break free from complacency and strive for high performance.

While it’s true that stretch goals are not expected to be fully achieved; their purpose is to inspire growth and push employees and teams beyond their comfort zones.

When a stretch goal is met, it’s rewarded as high performance. Conversely, missing a stretch goal should not be viewed as low performance, but rather as an opportunity to learn and improve.

Relevant reading: Performance Review SMART Goals: 18 Examples to Drive Results

What are the benefits of stretch goals?

Now that you know what stretch goals are, what do your employees stand to gain from setting these goals:

Enhanced innovation and growth

One of the main reasons for setting a stretch goal is to motivate your teams and employees to think creatively and unconventionally.

For example, if your marketing team sets a stretch goal to grow your social media engagement by 40% within 3 months, the goal can push them to come up with creative campaign ideas and proven strategies to help drive social media engagement for the brand.

Increased employee motivation and engagement

Having a stretch goal can also inspire employees to strive for excellence, which can improve employee engagement.

A perfect example can be your sales team setting a stretch goal to exceed monthly targets by 30%, this gives them a sense of unity and motivation as the team works together to achieve the objective.

Improved performance and results

To have improved performance and better results, you can set a stretch goal to help employees work more efficiently.

For example, if you have a SaaS company and your software development team sets a stretch goal to develop a new feature on the app within 3 months, this goal can help create a clear target for the team which leads to increased efficiency and performance and can give you an edge to continuously improve your product.

What are the characteristics of an effective stretch goal?

Knowing what defines an effective stretch goal is an important step in implementing it. Here are some of the characteristics to look out for:

Ambitious but achievable

Creating ambitious goals is not bad as a stretch goal should be challenging but is still possible to meet in a set time.

See an example of this context, if you own a startup with no social media presence and your social media marketing team wants to target reaching your first 1000 followers in 3 days, that’s an ambitious goal, the question is “Can it be achieved?” Depending on the type of content and approach, yes.

Specific and measurable

Your stretch goal should be clear and well-defined, with a specific target to aim for, much like a SMART goal. Specificity is needed as it increases the likelihood of measuring employee or team progress, providing a clear direction and focus.

Having a specific and measurable goal ensures potential roadblocks are avoided, and the team’s progress can be tracked and celebrated. This enables the team to stay motivated and engaged, while they work towards a common goal.

Time-bound

A stretch goal must also have a clear deadline or timeframe for completion, this gives the employee or team a sense of urgency and focus. Without deadlines, goals can become vague and unachievable.

For instance, if your product development team aims to launch a new product, having a clear timeline such as 7 months or making it into a quarterly goal can lead to more effective planning and execution. At the end of the deadline, the goal can be evaluated, and improvements can be made as needed.

Aligned with overall objectives

A goal that doesn’t align with your company’s overall objective is meaningless. Every stretch goal should be an integral part of the plan to drive business growth and fit into company values.

A common business objective is customer retention, let’s take for instance your customer service team sets a goal to reduce customer complaints by 35% within the next year. This is aligned with your overall objectives, making it a good example of stretch goals.

Here’s a good example of how your stretch goals should look like:

The marketing team wants to increase website traffic by 100,000 visitors in the next 6 months (specific and measurable, time-bound), this will be done by using a new social media and content marketing strategy (ambitious but achievable), which is expected to help drive sales revenue (aligns with overall objective).

What are the differences between SMART and stretch goals?

The main difference between SMART goals and stretch goals is how realistic they are and their completion status.

SMART goals, which stand for

Specific
Measurable
Achievable
Relevant, and
Time-bound,

are designed to be attainable and focused on completion.

Setting SMART goals gives you a clear target and an expected end. Contrastingly, stretch goals are visionary, serving as a guiding ‘north star’ to inspire and motivate teams towards high performance.

When it comes to stretch goals, they are meant to challenge employees and teams pushing them beyond their comfort zone. It takes creative thinking and problem-solving to achieve a stretch goal. Break it down into smaller, achievable SMART goals that contribute to the progress of the larger end goal.

How to implement effective stretch goals?

There’s the stretch goal paradox where setting effective stretch goals is challenging.

If they’re too difficult, employees can start to become unmotivated and burned out. And if they are not ambitious enough, they won’t push them or drive growth. Stretch goals are best used when employees or teams are on a high-performance streak with sufficient resources, not when morale is low or current goals aren’t being met.

This brings us to tips on how to implement effective stretch goals:

1. Involve your team when setting goals

We believe that stretch goals should be a collective effort, not just an instructed directive. Involving your employees and team in the goal-setting process will make them motivated and invested in achieving the goal. Furthermore, it’s also an opportunity to ask for their perspectives, knowledge, creativity, and ideas and use them.

You can have a team workshop or brainstorming session to discuss and define the stretch goal. Open-ended questions like “What’s the most ambitious outcome we could achieve?” or “What would make the biggest impact on our business? can also prompt them to think deeply and share their ideas.

2. Break down large goals

It can be overwhelming if stretch goals are too broad or vague. The right thing is to break them down into smaller, manageable objectives that are challenging but achievable. Doing this will give your team or employee a clear roadmap for achieving the goal and keep them focused.

For example, if your team’s stretch goal is to “improve customer experience by 50% in 3 months,” break it down into smaller chunks like:

Conduct customer surveys and feedback sessions within the next 4 weeks
Develop a new customer relationship management system within 3 weeks
Launch a pilot program for personalized customer engagement within 5 weeks

These smaller objectives are still challenging but can still provide a clear direction for your team and help in monitoring your key performance indicators (KPIs).

3. Provide resources and support needed

Stretch goals sometimes require new skills, knowledge, or tools. Providing your team with access to the necessary resources and support to succeed is needed for the effectiveness of the goal.

The resources and support can be:

Financial resources like extensive budgets
Human resources
Leadership support
Mentorship
Informational resources such as training and workshops
Feedback and guidance
Recognition and rewards
Technological needs like relevant software or hardware

For a more practical example, assume that your marketing team sets a stretch goal to increase social media engagement by 500% within the next 6 months. To provide resources and support needed, you can choose to:

Allocate $10,000 for social media advertising and content creation tools
Hire a social media specialist to join the team
Provide training on social media analytics and content creation
Offer regular feedback and guidance from the VP of marketing or Head of Marketing
Celebrate milestones, such as reaching 10,000 followers or achieving a 20% engagement rate

4. Embrace failure as learning

As we’ve discussed, a stretch goal is not created as a mandatory achievement, failure is a natural part of the process. Hence, you should teach your employees and teams to embrace failure as an opportunity to learn and grow, rather than a discouragement.

If your customer support team’s goal for personalized customer engagement doesn’t yield the expected results, you can use it as a chance to:

Analyze what went wrong and areas for improvement
Refine the approach and try again
Celebrate the effort and progress made, and recognize the team’s willingness to take risks

This will help keep your team motivated rather than just sulking over not achieving the set goal or objective and key results (OKRs).

Unlocking Peak Performance with Omni

Setting stretch goals serve as a powerful framework for obtaining organizational objectives, offering a structured approach to measuring progress and achieving goals.

In today’s dynamic work environment, the Human Resource Information System (HRIS) has become indispensable in effectively managing and aligning these goals.

Omni’s all-in-one employee management software empowers managers and People leaders to leverage automation, digitizing the people management process. Set and track employee stretch goals, performance review cycles, and gain real-time, actionable insights on employee performance in one, easy-to-use platform.

Start your 14 day free trial!

Book a demo with our team today to learn more about how Omni can help you transform your business and help your teams achieve their stretch goals.

Equity in the workplace is one of the pillars of human resources. Everyone has an inherent desire for some sort of fairness, and in the workplace that sense is more keen than anywhere – especially as it pertains to internal pay equity.

It’s unrealistic to imagine an environment where everyone is compensated the exact same. Certain roles demand more complexity and a deeper skillset, and are likely to be paid more than simpler roles. But the reasons for these differences need to be scrutinized and made transparent so everyone on your team has insight into why people get paid what they do, and can feel confident there’s no discrepancies due to bias.

In this article, we’ll walk you through what is internal equity, the value of a pay equity analysis, challenges you can expect to face, and how to maintain internal pay equity down the road.

Read next: The Pay Parity Guide for HR

What is internal pay equity?

While there’s all sorts of equity you’re going to need to consider in your workplace, internal pay equity should be at the top of your list. Internal pay equity refers to the principle and practice of ensuring fairness and equality for all compensation within your organization.

Ensure that all employees are paid fairly for work performed relative to their colleagues who hold similar positions and responsibilities. Internal pay equity can eliminate pay disparity based on gender, race, or factors unrelated to job performance or qualifications.

Put simply, employees who perform similar roles and contribute equally to the organization should receive comparable compensation. Striving for internal pay equity will help you develop a positive work environment, boosts employee engagement, and reduces attrition rates.

Read next: 8 Steps to Conducting Pay Equity Analysis

What is the difference between internal equity and external equity?

Both internal and external equity are related to compensation management within your organization, but they focus on different aspects. Here’s a breakdown of their respective nuances:

Internal equity: As mentioned above, internal equity refers to the fairness and equality in compensation among employees. It assesses the fairness of pay structures, ensuring employees are compensated fairly compared to their peers.

External equity: External equity is about the fairness of your organization’s pay rates compared to the job market. To ensure external equity, assess pay levels against industry benchmarks, market rates, and the salaries offered by your competitors. Consider conducting salary surveys to better understand current wage rates and roles in your industry and region. Once that’s done, adjust your pay structure accordingly to attract and retain the best talent.

Why is internal pay equity so important?

Achieving internal pay equity may seem like a purely moral pursuit, but there’s more to it:

For employers

Boost employee morale and satisfaction: Team members feel valued and motivated to perform when they are happy with their pay. This leads to higher employee morale and job satisfaction.

Reduce legal risks of pay disparity: Ensuring internal pay equity helps lower legal risks that come with pay discrimination. With a consistent and proactive pay practice, you can reduce the likelihood of legal inquiries due to pay disparity.

Better talent attraction and retention: Employers prioritizing internal pay equity can attract top talents who share the same value. Fair compensation practices can enhance your brand reputation, making it easier to attract top talent and retain existing employees. Employees are more likely to stay with employers who offer equitable pay and opportunities for growth.

For employees

Increased motivation and engagement: Employees are more motivated and engaged when they feel that their contributions are recognized and rewarded fairly. Internal pay equity ensures that employees are compensated based on their skills, experience, and performance, leading to higher levels of motivation and increase in work efficiency.

Better career growth opportunities: Fair compensation practices create a supportive environment where your employees feel encouraged to develop their skills and pursue career advancement opportunities within your organization. When your team members feel their efforts are valued and rewarded fairly, they’re more likely to invest in their professional growth and take on new challenges.

Reduced stress and improved well-being: Employees who are aware of pay inequities within your organization can experience stress, frustration, and dissatisfaction, which will have a serious negative impact on their overall well-being. By addressing internal pay disparities and promoting fairness, your organization can build a positive work environment where employees feel valued, respected, and supported in their roles.

What are the challenges of achieving internal pay equity?

We’ve established why you want internal pay equity. However, the process may not be straightforward. Here’s a list of challenges you should expect to face:

Lack of transparency

A challenge you can expect when implementing internal pay equity is a lack of transparency in your organization’s pay practices. Keeping employees in the dark about their pay and how it compares to their peers could lead to potential perceptions of unfairness and inequality. Your organization should strive to be transparent about compensation policies and practices to promote trust and fairness among your employees.

Job complexity and role variation

Your organization probably has diverse job roles with varying levels of complexity, responsibilities, and required skills. This makes internal pay equity a challenge when you start comparing roles that differ significantly in scope and requirements. Carefully evaluate job roles and establish clear criteria for compensation levels based on job complexity and contribution to the organization. To do this, consider running a pay equity analysis where you analyze factors that might impact higher or lower compensation, and map that to your workforce.

Poor data collection and analysis

Inaccurate or incomplete data can hurt your efforts to achieve internal pay equity. You might face challenges obtaining reliable data on your employee demographics, job roles, performance metrics, and compensation levels, especially if there’s not a centralized repository for this information. Without robust data collection and analysis processes, it becomes difficult to spot pay disparities and take the appropriate action.

Potential resistance to change

It might be difficult for your organization to appreciate internal pay equity. Expect to face resistance from certain stakeholders, including employees, managers, and organizational leaders. This resistance might be due to concerns about perceived loss of status, increased costs, or simply changing existing practices, which they feel are working well enough. You’ll need to proactively address resistance by communicating the rationale behind pay equity initiatives, gathering feedback from employees, and providing support and training to ease them into the transition.

Ways to Address Internal Equity

While challenges might be inevitable as you pursue pay inequity, here’s 4 strategies that can help you promote fair compensation within your organization.

Foster a culture of transparency and open communication

Building a culture of transparency and open communication is essential for addressing internal pay equity. You and your team should proactively communicate the compensation policies, practices, and decision-making processes to your employees. This includes providing clarity on performance expectations, and offering platforms for team members to voice their concerns on pay-related matters.

Implement standardized job evaluation systems

Standardized job evaluation systems help ensure consistency and fairness when determining the value of different roles within your organization. Start by establishing clear criteria for evaluating job roles based on factors such as skills, responsibilities, and required qualifications. Setting up job evaluation systems can help identify and address any pay disparity, before they become systemic or incur any legal challenges.

Relevant reading: A Guide to Mastering Performance Management

Regularly collect and analyze employee data

Regular data collection and pay equity analysis are important for identifying and addressing pay disparities within your organization. Your team should gather comprehensive data on employee demographics, job roles, performance metrics, and compensation levels. By analyzing this data regularly, you can identify trends, patterns, and potential areas of concern related to internal pay equity. This helps you keep an eye on internal pay equity, and make any necessary adjustments.

Clear communication and provide necessary training

Clear communication and training ensures that employees understand compensation decisions and how they can advocate for fair treatment. Provide training to managers and HR professionals on topics like unconscious bias, fair compensation practices, and performance evaluation techniques. Also, clear communication channels should be set up to address employee concerns, provide feedback, and facilitate discussions about pay-related matters.

Tips to Maintain Internal Equity

Pay equity isn’t a one-and-done effort—it’s an ongoing practice that needs to be carefully maintained as your organization evolves. Here’s a few considerations you’ll want to review for maintaining pay equity:

Conduct regular pay audits

Regular pay audits are essential for monitoring and maintaining internal equity within your organization. By periodically reviewing compensation data and comparing pay levels across different job roles, departments, and demographic groups, your team can identify any discrepancies or inequities that exist. Pay audits help ensure that compensation practices remain fair, consistent, and compliant with internal policies and external regulations.

Clearly communicate compensation policy

Clear communication of your organization’s compensation policy is a major factor for promoting transparency and trust among your employees. You should share information about salary bands, pay structures, and the factors that influence how you make compensation decisions. This will help your employees understand how their pay is determined, build trust in your organization’s compensation practices, and reduce speculation or misconceptions about pay fairness.

Address inequities promptly

It’s important for you to address any identified inequities or discrepancies in compensation promptly and effectively. This will involve conducting a pay equity analysis to understand the root causes of any disparities, taking corrective action to fix the problem, and effective communication with affected employees. Addressing inequities quickly demonstrates a commitment to fair treatment and helps maintain trust and confidence in your organization.

Invest in training and development

Investing in training and development opportunities for your employees will help promote internal equity by providing your team with the skills, knowledge, and resources they need to advance in their careers and earn fair compensation.

Adopt HR software

Leveraging HR software can streamline compensation management processes, improve data accuracy, and enhance transparency. You’ll want to consider HR software that includes features such as automated data collection, compensation benchmarking, and reporting capabilities, which enable your team to track and analyze compensation data more effectively. With the right HR software, your team will gain insights into pay equity issues, identify areas for improvement, and take proactive steps to address any concerns.

Unlock the Power of HRIS for a More Equitable Workforce

Understanding and addressing internal equity is crucial for fostering a fair and inclusive workplace environment. As mentioned, bridging the gap requires more than just awareness – it demands actionable steps and effective tools.

All-in-one HR software like Omni can play a crucial role in fostering pay equity by providing tools for tracking gender diversity metrics, identifying areas for improvement, and implementing policies that promote work-life balance.

Our comprehensive payroll solution provides impactful insights to seamlessly review, address, and prevent pay parity issues. Advanced performance management modules provide real-time performance data, helping HR teams swiftly identify and address skill gaps, so you can provide your teams with the training and tools they need to help boost overall performance and nurture talent.

Join the 83% of Omni customers who have unlocked new, actionable insights after using our modern HR solution, book a demo with our team today.

Every job has its own roles, responsibilities and expectations, also known as the job scope. A job scope needs to be clear and straightforward. This allows employees and job candidates to gain a realistic and actionable understanding, facilitating high performance.

However, the reality is job scopes can be vague, causing expectation gaps and employee frustration. Luckily, avoiding this friction is as simple as creating a clear job scope accompanied by a direct job description (JD).

Here, we’re going to explore the job scope meaning, and walk through how to write a job description, along with providing a job description template you can follow to make sure you’re onboarding talent that knows exactly what’s expected of them.

Importance of a Job Scope

Everyone wants to know the purpose of their role and responsibilities. Not having a clear understanding of your role is a bit like showing up at a party with no introduction—sure, you could probably work out the social dynamics in time, but it would be a lot easier if you had someone to tell you what was going on. A clear job scope is exactly as that introduction, and is extremely important for employers and employees alike.

For Employers

Better clarity and alignment: When job scopes are clearly defined, employers and employees alike have a better understanding of what is expected in each role. This clarity ensures that everyone is aligned with your company’s mission, vision, and objectives, reducing confusion and promoting unity within your team.

Enhance performance management: Job scopes are a great reference point for evaluating the performance of your employees. By aligning performance metrics with job responsibilities, you can more accurately assess your employees’ contributions and provide targeted feedback and support to help them succeed in their roles.

Minimize conflict and misunderstandings: Ambiguity surrounding job roles can lead to conflicts and misunderstandings among your employees. Clearly defined job scopes minimize the frequency of these issues by establishing boundaries and expectations, reducing the likelihood of role overlaps.

Increase efficiency and productivity: When your employees know exactly what’s expected of them, they can focus their efforts on tasks that directly contribute to their role’s objectives. This focused approach increases efficiency and productivity by minimizing time wasted on low-priority tasks.

For Employees

Improve employee satisfaction: Having a clear understanding of their job scope gives your employees a sense of purpose and direction. When employees know exactly what is expected of them and how their work contributes to your organization’s success, they’re more likely to feel satisfied and fulfilled in their jobs.

Better career development: Clearly defined job scopes will provide your employees with a roadmap for career advancement. By understanding the specific responsibilities and expectations associated with their roles, your team members can identify areas for growth and development, set meaningful career goals, and pursue opportunities for advancement within your organization.

Stronger work relationships: Job scopes that are easy to understand and follow promote collaboration and teamwork among your employees. When everyone knows their role and responsibilities, it becomes easier to work together effectively, share knowledge and resources, and support each other towards achieving common goals. In turn, this leads to stronger work relationships and a more positive work environment.

Empower employees: When your team knows what’s expected of them, they are empowered to take ownership of their work. They’ll have the autonomy to make decisions within their scope of responsibility, and feel able to take initiative, solve problems, and contribute to the organization’s success, without excess hand-holding. This sense of empowerment helps develop a culture of accountability and innovation within your workplace.

Effective Tips to Define Your Employee’s Job Scope

It’s all well and good to understand the job scope meaning and its importance. But clearly outlining job responsibilities can be trickier than it seems. Here are five tips you can follow to ensure your job scopes offer the necessary role clarity:

1. Identify their core responsibilities

To start, clearly outline the main duties and tasks that define your employee’s role. This includes noting the key functions they’re expected to perform on a regular basis, such as daily tasks, ongoing projects, and specific job duties specific to their role.

2. Outline expected outcomes

Clearly define the expected outcomes and deliverables associated with each core responsibility. This involves specifying the goals, objectives, and performance expectations that your employee is responsible for achieving within their role.

3. Decide the level of decision-making authority

This is an absolutely essential part of how to write a job description—your employees need to have a clear view of where they fall in the chain of command at your organization to avoid friction and conflicts. This includes:

Level of authority: Determine the extent to which your employee has the autonomy to make independent decisions within their role. Establish boundaries for their decision-making authority and empower them to take ownership of their tasks, in so far as their role demands.

Process for handling situations that require higher level approval: Establish clear protocols for handling situations that fall outside their authority or require input from higher levels of management. Outline the process for escalating issues, seeking approval, and resolving conflicts as needed.

4. Provide tools and resources available

Equip your employees with the necessary tools, resources, and support they need to effectively carry out their job responsibilities. Without them, even the goals of a clearly defined job scope might be impossible to achieve. This could include access to relevant software, training programs, mentorship opportunities, and support from colleagues or supervisors.

5. Emphasize on collaboration and communication

Encourage collaboration and open communication within your team to boost alignment and clarity around job scopes. Encourage a culture of transparency and inclusivity where your team members feel comfortable asking questions, seeking clarification, and sharing feedback about their roles and responsibilities.

Relevant reading: 5 Onboarding Manager Job Description Examples to Attract Top Talent

Key Components to Include in Your Employee’s Job Description

With all the above in mind, here is how to write a job description that effectively captures the job scope for your employees:

Job title and summary

Begin by clearly stating the job title, which should accurately reflect the role and level of responsibility within the organization. Provide a brief summary that outlines the purpose and objectives of the position, highlighting its importance and relevance within your company.

This might look something like, “Marketing Manager: Responsible for developing and executing marketing strategies to drive brand awareness and customer engagement.”

Job purpose

Define the primary purpose of the role, including its overarching goals and objectives.

An example of this might be, “The primary purpose of this role is to lead the marketing team in achieving company sales targets and expanding market share.” This helps employees understand the high-level context of their work and how it contributes to your organization’s mission and objectives.

Job duties and responsibilities

Provide a detailed list of the specific duties, tasks, and responsibilities associated with the role. Clearly outline the day-to-day activities and functions that your employee will be expected to perform, including any special projects, ongoing initiatives, or key deliverables.

An example of these duties might be:

“Develop and implement comprehensive marketing plans and campaigns.”
“Manage digital marketing channels, including social media, email, and online advertising.”
“Analyze market trends and competitor activities to identify growth opportunities.”

Required skills and qualifications

Specify the essential skills, qualifications, and experience necessary to succeed in the role. Make sure to include educational requirements, professional certifications, technical proficiencies, and relevant work experience.

Distinguish between “must-have” qualifications and “preferred” qualifications, if applicable.

For example:

“Bachelor’s degree in Marketing, Business Administration, or related field.”
“Minimum of 5 years of experience in marketing, with a proven track record of successful campaigns.”
“Strong analytical skills and proficiency in marketing analytics tools.”

Work environment and culture

Describe the work environment, company culture, and organizational values that define the employee experience at your organization. Highlight any unique aspects of your workplace culture, team dynamics, or company ethos that may impact an employee’s day-to-day experience and employee engagement at your workplace.

For instance, if your organization prioritizes collaboration, consider including a line like: “We foster a collaborative and innovative work environment where creativity and teamwork are valued.”

Compensation and benefits

Provide information about the compensation package and employee benefits associated with the role.

This may include details about salary range, bonus opportunities, healthcare benefits, retirement plans, paid time off, and other perks or incentives offered by the company.

Not sure where to begin?

Get our free Job Scope template now!

Best Practices for How to Write a Job Description

Once you’ve decided precisely what you’re going to include in your job description, it’s important to consider how you convey it. Here are some tips on how to write a job description that perfectly conveys the role you’re promoting:

Use clear and concise language

Clearly articulate the role’s responsibilities, duties, and requirements using easy-to-understand language. Avoid using overly technical terms or industry jargon that may confuse candidates who are not familiar with terminology that might seem normal to people who’ve worked in your organization a long time.

Aim to convey the key aspects of the role concisely, making it easy for candidates to grasp what’s expected of them.

Highlight what matters to your target audience

Tailor the job description to appeal to the specific audience you are trying to attract. Consider the demographics, preferences, and motivations of your target candidates, and emphasize the aspects of the role that are most likely to resonate with them.

For example, if you are recruiting for a marketing position, highlight opportunities for creativity, innovation, and collaboration. If you are targeting entry-level candidates, focus on growth opportunities and training programs.

Provide realistic expectations

Be transparent about the realities of the role, including the workload, working hours, and any potential challenges or difficulties. Avoid overselling the position or making unrealistic promises that could lead to disappointment or dissatisfaction later on.

Instead, provide a candid overview of what the job entails, including both the rewarding aspects and the potential obstacles. This will help your candidates make informed decisions about whether the role is a good fit for them, and ultimately help you bring on talent thatès a more natural fit.

Use neutral language

Ensure that the language used in the job description you create is inclusive and free from bias. Avoid using gendered pronouns or terms that may perpetuate stereotypes or exclude certain groups of candidates.

Instead, use neutral language that is inclusive of all genders, backgrounds, and identities. Be mindful of unconscious biases that may influence language choices and strive to create a job description that welcomes and values diversity.

Omni Tip: Have a few different team members review the job description, and take suggestions and edits to ensure it’s as fair and unbiased as possible.

Optimize Job Scoping with HR Tools

Sourcing top talent with our tips on how to write a job description and a well crafted job scope that fits your team’s needs is the key to high performance and innovation. Omni’s recruitment partners make building and advertising your talent search easy, sourcing and attracting talent to fit your company’s unique needs.

With seamless integration capabilities, your shortlisted and hired talent are automatically uploaded into your HR system, taking the administrative burden and manual entry errors out of the recruitment process.

Book a demo with our team to learn more about how Omni’s automated system can streamline your entire employee lifecycle—from recruitment to onboarding and beyond.

Download our free Job Scope template and attract top talents!

Want to begin improving your onboarding experience today while learning how to write a job description and craft your perfect job scope? Download our comprehensive Onboarding Kit for all the tools you’ll need to deepen engagement and provide a world-class company culture from day 1.