written by | April 25, 2022

Understanding the PayScale, its structure, levels, calculations, and examples

How often does it happen that you're applying for a job or already in a job, but you don't know how you get the salary you get? Is the compensation you are getting paid even justified for your work? What are the parameters based on which you get your salary? There's something called a pay scale depending upon which an organisation calculates your salary. Let us understand more about that.

Did you know?

That you can calculate your salary and determine if the pay you are getting is justified? It's easy if you understand the concept of pay scales and understand the job sector you're working in, and know which payscale art will apply to you.

What Is a Pay Scale?

Suppose you work in an organisation, private or public sector or a government department. If you work in any organisation, you get paid based on a systematic and rational structure. That structure is known as the pay scale. Having a pay scale in order is crucial as it also depicts the worth of an employee in the market. It is often the case when the amount received as salary is directly proportional to that employee's position, which means that if an employee's salary is high, they hold a higher position in their respective organisation and vice versa. However, it is also highly possible that the company pays every employee in the same manner. There could be differences within an organisation in how they pay an employee. Especially, every organisation pays a little differently while keeping the framework of the pay scale intact. First, let's go over a few of its contents more on how it works. 

How Do Pay Scales Function?

The employee's level is related to the employee's pay. A pay scale is a system that justifies how an employee is paid based on the level of responsibility, experience and work they do in their organisation. This practice is particularly more present in the public sector, where fairness is more important than the contribution by the employee. But in all types of organisations, the companies will plan and layout specific positions and values associated with this position. The value depends upon the responsibilities, experience, kind of work and other factors that may affect it. Keeping that standard, any organisation in any industry can establish a pay scale for their employees at all levels. There are different pay scales for different sectors as it is evident that the work is not the same for every industry and sector. How do companies or any organisation structure the pay scale to make it more systematic and rational so that it is a justified source for deriving an employee's pay?

Also Read: What is the Average Salary in India?

The Types of PayScales

Most businesses or organisations adapt to three basic types of pay scale structures.

1. Broadband

It is a standard structure format, which offers more flexibility to a pay range and gives employees a clear understanding of the total salary they can expect from their respective organisations in a year.

2. Traditional

It allows less flexibility to the organisation for paying an employee's salary. 

3. Market-Based

It is a type of pay scale that determines the pay by researching and evaluating the compensation of other employees by their employers in their respective sectors or industry.

Elements of the Pay Scale Structure

We will discuss the general framework of different pay scale chats or payscale matrices. The content of a particular pay scale chart may differ depending on the type of industry to which it belongs.

Pay Bands

Pay bands are the broad or more significant range of the applicable salary in a particular category. There are different pay bands as per the industry or sector standards which we can further categorise as grade pay or levels.

Grade Pay or Levels

Grade Pay is now more commonly called levels, a more specific representation of the pay divided from the pay band for any particular job in any given sector or industry.

Entry Pay

Entry pay is the total minimum pay provided to an employee at the entry-level.

Pay Scale Type

The area of a particular economic activity for which a particular scale proves to be valid. As discussed earlier, there are different sectors and different industries. Within them, there are different levels, so it becomes essential to define them so that we can apply an appropriate matrix. 

Pay Scale Area

The geographical location and the parameters like the size of that particular area also enable differentiation in the payscale matrix.

 It sounds complex, but let's look at a few different types of pay scale charts or payscale matrixes to have a clearer understanding.

Pay Scale Charts in India

Next, let's look at different payscale charts that follow different pay for an employee in their respective industry or sector to understand how will the payscale look.

Central Government Pay Scales As Per the 7th Pay Commission (CPC)

The 7th Pay Commission is the payscale chart or matrix for the central government employees. The central government registers the payscale of government employees under the pay commission. The 7th pay commission is the latest version of the pay commission we have in India for government employees. The government of India analyses and refreshes the payscales every ten years.

Bank Pay Scales

The employees of banks have different calculations of working days, non-working days, allowances, etc. The employees' salary depends on their workload, locality and responsibility. There is a revised version of the pay scale of bank officers scale I to VII stagnation increments which were in effect from 1 Nov 2017. That is the 11th BI-Partite settlement date. 11 Nov 2020.

FCI Pay Scale

Food Corporation of India is a government-owned company headquartered in New Delhi. The state government and the central government govern the company together. As per FCI's recruitment notification, government employees are the company's employees. The salaries for these employees are good, and they receive annual increments.

Several Factors That Can Affect a Pay Scale

The main factors that affect the pay scale are as follows:

Type of Industry or Sector

Depending upon the industry or the sector one might be operating in will affect the kind of pay that they receive. This is so that the pay is reasonable.

Individual Organisation

Within a broad categorisation, being a part of a particular company, organisation or department of the government will affect your pay scale.

Also Read: Professions that Offer the Highest Salary Jobs in India

The Responsibility

We can look at it as the level at which an employee is working. At a lower level, it is evident that they will have lesser responsibility than someone at a higher level. It is also related to the experience of the employee.

Experience

After you get into an organisation or start working, skills often matter less than experience. Depending on the level of experience, the pay will vary significantly.

Education and Certifications

The educational background and qualification enable the employees to be employed at a reasonable or higher level of a job to pay proportionately. The organisation would prefer to pay more to an educated and skilled employee than to someone less knowledgeable. Certifications don't affect the payscale directly, but the fact that an employee has been capable enough to earn a certificate in any related field. 

A simple calculation of gross salary of personnel at level – 6 

Location

Uttar Pradesh (Other Cities)

Basic Pay

36,500

DA

6,205 (17% of Basic Pay)

HRA

2,920 (8% / Other Cities)

TA

2,106 (Level-6 / Other Cities)

Gross salary

47,731 

We have personnel at level-6 of the pay scale with two years of experience. For calculating the gross salary, we add benefits like DA, dearness allowance, HRA or House Rental Allowance, and other allowances if applicable. After adding these to the basic pay, we get the gross salary.

Conclusion

In brief, we now understand that a pay scale is systematic under a rational structure that specifies the payment amount for a particular employee depending upon the industry or sector they work in a pay scale level of experience and responsibility. Based on the job level in a specific organisation, their pace is varied.

We understand that there are three types of pay scales that we can observe, one being the broadband which is a standard structure format and provides more flexibility in the pay range. The traditional payscale and the market-based pay scale where an employer would research and analyse the kind of pay another employer of a similar category would be paying to their employee and refresh their pay scale based on that.
The 7th Pay Commission pay scale is a typical example of different pay scale charts or pays scale metrics. These metrics depend upon the kind of industry. Various factors affect a pay scale, including the type of industry or sector, individual organisations' responsibility of an employee, the experience of employee education and certifications.

FAQs

Q: What kind of allowance can I get?

Ans:

You will have different allowances based on your payscale matrix and the industry in which you work. Some standard allowances are Travel Allowance (TA), House Rent Allowance (HRA) and Dearness Allowance (DA).

Q: What is the 7th payscale matrix or payscale chart?

Ans:

The 7th payscale matrix is simply the representation of the pay levels of all the central government employees. More popularly known as the 7th pay commission.

Q: What are pay scale charts or matrices?

Ans:

Depending on your industry, there are payscales based on which any organisation structures your salary, and it helps maintain transparency and rationality in employees' pay at various levels.

Q: How do I calculate my salary?

Ans:

It is relatively simple; all you need to do is identify your payscale and level. Based on this, you will have your basic pay and add your additional benefits or allowances to it, and you will have your gross salary.

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