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A pay band is one aspect of the salary process where different jobs are ranked by education and experience. It’s used to place applicants in the right position and ensure that they are compensated fairly. By law, employers must publish the minimum and maximum amount they’re willing to pay for each band.
A pay scale is a system that determines how much employees are paid. The most common pay scale type is salary, which is a set amount that employees earn per year. Other types of pay scales include hourly, commission, and piece rate. Pay scale can also be based on experience, education, or skills.
At each step on the scale, an employee is typically given a percentage raise (relative to their current salary) to maintain their buying power and keep up with inflation. Pay scales can also differentiate between employees (e.g., managers vs. non-management staff) or between employees in different geographical areas.Â
There are several benefits of designing a pay band in any organization. Some of the benefits include:
Generally, pay band is used to rank or define the range of different jobs which are dependent on several factors such as job location, responsibilities in job role, education etc. Jobs with similar responsibilities are grouped in a certain range.
For example- A certain band may range from 25000 to 35000 it means all employees who are paid a salary ranging from 25,000 to 35,000 are put in this band.
Pay scale refers to a different salary level based on skill or experience of an individual. It usually includes basic pay, fixed pay and all kinds of allowances paid to employees. Basically it is a systematic form of salary structure that defines how much an employee should be paid.
There are 5 pay bands present in India. Pay band first ranges from 5200 to 20,200. Second ranges from 9300 to 34,800. Pay band 3 ranges from 15,600 to 39,100 and fourth ranges from 37,400 to 67,000. Pay band 5 ranges from 67,000 to 90,000.
Salary band is calculated by monitoring information about various job roles in order to rank them according to their job titles, responsibilities and various other factors. The system of ranking must be defined prior to ranking various job roles. Next task is to research the salary offered in other related industries. After this create pay grades and define what should be the minimum and maximum salary range. With changing trends it is necessary to update these salary bands.