Pay Band | Meaning and Definition

What is a pay band?

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.

What is a pay scale?

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. 

What are the benefits of Pay Band?

There are several benefits of designing a pay band in any organization. Some of the benefits include:

  • This system helps to ensure that employees are paid fairly. By standardizing compensation levels within job grades, this system ensures that employees with similar qualifications and experience levels are paid according to their worth. This promotes equity and fairness within the organization, boosting morale and employee satisfaction.
  • The pay band system can help attract and retain top talent. By offering competitive compensation rates, employers can entice high-quality candidates to apply for open positions. Additionally, this system can help retain valued employees who may consider leaving the organization.
  • It helps to ensure transparency in comparison of salary of two employees. This transparency motivates employees to stay long with the same organization.
  • This helps to lessen the gender gaps and ensure fairness when it comes to pay employees as it is necessary to ensure similar payout to employees of different gender working at same job role.

What is the difference between pay band and pay scale?

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.

How many pay bands are available in India?

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.

How is the pay band calculated?

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.

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