MoF issues amended notification on SOE pay hike

Tshering Dorji

The finance ministry issued a new notification on pay revision of the state-owned enterprises (SOE) yesterday, superseding the earlier notification issued on November 29.

While the revision slab of 6 to 35 percent remains unchanged, a restructuring was done.

In the earlier notification, a revision of 14 percent was given to corporate employees between grade 1 and 3. The amendment comes with a revision of 14 percent for those in grade 1 and 2 only. The next slab is now from grade 3 to 8, who would now get 18 percent hike. 

While the CEOs would get a revision of six percent, CEOs of National Pension and Provident Fund (NPPF) and Bhutan Development Bank Limited (BDBL) are classified in a higher slab with a minimum starting pay of Nu 85,000. All other CEOs would draw a minimum pay of Nu 75,000 a month. In the earlier notification, salaries of CEOs of Food Corporation of Bhutan and CSI Bank was fixed at par with the CEOs of NPPF and BDBL.

The contract employees other than CEOs in the earlier notification stated that their salaries would remain unchanged. The new notification states that the pay, and allowances of such employees shall be determined by the respective boards in keeping with the contract conditions.

The PBVI payout remains unchanged. However, an amendment is made clarifying that corporate allowance of 25 percent is now replaced by the PBVI ranging from 15 to 50 percent based on companies’ performances.

The notification also stated that assessment of PBVI would formally begin from calendar year 2020. An official from the ministry said that the previous notification, which granted 15 percent PBVI payout in 2020 and no bonus pay out now stands null and void. Employees would now get the actual bonus payout for 2019 in 2020.

The assessment of 2020 will be the basis for PBVI in the following year, meaning that PBVI payout in 2021 will depend on 2020’s performance.  So, the bonus payout for 2019 should suffice the PBVI in 2020.

In an earlier interview with kuensel, the finance minister said that the PBVI rating of preceding year will serve as the basis for PBVI for the coming year.

For instance, if a company achieves “very good” in 2020, this amounts to a 35 percent PBVI. In the following year (2021), its employees would be paid 35 percent PBVI on the new basic pay every month, excluding the 20 percent house rent allowance. Should the board of a company decide to reward the PBVI on annual basis, the PBVI payout would be calculated for the 12-month period and paid in one go at the end of the year.

He said that the government would ensure only deserving companies would get good ratings, not just based on financial performance but also on the social aspects.

Banking allowance was one of the issues that was raised by the financial institutions under the finance ministry. For instance, BDBL employees were entitled to 20 percent banking allowance and the previous notification slashed it down to 10 percent. Now the banking allowance would remain unchanged.

Travelling allowance and daily allowance for in-country travel will now be pegged with that of revised TA/DA of civil servants. However, if the revised rate is lower than the existing rate, the amended notification states that companies may continue to follow their service rules, subject to a review by the board.

This issue also surfaced because some SOEs were providing TA/DA higher than civil servants, while few were paying lower.

More clarity was also provided on the provident fund. The provident fund contribution from the employer would be revised from 11 to 15 percent.

One major confusion was on the company specific allowances because the first notification stated that no other allowances, including corporate allowances would be provided.

Finance minister, earlier said that the government was unaware of certain allowances that was agreed between the board and the management. The new notification clarifies that all other company specific allowances shall be continued as per the service rules of the SOEs, unless changes arise from the ongoing reforms in SOEs. This also means that the position specific allowances, which was earlier done away with, are now reinstated.

However, the ministry also cautioned the boards of SOEs to carefully study various allowances granted till date, to ensure relevance, affordability and most importantly to prevent proliferation of allowances.

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