Last Updated on February 1, 2013 by ShumailaKamalBHP
Option Certificate is a great tool for the employees that are being promoted. Option certificate can be adopted if an employee is promoted after 1st June. As you all know that the condition for the annual increment is minimum 6 months service in a particular scale and if an employee is promoted after 1st June 6 months service is not completed by the same employee. Then what will happen to the employee if he is promoted after 1stJune? Will he not get the benefit of Annual Increment? This will be a loss for that employee. But don’t worry; this loss can be avoided by using the great tool of Option Certificate for Pay Fixation.
What is Option Certificate?
As earlier told Option Certificate is adopted when an employee is promoted after 1st June to avoid the loss of 1x Annual Increment. In Option Certificate it is mentioned that the employee will avail the promotion after 1st December instead of the date of Promotion to avoid the loss of Annual Increment. In this case the pay is fixed on 2nd December after availing the benefit of Annual Increment on 1stDecember.
How this Tool of Option Certificate is used
I shall illustrate you this by an example. Suppose promotion of an employee is on 3rd June and his/her basic pay in the previous scale was 10,000/- . If he/she fixes his pay on 3rd June in the new scale then his pay becomes 10,500/-. In this way he will not get annual increment and he will annual increment next year instead of current year. If he/she fixes his/her pay on 2ndDecember then the situation will be as under: Before Pay Fixation: 10,000/- + Annual Increment (300/-) = 10,300/- After Pay Fixation: When 10,300 is fixed in next scale it becomes 10,800/- Thus this employee will get basic pay 10,800/- instead of 10,500/-
When this Option Certificate cannot be used?
If the pay fixed before 1st December is greater or equal than the pay fixed on 2ndDecember, then don’t use option.
What is the Loss of Option Certificate?
The loss of Option Certificate for pay fixation is that the employee cannot get the arrear loss only as the pay is fixed on 2nd December instead of actual date of promotion. Don’t worry the main purpose is basic pay not the arrear amount. Increase in basic pay is 100 times much better than the amount of arrear as the arrear is temporary amount but the basic pay is a permanent increase in pay for whole of service.