It is inevitable that you will be asked for a salary advance by someone working for you. While some people have adopted a firm “no advances given” policy, others freely give advances. What will work for you depends in large party upon your own mentality when you give the advance, your expectations, and your relationship with the person you are giving it to. There are a number of approaches I have seen work for people:
Approach One – Large advances to known and trusted employees. We have a maid who has been with us for over two years. Her main expense, as a single mother, is the education of her three children. School tuition is generally due in a lump sum in June. For the last two years we have given very large advances to her to cover the cost of tuition. We then cut a pre-determined amount from her salary every month in order to cover the advance. The first year went very well so we were more than willing to do it again this year. We have set a limit for how much of an advance we will give. We will not give more that what she can comfortably have cut for a 10 month period (that gives her two months of full salary in the summer.) For example, if she is willing to have Rs 3000 cut per month, we will lend a total of Rs 30,000. Of course, as the year progresses we will give bonuses for different holidays and we will give small “scholarships” to each of the children when they do well on exams. We have found this method to work very well with this particular person.
Approach Two – Small Advances – No more than what you owe for services already rendered. By this I mean if you have a driver who has worked for you for a week, then you can give an “advance” of a weeks pay. He has already earned the money so if he skips out on the job after getting the advance you are no worse off. Sometimes drivers, particularly those with families, will have expenses that arise before the end of the month. If you are willing to help him out, then feel free to do so.
Approach Three – “Gifts to Employees”- There are times of the year when festivals are numerous and when everyone’s household expenses increase. If you know that this is happening, you may want to simply give a “gift” to your employee. With a gift you have no expectation of repayment and there is no burden added on to the employee. The reality is that the differences in the financial situations between employer and employee here are VAST. The difference between what giving a RS 500-1000 gift will mean to your pocket vs what it will mean to your maid, cook or driver is unquantifiable.
Approach Four – No advances. I know many families who swear by this approach. It keeps things simple. They tell new employees upfront that this is the policy. It prevents them from having to track advances and repayments and forestalls any requests for money.
