Indian companies and startups seem to copy ideas from California all the time; they’d perhaps do well to copy some of their workplace practices as well.
Employers in California will no longer be allowed to ask potential employees the details of their previously drawn salaries. A new law called AB 168, which went into effect from 1st January, prohibits employers from inquiring about a job applicant’s prior salary, compensation or benefits directly or indirectly from another agent, such as a job recruiter. Under this law, employers also cannot use salary history information to determine whether to hire an applicant or how much to pay them.
Job applicants, of course, are allowed to voluntarily disclose their salary history if they so choose. Also, California employers will have to provide a job applicant with the pay scale for the position if the applicant asks for it.
This is a far cry from what happens in India, where job applicants are often asked to disclose their currently drawn salary before they’ve even appeared for their first interview. The practice is widespread and pervasive — most job applications on prominent portals have a “current CTC” column, where applicants are required to put down their salaries. It doesn’t just stop there — most employers also require applicants to also furnish proofs of their salaries by submitting their last payslips.
There is no law that mandates job applicants to disclose their salaries, but the practice has become so common among Indian companies that many assume it’s a requirement — companies have banded together to create an impression that furnishing salary details is a regular part of a recruitment process. Few Indian applicants do this, but they are free to refuse to disclose their past salaries and ask companies to judge them on merit alone.
And that’s something more applicants should be doing — revealing your own salary creates an information asymmetry that squarely benefits companies over employees. A salary discussion is essentially a negotiation between the employer and the employee, and the moment an employer has information about your pay, they can make their offer with a minimal increment over your current salary. Prospective employees have no such information however — no company would disclose how much they’re paying their existing employees, making it impossible for new job applicants to assess if they’re being paid fairly.
This practice could be brought to a swift end in India if employees decide, en masse, to collectively refuse to reveal their previous salary details. That’s hard to achieve — getting millions of job applicants across the country to change their behaviour overnight is easier said that done. Alternatively, India’s government could take a leaf out of California’s book and prohibit employers from asking for salary details — it could go a long way towards improving employee welfare in the country.