What is Wage Drift?
Wage drift refers to a difference between the salary negotiated by a company and the one that is actually paid to an employee by the end of the work period, be it monthly or weekly.
Wage drift refers to the situation where an employee's actual wages or earnings deviate from the originally agreed-upon or contracted wage rate. It occurs when an employee's earnings increase or decrease beyond what was initially negotiated due to various factors.
There are two main types of wage drift:
1. Positive wage drift: This occurs when an employee's actual earnings exceed the contracted wage rate. Positive wage drift can result from several factors, such as overtime work, performance-related bonuses or incentives, commission-based earnings, pay increases due to promotions or job changes, or the impact of collective bargaining agreements that lead to higher wages.
2. Negative wage drift: This refers to a situation where an employee's actual earnings fall below the contracted wage rate. Negative wage drift can occur when there are reductions in working hours, the loss of overtime opportunities, pay cuts, or changes in incentives or benefits that result in a decrease in total earnings.
Wage drift can arise due to a variety of reasons, including changes in work patterns, economic conditions, labor market dynamics, fluctuations in demand for labor, or adjustments in organizational policies or compensation structures. It can be influenced by factors both within and outside the control of employers and employees.
Managing wage drift is an important consideration for both employers and employees. Employers need to ensure that wage drift is properly monitored and managed to maintain compliance with employment contracts, labor laws, and collective agreements. Employees, on the other hand, may negotiate for wage adjustments or seek clarification from their employers if their earnings deviate significantly from the agreed-upon wage rate.
It's worth noting that wage drift can have implications for other aspects of employment, such as overtime eligibility, entitlement to benefits, and calculations for various statutory payments (e.g., holiday pay, sick pay). Therefore, it is essential for employers and employees to regularly review and track earnings to address any instances of wage drift and ensure fair compensation.