What's the point of asking previous salary of an applicant?

Question

In India I don't know why but most of the HR person usually ask about previous pay. What's the point of asking this?

This is not duplicate of How to respond to a direct ask of salary earned and expectations? as I am looking for reason on why HR would be concerned about previous salary.

Is it because they wan't to hire the applicant at minimum wage possible?

if that's the case then would it be fair in a company if two people who are doing the same work are paid very differently just because one person's previous salary was less?

Answer 1

I disagree with Snow's answer, it's not a sanity check to measure you have realistic expectations it's a cunning tactic of bargain that exploits introverted and low steem individuals all they want is to low ball you in hopes you're being underpaid and you don't realize

Asking for 20% more of what you currently make gives them leverage to question your entire career this puts them in psychological advantage, and I see them do this all the time with juniors and mid level

This is why many people refuse to talk about it none of their business Just do your market research and give them a number of what you expect as salary no need to tell them how much you currently make

Answer 2

Over and above the generic case of screening a candidate for the allocated budget for the role, this is more like part of a recruitment strategy, to choose the "least expensive" candidates, in India.

This is strange, but true, that many of the Indian organizations (software-oriented) has a very wide range of pay-scale for similar positions, and they want do offer the new salary based on the previous payout, plus a certain amount of hike.

Usually, the amount you can expect is : (previous pay + 20-30% of previous pay) i.e, 20-30% increase overall.

Is it because they wan't to hire the applicant at minimum wage possible?

Yes, it's weird, but real.

Answer 3

In India I don't know why but most of the HR person usually ask about previous pay. What's the point of asking this?

It's a lazy way of gauging the value of an applicant. The thinking goes that if the previous employer only thought they were worth X, why should I pay a whole lot more than X?

As a hiring manager, I've had to battle with upper management on many occasions, in order to pay a new hire what they were worth, rather than just a percentage above what they received in their last job. I didn't always win that battle. It always seemed foolish and short-sighted to me.

In parts of the US, it is now against the law to ask salary history questions. It has been deemed as discriminatory (particularly against women who on average make less than men for the same position). Instead, many potential employers will ask what salary you are looking for.

Answer 4

It's a sanity check to make sure that your expectations are realistic and that you're a match for the role being offered.

The employer knows that you're not going to take a pay cut before moving to them.

They also know that most applications ask for 5-10% above what they're currently on.

It's also a check on your pay grade. If you're being paid way less than the current job has a budget for, then it's an indication you're punching too far above your weight. If you're asking for far too much, then you're applying for the wrong job.

You could lie about it to get what you think is a good deal, but the salary will be covered with the references, so the lie will be found out. So most people are truthful when answering this question.