Hi-Tech Electronics Limited was established in 2006 in Kualalampur, Malaysia. It produces and markets all types of electronics goods in most of the Asian and Pacific countries. It has been one among the top five companies as for the level of technology and one among the top three

Companies regarding marketing of the products in Malaysia. The companys policy and practices concerning human resource management are top in the country. The companys salary administration policies and practices were taken as guidelines not only by the other companies but

Also by various wage boards and pay commissions in the country. But this company has been struggling a lot because of a minor problem relating to administration of salary and benefits. The problem is stated hereunder.

The company employed nearly 400 national young graduate and post graduate engineers and 20 expatriate engineers. This employees form the cream of the companys present human resource. The expatriate employees occupied higher position in all the departments including Human Resource Department. The companys salary policy and benefit policy were formulated mainly on the basis of the expatriate employees desire. The base salary of the company is the same for both the expatriate and national employees. But expatriate receive additional allowances like international market allowance, educational allowance, settling-in allowance, car allowance, housing allowance and entertainment allowance. Thus, expatriate receives nearly 250% more salary than the nationals doing the same job.

The national employees demanded the management to pay equally with that of expatriates immediately. According to them, the pocket frustrates them severely.

(a) What is the crucial issue in this case?

(b) If you were the HR manager of the company, whom do you satisfy?