Summer Training Project Report
PROJECT REPORT
ON
“WAGE AND SALARY ADMINISTRATION IN AN ORGANISATION”
IN PARTIAL FULFILLMENT OF THE DEGREE OF
BACHLOR OF BUSINESS ADMINISTRATION
SESSION (2012-2013)
TECHNOCARE SOLLUTION
SUBMITTED TO SUBMITTED BY
TRIPATI INSTITUTE OF PROFFESSIONAL STUDIES
ACKNOWLEDGEMENT
Summer Training is an important part of BBA and I would like to express my heartfelt gratitude towards TECHNOCARE SOLUTION for giving me this opportunity.
Initially I would like to take the privilege to express my deep sense of gratitude to Ms. Harjeet Kaur (Sr. Manager-HR),Technocare Solution, Rudrapur, Uttrakhand who granted me the permission to undertake my project work in this organization. I also like to thank sir for his able guidance, constructive criticism, and the right amount of personal touch, which enable the project in its present state.
I would also like to make Acknowledge to Mr. J.P.Singh (Director), who gave me his valuable time and provided me with relevant information and support. I am also grateful to all staff members of this cooperation
I would like to thank the HR department, TCS Rudrapur for making me familiar with the intricacies of report development and ensuring that work in a systematic manner.
Also, I would like to extend my gratitude to our institute Tripati Institute of Professional studies for giving me an opportunity to have a practical experience of job and for their continues support during the project.
STUDENT’S DECLARATION
This project has been undertaken for the partial fulfillment of the requirement for award bachelors degree in management.
The project was executed during the summer training after the 2nd semester of BBA under the supervision of Ms. Neha Adhar
Further, I declared that this project is my original work and the analysis and the findings are for academic purpose only this project has not been presented in any seminar or submitted elsewhere for the award of any degree or diploma.
TABLE OF CONTENTS
S.NO. | TOPIC | | 1. | PREFACE | | 2. | INTRODUCTION | | 3. | RESEARCH METHODLOGY | | 4. | COMPANY PROFILE | | 5. | WAGE AND DALARY INTRODUCTIONOBJECTIVES | | 6. | SALARY CONCEPT | | 7. | WAGE AND ALLOWANCES | | 8. | ESI AND BONUS | | 9. | QUESTIONNARE | | 10. | CONCLUSION | | 11 | RECOMMADATION | | 12. | BIBLOGRAPHY | | 13. | ANNEXURE | |
PREFACE
Human Resource Management is both an academic theory and a business practices that addresses the techniques of managing a workforce. The theoretical discipline is based on the assumption that employees are individuals with varying goals and needs, and as such should not be thought of as bonded labour or can be purchased at price. The field takes a positive view of employees study of practices followed by organization to manage this intellectual capital to their maximum satisfaction, so that they can work to best of their ability so, as a BBA student I must know the practical implication of concepts of Human Resource Management has given me this golden opportunity to meet this end, by means of this project work.
Project work consists of knowing about how Wage and Salary is maintained in the company and collect information for the same, as an HR student my aim was to get a deep insight into HR functioning and to know about the vital role that HR department plays in functioning of other departments.
I have done my project from Technocare Solution, Rudrapur, as per the requirement of BBA course. I hope to provide relevant information about the various HR functions of the organization in a nutshell by means of this report. It had been a constant Endeavour to remain informative and to the point.
INTRODUCTION OF COMPANY
A team of five entrepreneurs, leaders in their respective fields, joined hands together to form a group called as –TCS Group.
This group over the last three years has crossed many milestones both in quality & financial parameters.
In a short span we are a renowned name in the telecom sector. As a service provider we have won the confidence of prestigious organization as Airtel, Idea, Vodafone & Indus towers,
Our group turnover also have increased ten folds in last three years.
VISION
“We as service provider for telecom sector are delivering operational excellence through innovation technologies, dedicated field force & always a step ahead to satisfy the need of the customers."
We transform our actions to meet our commitments deliver to our custom.
MISSION Integrity - Honesty in every action Commitment - deliver what we promise Passion - energized action Delight customers through superior services Develop entrepreneurs through an Achievement- Oriented culture Build a sustainable global organization Share knowledge and focus on end-result.
We survive because of our customer
Service we offer
* Operation and telecom in charge for telecom sector. * Power Generation. * Erection of telecom towers. * Service providing to a organization require facility management.
-------------------------------------------------
Product & Services ! | | | |
Products and Services
Operation and Maintenance incharge for telecom sector- we as a service provider have made a name of repute due to our sincere efforts & dedicated field force striving hard to deliver the best, We have a record of providing the services to keep the outrages below the minimum standard as set apart by our parent organization . Power Generation –We provide electrification to the towers where ever required after liasioning with the concerned department / persons. We also provide generators of ratings even above 750 KWA & provide all level of services. We also provide the back up support to keep the continuous supply of power. Erection of telecom towers. We also on turnkey basis undertake the tower erection work either roof top or ground level. We provide the support from civil works to installation of sophisticated switch units of power generating equipments. Service providing to a organization requiring facility management—we provide complete solution to the organization to facilitate the smooth & hygiene working -----atmosphere of the organization. We also ensure to provide the best solutions to the organization within the given parameters.
------------------------------------------------- Customers / Partners!
-------------------------------------------------
NEWS & EVENT
Operation Shine
Project Shine: A step taken ahead for Hygiene of sites. 50 days mission to make all the sites LOOK GOOD, FEEL GOOD & WORK GOOD. Under Project Shine our Technical Manager, Mr. Vikram Singh Mehra, has taken this responsibility thoroughly. He with his Team consisting of 1 Technician Supervisor, 2 Technicians & 2 Helper are making the Project Shine mission Successful.
Project Sine was launched on 04th August, 2010 in Office Premises. During the Launch our Board of Members, Senior Official from Our Host Company – Indus Towers, Technician Supervisors, Technicians & Office Staff were together; consisting of total 60 plus members. We sung National Anthem to begin Project Shine.
The main reason to Launch Project Shine is make our Sites more Clean and Environment Friendly. There was lot many steps taken for Project Shine. For Example, removal of extra or raw material from site, proper cleaning and servicing of Electronic Equipments, Servicing of Diesel Generators, Checking the Boundary Walls, Checking Alarms on Site, etc.
Manpower Required S.No. | Designation | Eligibility | No. of Intakes | 1 | DG Technician | ITI | 6 | 2 | AC Technician | ITI | 4 | 3 | Technician for Network | ITI | 4 | 4 | SME & OME | ITI | 8 |
INTRODUCTION
The terms ‘wage’ and ‘salary’ are often used as synonyms. The term wage is commonly used for those employees whose pay is calculated according to the number of hours worked.
The word salary applies to compensation that is uniform from one period to the next and does not depend upon the number of hours worked.
Certain theories were propounded for determination of wages but these could not stand the test of time. A few labor and wage theories are discussed in this unit. It also focuses on job evaluation and methods of job evaluation.
Wage & Salary Administration
The term compensation management, or alternatively, wage and salary administration has come to be accepted as the designation for the field of endeavor concerned with the establishment and implementation of sound policies and methods of employee compensation.
It includes such areas as job evaluation, development and maintenance of wage structures, wage surveys, wage incentives, wage changes and adjustments, supplementary payments, profits haring, control of compensation costs, and other related pay items.
The term wage is commonly used for those employees whose pay is calculated according to the number of hours worked. Thus, the weekly pay check will fluctuate as the number of hours actually worked varies.
The word salary applies to compensation that is uniform from one period to the next and does not depend upon the number of hours worked. Salaried often implies a status distinction, because those who are on salary are generally white-collar, administrative,
Professional, and executive employees, whereas wage-earners are designated as hourly, non supervisory, or blue-collar. Wage-earners in some organizations do receive full wage if they are absent for such reasons as sickness, whereas salaried employees, especially at the lower levels, often receive overtime pay when they work over the standard work week.
A job is defined as a collection or aggregation of tasks, duties, and responsibilities that, as a whole, is regarded as the reasonable assignment to an individual employee. A job may include many positions, for a position is a job performed by an individual and hence related to a particular employee. Thus, an employee has his position, but many positions may involve the same assignment of duties and constitute a single job. The job is impersonal, the position is personal.
OBJECTIVES
Concept of salary and structure
Concept of wage
The concept of allowances
Computation of taxable value of allowances
The computation of basic salary in grade system
Types of commission an employee can get
SALARY CONCEPT
Salary, in simple words, means remuneration of a person, which he has received from his employer for rendering services to him. But receipts for all kinds of services rendered cannot be taxed as salary. The remuneration received by professionals like doctors, architects, lawyers etc. cannot be covered under salary since it is not received from their employers but from their clients. So, it is taxed under business or profession head. In order to understand what is included in salary, let us discuss few characteristics of salary.
CHARACTERISTICS OF SALARY
1. The relationship of payer and payee must be of employer and employee for an income to be categorized as salary income. For example: Salary income of a Member of Parliament cannot be specified as salary, since it is received from Government of India which is not his employer.
2. The Act makes no distinction between salary and wages, though generally salary is paid for non-manual work and wages are paid for manual work.
3. Salary received from employer, whether one or more than one is included in this head.
4. Salary is taxable either on due basis or receipt basis which ever matures earlier:
i) Due basis – when it is earned even if it is not received in the previous year. ii) Receipt basis – when it is received even if it is not earned in the previous year. iii) Arrears of salary- which were not due and received earlier are taxable when due or received, whichever is earlier.
5. Compulsory deduction from salary such as employees’ contribution to provident fund, deduction on account of medical scheme or staff welfare scheme etc. are examples of instances of application of income. In these cases, for computing total income, these deductions have to be added back.
SALARY STRUCTURE at PERFETTI VAN MELLE
Description per Month Per Annum Salary heads: | | | basic salary | | | HRA | | | Special Allowance | | | Conveyance Allowance | | | Education Allowance | | | Medical Reimbursement | | | Night Allowance | | | Leave travel allowance | | | Statutory Bonus | | | Provident Fund | | | Gratuity | | | Total | | |
Advance Salary, if received in previous year for next year is taxable on receipt basis in the same previous year.
Illustration
X joins service in the grade of Rs.12000 – 300 – 13800 – 400 – 17800 on 1st June,
1999. Compute his basic salary for the previous year 2005-06.
Solution:
For the previous year 2005-06, basic salary of X will be calculated as follows:
1st June 1999 – 31st May 2000 12000
1st June 2000 – 31st May 2001 12300
1st June 2001 – 31st May 2002 12600
1st June 2002 – 31st May 2003 12900
1st June 2003 – 31st May 2004 13200
1st June 2004 – 31st May 2005 13500
1st June 2005 – 31st May 2006 13800
Basic Salary for April and May 2005 (Rs.13500 x 2) 27,000
Basic Salary for June 2005 – March 2006 (Rs.13800 x 10) 1, 38,000
Basic Salary for previous year 1, 65, 00
WORKER’S WAGE:
* MINIMUM WAGES—NOT MERELY BARE SUBSISTANCE, BUT PROVISION FOR PRESERVATION OF EFFICIENCY BY PROVIDING SOME MEASURE OF EDUCATION, MEDICINES AND AMINITIES, BE MADE.
* FAIR WAGES—LOWER LIMIT =MINIMUM WAGES. UPPER LIMIT SET BY CAPACITY TO PAY. BETWEEN THE TWO BASED ON 1. PRODUCTIVITY 2 .PREVAILING RATES 3. LEVELS OF NATIONAL INCOME AND DISTRIBUTION. 4. PLACE OF INDUSTRY IN COUNTRY’S ECONOMY * LIVING WAGES—REPRESENTS STANDARD OF LIVING, NOT MERELY PHYSICAL SUSTAINENCE, BUT DECENCY, PROTECTION AGAINST ILL-HEALTH, REQUIREMENTS OF ESSENTIAL SOCIAL NEEDS AND INSURANCE AGAINST IMPORTANT MISFORTUNES AND OLD AGE LIVING. LIVING WAGE IS A DYNAMIC CONCEPT
WAGE FIXATION- STRUCTURE:
1. BASIC WAGES. 2. BONUS. 3. HOUSE RENT ALLOWANCE. 4. DEARNESS ALLOWANCE. 5. OVERTIME PAYMENTS. 6. PAYMENTS BY RESULTS. 7. FRINGE BENEFITS AND OTHER ALLOWANCES. 8. RETIREMENT BENEFITS.
1. BASIC WAGES—
‘Basic Wages’ has been defined under Section
2(b) of the EPF & MP Act, 1952 as below:
Section 2(b) “basic wages” means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include
i. The cash value of any food concession; ii. Any dearness allowance (that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living), house rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment. iii. Any presents made by the employer; Minimum basic wage which the employer of any industrial labour must pay in order to be allowed to be continue an industry.
No industry has right to exit unless it is able to pay its employees at least a bare minimum wages. If any employer cannot maintain his enterprise without cutting down wages of his employees below even a bare subsistence or minimum wages, he would have no right to conduct his enterprise on such terms.
2. BONUS
Payment of Bonus Act was enacted in 1965. The establishment covered under the act. An employee under the act means any person other than apprentice, engaged for hire/reward whether the terms of employment be express or implied and includes supervisors/managerial and administrative employees drawing salary/wages not exceeding Rs. 3500 p.m. Who has worked for not less than 30 days in an accounting year, shall be eligible for bonus for a minimum of 8.33% of the salary/wage even if there is loss in the establishment whereas a maximum of 20% of the employee’s salary/wages is payable as bonus in an accounting year.
In case of the employees in the salary/wage range of Rs. 2500 to Rs. 3500 p.m. for the purposes of payment of bonus, their salary/wages would be deemed to be Rs. 2500 p.m. * Bonus on allowance * Bonus on arrears of wages * Bonus on commission
Eligibility for bonus:
The payment of bonus act indicates that the following categories of persons will be entitled to bonus: a) Skilled or unskilled or manual labour b) Managerial staff c) Supervisory staff d) Administrative staff e) Technical staff f) Clerical staff
An employee who has been engaged on hires or reward on terms which are either express or implied i. His salary does not exceed Rs. 2500 per mensem is entitled to bonus, but he must have worked for at least 30 working days in a year. ii. Who is not an apprentice?
3.House Rent Allowance (H.R.A.)
An allowance granted to a person by his employer to meet expenditure incurred on payment of rent in respect of residential accommodation occupied by him is exempt from tax to the extent of least of the following three amounts:
a) House Rent Allowance actually received by the assessee
b) Excess of rent paid by the assessee over 10% of salary due to him
c) An amount equal to 50% of salary due to assessee (If accommodation is situated in Mumbai, Kolkata, Delhi, Chennai)
‘Or’ an amount equal to 40% of salary (if accommodation is situated in any other place).
Salary for this purpose includes Basic Salary, Dearness Allowance (if it forms part of salary for the purpose of retirement benefits), Commission based on fixed percentage of turnover achieved by the employee.
The exemption of HRA depends upon the following factors:
(1) Basic Salary (3) Rent paid
(2) Place of residence (4) HRA received
If an employee is living in his own house and receiving HRA, it will be fully taxable. Illustration
Mr. X is employed in A Ltd. getting basic pay of Rs.20, 000 per month and dearness allowance of Rs.7, 000 per month (half of the dearness allowance forms part of salary for the purpose of retirement benefits). The employer has paid bonus @Rs.500 per month, Commission @1% on the sales turnover of Rs.20 lakhs, and house rent allowance of Rs.6, 000 per month. X has paid rent of Rs.7,
000 per month and was posted at Agra.
Compute his gross salary for the assessment year 2006-07
Solution:
Computation of Gross Salary Amount / Rs.
Basic Salary (Rs.20,000 x 12) 2,40,000
Dearness Allowance (Rs.7,000 x 12) 84,000
Bonus (Rs.500 x 12) 6,000
Commission (1% of Rs.20,00,000) 20,000
House Rent Allowance(Rs.6,000 x 12 – Amount exempt Rs.53,800) 18,200
Gross Salary 3,68,200 Amount of HRA exempt is least of 3 amounts:
1. 40% of Salary (Rs.2,40,000 + Rs.42,000 + Rs.20,000) = Rs.3,02,000
2. Actual HRA received (Rs.6, 000 x 12) = Rs. 72,000
3. Rent paid (Rs.7, 000 x 12 – 10% of salary Rs.30, 200) = Rs. 53,800
Amount of HRA exempt is = Rs. 53,800
1. DEARNESS ALLOWANCE—
TO COMPENSATE FOR THE INCREASE IN PRICES
Dearness Allowance is a device to protect to a greater or lesser extent the real income of a wage earner.
During the W.W.1, management instead of revising wages, paid a separate amount as exgratia (known as the dear food allowance), hoping that prices would come back to normal after the war.
During the W.W.2, the CPI rose from 105 to 113 and the government persuaded the Mill Owners to pay D.A. @ of 1.75 an as per day per point rise over CPI no:105. On 31.05.1945 Industrial Court awarded Rs. 44.11.11. On 1.09 1953 CPI crossed 325. On 17.01.55 L.A.T. gave revised textile D.A. # They show monthly avg. price paid by the population group covered for a fixed list of basket of goods and services.
# This is over a fixed period called the base period.
#The index at the base is 100 so that indices for later periods is automatically expressed as percentage of the index at the base period.
# Define the group- working class, middle class etc. and its geographic area.
# Determine the consumption level and pattern.
# Ascertain the fixed basket of goods and services.
# Define the quality.
# Give weight ages, depending on consumption pattern. (structure of weight ages is called weighing diagram)
# Collection of price data:
The no:= the % change, in different * by weights before they are averaged to yield the index number.
5. OVERTIME ALLOWANCE: # In appropriate allocation of manpower.
# Absenteeism.
# Urgent breakdowns.
# Work fluctuations.
# Rush jobs at the month end.
# Willful planning by workers.
# Overtime amount to be paid is determined by negotiations and minimum requirement of the factories act 1948 must be met.
6. PROVIDENT FUND: Provident fund is calculated @ 12% on the basic salary, which indeed is deducted from employees salary and the same plus 12% on the basic is contributed by the employer. So the aggregate 12% + 12% is remitted to the provident fund department.
BASIC WAGES FOR E.P.F. Employees provident fund “all emoluments which are earned by an employee while on duty or on leave with wages in accordance with the term of the ‘contract of employment’. According to the scheme of the act, an employee in order to avail the benefit of the scheme, must be regular employee of the establishment. The test of regular employment would not be on the nature of the terms of employment but on the nature of business carried on by the establishment and its commercial norms. It clearly states ‘in accordance’ with the terms of the ‘contract of employment’. Therefore, if in accordance with the terms of the ‘contract of employment’.
* Casual Employees and E.P.F. According to the scheme of the Act, an employee in order to avail the benefit of the scheme of the act must be regular employee of the establishment. The test of regular employment would not be on the nature of the terms of employment but on the nature of business carried on by the establishment and its commercial norms. Unless and until the employees are on the regular monthly contribution it is impossible to conceive that the employer alone can be called upon to make its contribution for those employees who casual and not in regular employment.
7. EMPLOYEE STATE INSURANCE: Employee state insurance is calculated at 1.75% on the gross salary of the employees whose salary is below Rs. 15000/-p.m. (w.e.f 2008) and employer contributes 4.75% on the gross salary of the employee and the aggregate 1.75% + 4.75% is remitted to the ESI Department. The amount of contribution for a wage period shall be as follows: * Employer’s contribution, a sum (rounded to the next of five paise) equal four and three-fourth percent of the wages payable to an employee. * Employee’s contribution, a sum (rounded to the next higher multiple of five paise) equal to one and three-forth per cent of wages payable to an employee. The Scheme, as per provision of the act, is devised so as to provide social protection to workers in contingencies such as illness, long term sickness or any other health risk due to exposure to employment injury or occupational hazards. Medical facility has also now been introduced for retired insured persons and permanently, disabled workers and their spouses at a nominal contribution of Rs. 10 per month. POSITION OF AN APPRENTICE UNDER ESI: The apprentices who are mere trainees or a particular period for a distinct purpose are not employees under sec. 2(9) of the E.S.I. Act. And the employer is not bound to employ them after training period. Medical care is provided to the insured persons and their family members through a vast and widespread network of ESI dispensaries, ESI hospitals and panel clinics. * ESI Contribution on incentive bonus The E.S.I . authorities can ask for payment of incentive bonus payable to the employees more particularly when such an incentive is linked with production. In this context reference is made to one case wherein it was held that production bonus paid to the employees for more production falls within the latter definition of wages in sec. 2(22) of the E.S.I. Act. * ESI On Overtime There has been differences of opinion of various High Courts on this point. Finally the Supreme court has held that overtime wage will be liable for the deductions for ESI’s contributions. The employer is obligated to pay wages an employee receives for normal work. In other words, both the remuneration received during the working hours and overtime constitute a composite wages and thereby it is a ‘wage’ within the meaning of section 2(22) of the Act. Whatever remuneration , paid or payable for overtime work, forms wages under an implied term of the contract of employment and the remuneration paid therefore forms part of the ‘wages’.
* ESI Contribution on paid holidays The payment made by an employer in respect of ‘paid holidays’ is not ‘wages’ and therefore the employer is not liable to pay special contribution on such payment made to his employees in respect of ‘paid holidays’. Paid holiday is a holiday which could not be substituted for another holiday and under the terms of the contract, the parties agree that on that day no service would be taken and yet payment would be made. * ESI Disputes and civil courts Sec. 75 of the Employees State Insurance Act provides a forum for adjudication of the dispute as to whether any person is an employer and is liable to pay employee’s contribution , act applies to find out the principal employer, it would be necessary to find out the owner of occupier of the factory as far as clause(1)17 of section 2 is concerned. It has been held that it is only in relation to a factory or an establishment to which the act applies that the question or dispute can be adjudicated as provided for in clauses (a) to (d) of sec. 75(1)of the act. The dispute would squarely fall under clauses (c), (d) and (g)of sec. 75(1). It is covered then by virtue of 75(3) the jurisdiction of the civil court to decide or deal with such disputes would be barred. * ESI Contributions on closure of the establishment The ESI authorities can ask for payment of incentive bonus payable to the employees more particularly when such bonus payable to the employees more particularly when such an incentive is linked with production. In this context reference is made to one case wherein it was held that production bonus paid to the employees for more production falls within the latter part of definition of wages In sec. 2(22) of the ESI Act. The Bombay high court has also held that the amount paid to employees towards incentive or production bonus will constitute wages for ESI purpose
RETIREMENT BENEFITS
Every employee must know the quantum of the various retirement benefits he would be getting, as well as its tax implications. The employee may get more benefits if he chooses a good employer but he has no choice in respect of taxes.
Retirement benefits received by an employee are taxable under the head Salary. Thus, the employer must take these benefits into account while computing the Tax Deducted at Source (TDS) at the time of retirement of an employee. Some retirement benefits are fully or partially exempt from tax.
Some of the retirement benefits are:
Pension
Pension is the income received by an employee after his retirement. It is a periodical allowance, on account of past service, given by a former employer after the retirement of an employee. Periodical pension is called un-commuted pension. When a lump-sum payment is made in lieu of a periodical pension, it is termed as commuted pension. Pension of an employee is taxable under the head salary. Taxability of pension depends on whether it is periodic or lump-sum.
Periodic payment (un-commuted pension) is fully taxable in case of both government and non-government employees. Lump-sum Payment (commuted pension) is tax-free in case of government employees. In case of other employees, if that employee is also receiving gratuity, then 1/3rd of the commuted pension would be exempt from tax. If gratuity is not received by an employee, half of the commuted pension will be exempt from tax.
GRATUITY
Gratuity is a lump-sum payment made by an employer as a mark of gratitude for the services rendered by his employee. It is an important form of social security benefit. Gratuity is payable at the end of the employment (by way of retirement, death, termination or resignation). Every employer who has more than 10 salaried workers is allowed to grant gratuity to workers. The law which governs gratuity in India is the Payment of Gratuity Act, 1972.
To receive gratuity, the employee should at least have completed 5 years of service. The payment of gratuity is made to the employee based on the duration of his total service to that employer. The benefit is payable by taking the last drawn salary as the basis for calculation.
For the purpose of Income Tax, gratuity received by an employee of the central government, state government or any local authority is completely exempt from tax.
For other employees, the least of the following is exempt from tax * Rs. 10,00,000 (as per amendment from march 2010) * Gratuity actually received, or * Half month's average salary (average of last 10 months salary) for each completed year of service. a) GRATUITY ON ALLOWANCES
Bonus, commission, House rent allowance, overtime wages and other allowances through paid in cash have been deliberately excluded by the legislature to form part of emolument.
b) AVERAGE MONTHLY WAGES
This can only mean the wage earned by an employee during a month divided by the no. of days for which he has worked and multiplied by 26 days in order to arrive at the monthly wages for computation of gratuity payable under a scheme of gratuity framed by the employer
c) GRATUITY AND BREAK IN SERVICE
Under this sec. an employee said to be in ‘continuous service’ for a period if he has, been in uninterrupted service including service which may be interrupted on account of absence from duty without leave.
Leave Encashment
Leave encashment is the encashment of unused leave of an employee. The employee surrenders the leave at the time of retirement and is paid for the same. Taxability of leave encashment received at the time of retirement is as follows * In case of government employees, it is fully exempt from tax. * In case of non-government employees, the least of the following is exempt * Rs. 3,00,000/- * 10 months average salary * Leave encashment actually received * Cash equivalent to the leaves surrendered
Employees are provided leaves on the basis of calendar year from Jan to Dec.
CASUAL LEAVE- Casual leave may be asked for meeting in estimate able and unforeseen circumstances suddenly arising. Each application for casual leave has to be judged on its own merits. The merit of an application for casual leave has to be weighed according to the circumstances for which the leave is required.
In TCS there are 7 casual leaves which are availed to the employees.
SICK LEAVE- An employee availing more than 3 consecutive sick leaves at a time will have to produce a medical certificate duly attested by the local doctor or physician. In a calendar year, employee can avail maximum 30 sick leaves. Pending sick leaves at the end of the year can be carry forwarded & gets credited to the leave account.
EARNED LEAVE- an employee earns at least 30 earned leaves in a calendar year ranging from Jan to Dec. Employee can carry up to 60 earned leaves for next year, balance leaves are automatically credited to the leave account of the employee.
Encashment of earned leaves is done at the end of the year Jan to Dec calculated on the basis of basic salary estimated for no. of earned leaves to be encashed & the amount gets automatically credited to the employee’s account.
Medical claim or reimbursement
An employee can claim for medical benefit after producing the complete bills of any treatment or surgery done with the proper approval & prescription of concerned doctor. The document attached with bills & medical reports like reports of CT scan, MRIs, Delivery reports, any operation performed etc. are duly signed by the concerned HOD & HR manager & then forwarded to the corporate office for further processing through HR. The documents there are properly verified & if the bills & documents are found genuine, the claimed amount gets credited to the employee’s account according to their limit to which they can claim.
Any employee having salary below Rs. 15000/- pm can avail for medical benefit under ESI scheme. The norms & policy according to the ESI act imposed by Govt of India deducts some amount from the employee’s salary on monthly basis which is credited to employee’s ESI account. In case of any accident or emergency or any medical treatment undergone, the employee gets treated in a local ESI hospital & the payment of treatment is done by the insurance company according to the policy & norms. Monthly ESI challans & account is updated by HR & the employees are provided a ID card without which they cannot avail this benefit.
Contingency Loan
Contingency loan can be availed by an individual for maximum 3 times in 10 years of service in same organization maximum eventually when employee is in need for loan emergency reasons like marriage, treatment, car loan, personal etc.
For Staff- the maximum loan amount can be availed up to four times of basic salary per month given at no interest till Rs 25000, but above Rs.25000, 8% interest is charged. Further, the amount is deducted from salary in 18 regular installments on monthly basis. To claim for a loan,there must be no previous loan due or loan must be completed. With special approval in written application by the manager, and duly signed by HR manager, employee gets the loan amount in cash or cheque.
In case of Shop Floor Employees the individual can avail loan amount up to Rs 30000 with no interest with proper application letter signed by HOD & duly approved by the HR manager
Further the salary amount is deducted within 18 installments of the loan on monthly basis. The terms & conditions for staff & sfe’s remains same.
Voluntary Retirement Compensation
Many companies today provide its employee with the option of taking voluntary retirement under the Voluntary Retirement Scheme (VRS). This scheme is drawn to right-size the existing strength of employees within a company. The benefits derived by an employee by opting VRS can also be considered as retirement benefit. VRS is applicable to only those employees who have completed 10 years of service or are of the age of 40 years. Under VRS, the employees are offered a onetime lump-sum amount. For income tax purposes, this compensation amount received is exempt up to Rs. 5,00,000/- if all the conditions under the scheme are fulfilled. WAGES AND ALLOWANCES
Wages are central concern for both the employers and thee employees the employers and the employees. The employer always thinks of how to decrease the production cost while the employees on the other hand, see wages in terms of their pre-occupation, better, housing, schooling and food etc.
Allowances
Adjudication dearness allowance
The guideline for adjudication in respect of D.A. as laid down by supreme court are as follows: 1. Full neutralization is not normally given except to the very lowest class of employees. 2. D.A. should be on a sliding scale and provide the increase according to rise in the cost of living index and decrease on a fall in the cost of living index. 3. The fixation on D.A. should be on industry-cum-region basis. 4. Employees getting the same wages should get the same DA irrespective of the category to which they belong. 5. The additional financial burden upon an employer and his capacity to bear such burden.
Adjustment of loan from wages It is within the right of employer to adjust the outstanding loan against an employee resigned from service and a sum of Rs. 66.35 paise was payable to him as arrear of wages. However, the employee owned a sum of Rs. 983.46 paise to the employer as balance of advance paid to him.the employer adjusted the entire amount of arrears of wages against the dues payable to him which was objected by the employee on the plea that he has resigned from service and the permissible deduction was being made while he was in the employment and, therefore, the employer was entitled to deduct from Rs. 22.50 paise only from wages for September and part of October, 1975.
Allowance for suspension period
Ordinarily, the law is that a work man may be suspended pending enquiry and disciplinary action. If after the enquiry the misconduct is proved and the workmen is dismissed, he is not entitled to any wages for the suspension period but if the enquiry exonerates the workman he is not entitled not only to reinstatement but also to full wages for the suspension period because in such a case the workman would be deemed to have remained in the service of the employer.
The tribunal must award the full wages for the whole period of suspension when it set aside the order of dismissal, or even when it set aside the order if no enquiry has been held by the employer.
Calculation of average monthly wages
The expression, ‘average monthly wage’ can only mean the wage earned by a workman during a month divided by the no. of days for which he has worked and multiplied by 26 days in order to arrive at the monthly wages for computation of gratuity payable under a scheme of gratuity framed by the employer. While fixing the minimum wages for a daily wage worker, made under the minimum wage act, the same pattern is adopted.
Contracting out
Sec. 25 of the minimum wage act as in force provides that any contract or agreement irrespective of whether it was made before or after the commencement of the act, whereby an employee either relinquishes or agrees to forgo into or impart his right to minimum rate of his wages or else forgoes any privilege or concession to which he is entitled under the act, shall render such contract or agreement null and void, but only to the extent it purports to reducing the rate of wages fixed under the act.
Deduction of wages and absence of ten persons from duty
If ten or more employed persons acting in concert absent themselves without due notice and without reasonable cause from duty, the employer can deduct from their wages. And such deduction from any such person may include such amount as not exceeding his wages for eight days as may be and such terms be due to the employer in lieu of due notice. Tool down strike also amounts to absence from duty. However, while making penal deductions from wages a show cause notice must be issued to the employee.
Night-shift allowance
Night shift allowance is an allowance for doing work in the night shifts in cases where the factory is run on shifts. Decisions of the courts on the question of night shift allowance are not uniform.
In some cases, the courts have negative the claim for night shift allowance on the ground that where the industry is of such a nature that continuous working is essential for technical reasons, the rotation of workmen in night shifts would be a condition of service and a part the job and, therefore, no special allowance is called for.
Special allowance
A special allowance can be granted only to the employees whose work carries some special risk or special strain which is not shared by the other employees in the same class or category. Thus, where the office of the company is situated in the heart of the company and only a short distance from the bank and the sepoys who are entrusted with the work of carrying money from the bank do not run risk and the duty of bringing the money is not more strenuous than any other duty usually allotted to sepoys, the sepoys concerned are not entitled to any special allowance. Similarly, sepoys who are given duplicating and filling work are not entitled to any special allowance.
Conveyance allowance
Considering the demands of workmen for transport facility along with various other demand such as wage scales, dearness allowance etc. the tribunal has jurisdiction in a proper case to call upon an employer to reimburse the workmen atleast to a limited extent regarding transport expenses incurred by the latter for going to his place of work. The tribunal is justified in having regards to the practice obtaining in that region on the principle of region-cum-industry when considering the claim of the workers of the payment of transport allowance. Though the tribunal cannot impose any new obligation on an employer merely on the ground that the financial capacity of the employer is sound, nevertheless while imposing the new obligation the tribunal has also to consider the capacity of the employer to bear the burden. It has been held that the award of the sum of 15 paise per day to workmen saying at a distance of 5 miles or more could not be stated to be unreasonable.
Managing compensation
The basic purpose of wage and salary administration is to establish and maintain an equitable wage and salary structure.
Its secondary objective is the establishment and maintenance of an equitable labor cost structure i.e., an optimal balancing of conflicting personnel interests so that the satisfaction of employees and employers is maximized and conflicts are minimized.
The wage and salary administration is concerned with the financial aspects of needs, motivation and rewards Managers, therefore, analyze and interpret the needs of their employees so that reward can be individually designed to satisfy these needs.
Labor was always looked upon as a commodity governed by the law of supply and demand.
Certain theories were propounded for determination of wages but these could not stand the test of time.
A few theories are discussed below:
1. Subsistence theory:
This theory, also known as 'Iron Law of Wages', was propounded by David Ricardo According to this theory; wages tend to settle at a level just sufficient to
Maintain the workers and his family at minimum subsistence levels. The theory applies only to backward countries where laborers are extremely poor and are unable to get their share from the employers.
2. Standard of living theory:
This theory is a modified form of subsistence theory. According to this theory, wages are determined not by subsistence level but also by the standard of living to which a class of laborers becomes habituated.
3. Residual claimant theory:
Francis A. Walker propounded this theory. According to him, there were four factors of production/ business activity viz., land, labor, capital and entrepreneurship. Wages represent the amount of value created in the production which remains after payment has been made for all these factors of production. In other words, labor is the residual claimant
4. The wage fund theory:
According to this theory, after rent and raw materials are paid for, a definite amount remains for labor. The total wage fund and the number of workers determine the average worker's share in the form of wages.
5. Demand and supply theory:
According to this theory, wages depend upon the demand and supply of labour.
6. Marginal productivity theory:
This is an improved form of demand and supply theory. Wages are determined by the value of the net product of the marginal unit of labor employed.
7. Purchasing power theory:
According to this theory the prosperity, productivity and progress of industry depend on there being sufficient demand to ensure the sale of its products and pocketing of reasonable profits. A large part of the products of industry is consumed by workers and their families and if wages are high, demand will be good. However, if wages and the purchasing power of the workers are low, some of the goods will remain unsold; output will go down, which will result in unemployment.
8.The bargaining theory of wages:
John Davidson propounded this theory. According to him, wages are determined by the relative bargaining power of workers or trade unions and of employers. When a trade union is involved, basic wages, fringe benefits, job differentials and individual differences tend to be determined by the relative strength of the organization and the trade union.
FACTORS:
The following factors should be taken into consideration for fixation of wages:
1. The degree of skill.
2. The strain of work.
3. The experience involved.
4. The training involved.
5. The responsibility undertaken.
6. The mental and physical requirements.
7. The disagreeableness of the task.
8. The hazard attendant on the work, and
9. The fatigue involved.
CLASSIFICATIONS: The International Labor Organization (ILO) in one of its publications,classified wages as under:
1. The amount necessary for mere subsistence;
2. The amount necessary for health and decency; and
3. The amount necessary to provide a standard of comfort.
a. MINIMUM WAGE
b. FARE WAGE; Depends on the following:
i) The productivity of labor; ii) The prevailing rates of wages in the same or neighboring localities; iii) The level of the national income and its distribution; and iv).The place of industry in the economy.
c. LIVING WAGE
Methods of fixing wages
* Collective Bargaining * Voluntary Arbitration * Wage Legislation * Conciliation * Adjudication * Wage Boards
COMPENSATION SYSTEM
Pay:
Pay is a statement of an employee’s worth by an employer.
Or
Pay is a perception of worth by an employee
HR Management Strategy Model:
Human resource department uses different strategies to manage the workforce so that the desired results can be attained. These desired result can be attained if organization is able to attract,select, develop and retain workforce in successful manner in short, the effective hiring and retaining workforce can be helpful in achieving organizational goals. This purpose can be attained through fair and effective rewards systems in the organization. Rewards are used as basic motivational tools in the organization so that performance of the employees can be influenced in desirable way. So to be more successful organizations need attractive and fair compensation and reward systems to be paid to the workforce.
A. Job Pricing
Job pricing means placing a dollar value on the worth of a job.
I. Pay Grades—the grouping of similar jobs together to simplify the job pricing process.
Plotting jobs on a scatter diagram is often useful in determining the appropriate number of pay grades.
II. Wage Curve—the fitting of plotted points in order to create a smooth progression between pay grades.
III. Pay Ranges—includes a minimum and maximum pay rate with enough variance between the two to allow some significant pay difference.
IV. Broad Banding—a technique that collapses many pay grades (salary grades) into a few wide bands in order to improve organizational effectiveness.
V. Single-Rate System—Pay ranges are not appropriate for some workplace conditions. When single rates are used, everyone in the same job receives the same base pay, regardless of seniority or productivity. This rate may correspond to the midpoint of a range determined by a compensation survey.
VI. Adjusting Pay Rates—when pay ranges have been determined and jobs assigned to pay grades, it may become obvious that some jobs are overpaid and others underpaid. Underpaid jobs normally are brought to the minimum of the pay range as soon as possible.
Compensation: An Overview
Compensation—The total of all rewards provided employees in return for their services.
Direct Financial Compensation—Consists of the pay that a person receives in the form of wages, salaries, bonuses, and commissions.
Indirect Financial Compensation—All financial rewards that are not included in direct compensation.
iv. Non-financial Compensation—Consists of the satisfaction that a person receives from the job itself or from the psychological and/or physical environment in which the person works. All such rewards comprise a total compensation program.
I. Equity in financial compensation:
Organizations must attract, motivate, and retain competent employees. Because achievement of these goals is largely accomplished through a firm’s compensation system, organizations must strive for compensation equity.
a. Equity—Workers’ perceptions that they are being treated fairly. Compensation must be fair to all parties concerned and be perceived as fair.
b. External Equity—Exists when a firm’s employees are paid comparably to workers who perform similar jobs in other firms.
c. Internal Equity—Exists when employees are paid according to the relative value of their jobs within an organization.
d. Employee Equity—Exists when individuals performing similar jobs for the same firm are paid according to factors unique to the employee, such as performance level or seniority.
e. Team Equity—Achieved when more productive teams are rewarded more than less productive teams.
Determinants of individual financial compensation:
Compensation theory has never been able to provide a completely satisfactory answer to what an individual is worth for performing jobs.
• The Organization,
• The Labor Market,
• The Job, and
• The Employee
These all have an impact on job pricing and the ultimate determination of an individual’s financial compensation.
The Organization as a Determinant of Financial Compensation:
• Compensation Policies—An organization often establishes—formally or informally—
Compensation policies that determine whether it will be a pay leader, a pay follower, or strive for an average position in the labor market.
1. Pay Leaders: Those organizations that pay higher wages and salaries than competing firms.
2. Market Rate or Going Rate: The average pay that most employers provide for the same job in a particular area or industry.
3. Pay Followers: Companies that choose to pay below the market rate because of poor financial condition or a belief that they simply do not require highly capable employees.
• Organizational Politics—Political considerations may also enter into the equation. A sound, objective compensation system can be destroyed by organizational politics. Managers should become aware of this possibility and take appropriate action.
• Ability to Pay—An organization’s assessment of its ability to pay is also an important factor in determining pay levels. Financially successful firms tend to provide higher-than average compensation. However, an organization’s financial strength establishes only the upper limit of what it will pay.
The labor market as a determinant of financial compensation:
Potential employees located within the geographical area from which employees are recruited comprise the labor market.
• Compensation Surveys—Large organizations routinely conduct compensation surveys to determine prevailing pay rates within labor markets.
1. Compensation surveys: Provide information for establishing both direct and indirect compensation. 2. Benchmark job: A job that is well known in the company and industry, one that represents the entire job structure, and one in which a large percentage of the workforce is employed.
• Cost of Living—A pay increase must be roughly the equivalent to the cost of living increase if a person is to maintain a previous level of real wages.
• Labor Unions—When a union uses comparable pay as a standard for making compensation demands, the employer must obtain accurate labor market data. When a union emphasizes cost of living, management may be pressured to include a cost-of-living allowance (COLA). This is an escalator clause in the labor agreement that automatically increases wages as the U.S Bureau of Labor Statistics’ cost-of-living index rises.
• Society—Compensation paid to employees often affects a firm’s pricing of its goods and/or services. Consumers may also be interested in compensation decisions.
• Economy—In most cases, the cost of living will rise in an expanding economy. Thus, the economy’s health exerts a major impact on pay decisions.
• Legislation—The amount of compensation a person receives can also be affected by certain federal and state legislation.
The job as a determinant of financial compensation:
Organizations pay for the value they attach to certain duties, responsibilities, and other job related factors.
Techniques used to determine a job’s relative worth include job analysis, job descriptions, and job evaluation.
• Job Analysis and Job Descriptions—Before an organization can determine the relative difficulty or value of its jobs, it must first define their content, which it normally does by analyzing jobs. Job analysis is the systematic process of determining the skills and knowledge required for performing jobs. The job description is the primary by-product of job analysis, consisting of a written document that describes job duties and responsibilities. Job descriptions are used for many different purposes, including job evaluation.
• JOB EVALUTION—That part of a compensation system in which a firm determines the relative value of one job compared with that of another.
The employee as a determinant of financial compensation:
In addition to the organization, the labor market, and the job, factors related to the employee are also essential in determining pay and employee equity.
I. Performance Based Pay—PA data provide the input for such approaches as merit pay,
Variable pay, skill-based pay, and competency-based pay.
1. Merit Pay: A pay increase given to employees based on their level of performance as indicated in the appraisal.
2. Bonus: The most common type of variable pay for performance and is a one-time award that is not added to employees’ base pay.
3. Skill-based Pay: A system that compensates employees on the basis of job-related skills and knowledge they possess, not for their job titles.
4. Competency-Based Pay: A compensation plan that rewards employees for their demonstrated expertise.
II. Seniority—The length of time an employee has been associated with the company, division, department, or job is referred to as seniority.
III. Experience—Regardless of the nature of the task, very few factors has a more significant impact on performance than experience.
IV. Membership in the Organization—Some components of individual financial compensation are given to employees without regard to the particular job they perform or their level of productivity.
V. Potential—Organizations do pay some individuals based on their potential.
. Political Influence—Political influence is a factor that obviously should not be used as a determinant of financial compensation. However, to deny that it exists would be unrealistic.
f. Luck—The expression has often been stated, “It certainly helps to be in the right place at the right time.” There is more than a little truth in this statement as it relates to the determination of a person’s compensation.
g. Special Employee Classes—These include pay for executives, which are discussed in a later section, and pay for professionals and sales employees.
Executive Compensation:
Executive skill largely determines whether a firm will prosper, survive, or fail. Therefore, providing adequate compensation for these managers is vital. A critical factor in attracting sand retaining the best managers is a company’s program for compensating executives.
a) Determining Executive Compensation—In determining executive compensation, firms typically prefer to relate salary growth for the highest-level managers to overall corporate performance. In general, the higher the managerial position, the greater the flexibility managers have in designing their jobs.
b) Types of Executive Compensation—Executive compensation often has five basic elements:
(1) Base Salary,
(2) Short-Term Incentives or Bonuses,
(3) Long-Term Incentives and Capital Appreciation Plans,
(4) Executive Benefits, and
(5) Perquisites. The way an executive compensation package is designed is partially dependent on the ever-changing tax legislation.
• Base Salary: Salary is obviously important. It is a factor in determining standard of living.
Salary also provides the basis for other forms of compensation.
• Short-Term Incentives or bonuses: Payment of bonuses reflects a managerial belief in their incentive value. Today, virtually all top executives receive bonuses that are tied to base salary.
• Long-Term Incentives and Capital Appreciation: The stock option is a long-term incentive designed to integrate further the interests of management with those of the organization. The typical stock option plan gives the manager the option to buy a specified amount of stock in the future at or below the current market price.
• Executive Benefits: Executive benefits are generally more generous than those received by other employees because the benefits are tied to their higher salaries. However, current legislation (ERISA) does restrict the value of executive benefits to a certain level above those of other workers.
• Perquisites (Perks): Any special benefits provided by a firm to a small group of key executives that are designed to give the executives something extra. A “golden parachute” contract is a perquisite that protects executives in the event that their firm is acquired by another.
Compensation for professionals:
People in professional jobs are initially compensated primarily for the knowledge they bring to the organization. Because of this, the administration of compensation programs for professionals is somewhat different than for managers. Many professional employees eventually become managers. For those who do not desire this form of career progression, some organizations have created a dual track of compensation. The dual track provides a separate pay structure for professionals, which may overlap a portion of the managerial pay structure.
Sales Compensation:
Designing compensation programs for sales employees involves unique considerations. For example, job content, relative job worth, and job market value should be determined. The straight salary approach is at one extreme in sales compensation. In this method, salespersons receive a fixed salary regardless of their sales levels. At the other extreme, the person whose pay is totally determined as a percentage of sales is on straight commission. Between these extremes, there are endless part salary–part commission combinations.
The possibilities increase when various types of bonuses are added to the basic compensation package. In addition to salary, commissions, and bonuses, salespersons often receive other forms of compensation that are intended to serve as added incentives.
Role of Line managers and HRM Department in Compensation:
Line managers perform the function of job evaluation that is base for the compensation systems, according to the worth of the job negotiation regarding the salaries and other benefits is negotiated with potential employees through line mangers. Basic compensation packages are mostly recommended by the line managers in the organizations. All these information is communicated to the employees by HRM department beside communicating this information HRM department also facilitates the departments in establishing rates of pay, monitoring in job evaluation process, and Conducting salary surveys in order to establish procedures for administering pay plans, and to ensure compliance with antidiscrimination laws.
Total Compensation
Total compensation constitutes of two types of the rewards which are direct rewards and indirect rewards. Direct rewards include the salaries wages, commission, bonuses and gain sharing all of these rewards are directly paid to employees in monetary or financial terms, second type of the rewards are benefits provided by organization. Benefits are not direct payments in financial terms.
B. Employee Benefits
Benefits are all financial rewards that generally are not paid directly to an employee. Benefits absorb social costs for health care and retirement and can influence employee decisions about employers.
I. Benefits (Indirect Financial Compensation)
Most organizations recognize that they have a responsibility to provide their employees with insurance and other programs for their health, safety, security, and general welfare. These benefits include all financial rewards that generally are not paid directly to the employee.
II. Mandated Benefits (Legally Required)
Although most employee benefits are provided at the employer’s discretion, others are required by law.
Legally required benefits include Social Security, unemployment compensation, and workers’ compensation.
a) Social Security—It is a system of retirement benefits that provides benefits like disability insurance, survivor’s benefits, and, most recently, Medicare.
b) Unemployment Compensation—An individual laid off by an organization may receive unemployment compensation.
c) Workers’ Compensation—Workers’ compensation benefits provide a degree of financial protection for employees who incur expenses resulting from job-related accidents or illnesses.
d) Family and Medical Leave:
This provides for unpaid leave per year for absences due to the employee’s own serious health condition or the need to care for a newborn or newly adopted child or a seriously ill child, parent, or spouse.
III. Discretionary Benefits (Voluntary)
Organizations voluntarily provide numerous benefits. These benefits may be classified as (1) payment for time not worked,
(2) Health and security benefits,
(3) Employee services, and
(4) Premium pay.
Generally speaking, such benefits are not legally required.
Payment for Time Not Worked—
In providing payment for time not worked, employers recognize that employees need time away from the job for many purposes, such as paid vacations, payment for holidays not worked, paid sick leave, jury duty, national guard or other military reserve duty, voting time, and bereavement time. Some payments are provided for time off taken during work hours, such as rest periods, coffee breaks, lunch periods, cleanup time, and travel time.
• Paid Vacations: Payment for time not worked serves important compensation goals. Paid vacations provide workers with an opportunity to rest, become rejuvenated, and hopefully,become more productive.
• Sick Leave: Each year many firms allocate, to each employee, a certain number of days of sick leave, which they can use when ill.
b) Health Benefits—Health benefits are often included as part of an employee’s indirect financial compensation. Specific areas include health, dental, and vision care.
c) Security Benefits—Security benefits include retirement plans, disability insurance, life insurance, and supplemental unemployment benefits.
• Retirement Plans: Private retirement plans provide income for employees who retire after reaching a certain age or having served the firm for a specific period of time.
• Disability Protection: Workers’ compensation protects employees from job-related accidents and illnesses. Some firms, however, provide additional protection that is more comprehensive.
• Life Insurance: Group life insurance is a benefit commonly provided to protect the employee’s family in the event of his or her death. Although the cost of group life insurance is relatively low,some plans call for the employee to pay part of the premium.
d) Employee Services—Organizations offer a variety of benefits that can be termed employee services. These benefits encompass a number of areas including relocation benefits, child care, educational assistance, food services/ subsidized cafeterias, and financial services.
• Relocation Benefits: Include shipment of household goods and temporary living expenses, covering all or a portion of the real estate costs associated with buying a new home and selling the previously occupied home.
• Child Care: Another benefit offered by some firms is subsidized child care. Here, the firm may provide an on-site child care center, support an off-site center, or subsidize the costs of child care.
• Educational
Assistance: According to a recent benefits survey, 81 percent have educational benefits that reimburse employees for college tuition and books.
• Food Services/ Subsidized Cafeterias: Most firms that offer free or subsidized lunches feel that they get a high payback in terms of employee relations.
• Financial Services: One financial benefit that is growing in popularity permits employees to purchase different types of insurance policies through payroll deduction.
e) Premium Pay—Compensation paid to employees for working long periods of time or working under dangerous or undesirable conditions.
• Hazard pay: Additional pay provided to employees who work under extremely dangerous conditions. • Shift differentials: Paid to employees for the inconvenience of working undesirable hours.
f) Benefits for Part-Time Employees—Recent studies indicate that employers are offering this group more benefits than ever. Growth in the number of part-timers is due to the aging of the workforce and also to an increased desire by more employees to balance their lives between work and home.
V. Communicating Information about the Benefits Package
Employee benefits can help a firm recruit and retain a quality workforce. Management depends on an upward flow of information from employees in order to know when benefit changes are needed, and, because employee awareness of benefits is often severely limited, the program information must be communicated downward.
vi. Incentive Compensation
Compensation programs that relate pay to productivity.
a) Individual Incentive Plans—A specific form of performance-based pay is an individual incentive plan called piecework. In such a plan, employees are paid for each unit produced.
b) Team-Based Compensation Plans—Team performance consists of individual efforts.
Therefore, individual employees should be recognized and rewarded for their contributions.
However, if the team is to function effectively, a reward based on the overall team performance should be provided as well.
c) Companywide Plans—Companywide plans offer a feasible alternative to the incentive plans previously discussed. They may be based on the organization’s productivity, cost savings, or profitability. • Profit Sharing: A compensation plan that results in the distribution of a predetermined percentage of the firm’s profits to employees. There are several variations, but the three basic forms are current, deferred, and combination. Current plans provide payment to employees in cash or stock as soon as profits have been determined. Deferred plans involve placing company contributions in an irrevocable trust to be credited to the account of individual employees. The funds are normally invested in securities and become available to the employee (or his/her survivors) at retirement, termination, or death. Combination plans permit employees to receive payment of part of their share of profits on a current basis, whereas payment of part of their share is deferred. Profit sharing tends to tie employees to the economic success of the firm.
• Employee Stock Option Plan (ESOP): A defined contribution plan in which a firm contributes stock shares to a trust.
• Gain Sharing: Plans that are designed to bind employees to the firm’s performance by providing an incentive payment based on improved company performance. The first gain sharing plan was developed by Joseph Scanlon during the Great Depression, and it continues to be a successful approach to group incentive, especially in smaller firms.
• Scanlon Plan: Provides a financial reward to employees for savings in labor costs that result from their suggestions.
Vii. Non-financial Compensation
Compensation departments in organizations do not normally deal with non-financial factors.
However, non-financial compensation can be a very powerful factor in the compensation equation. Viii. The job
Some jobs can be so exciting that the incumbent can hardly wait to get to work each day.
IX. The Job as a Total Compensation Factor
The job itself is a central issue in many theories of motivation, and it is also a vital component of a total compensation program.
a) Skill Variety—The extent to which work requires a number of different activities for successful completion.
b) Task Identity—The extent to which the job includes an identifiable unit of work that is carried out from start to finish.
c) Task Significance—The impact that the job has on other people.
d) Autonomy—The extents of individual freedom and discretion employees have in performing their jobs.
e) Feedback—The amount of information employees receive about how well they have performed the job.
g) Cyber-work—A possibility of a never-ending workday created through the use of technology.
X. The Job Environment as a Total Compensation Factor
Employees can draw satisfaction from their work through several non-financial factors.
a) Sound Policies—Human resource policies and practices reflecting management’s concern for its employees can serve as positive rewards.
b) Competent Employees—Successful organizations emphasize continuous development and assure that competent managers and non-managers are employed.
c) Congenial Coworkers—Although the American culture has historically embraced Individualism, most people possess, in varying degrees, a desire to be accepted by their work group.
d) Appropriate Status Symbols—Organizational rewards that take many forms such as office size and location, desk size and quality, private secretaries, floor covering, and title.
e) Working Conditions—The definition of working conditions has been broadened considerably during the past decade.
XI. Workplace Flexibility
Flexible work arrangements do more than just assist new mothers’ return to full-time work. They comprise an aspect of non-financial compensation that allows many families to manage a stressful work/home juggling act.
a) Flextime—The practice of permitting employees to choose, with certain limitations, their own working hours.
b) Compressed Workweek—Any arrangement of work hours that permits employees to fulfill their work obligation in fewer days than the typical five-day workweek.
c) Job Sharing—An approach to work that is attractive to people who want to work fewer than 40 hours per week.
d) Flexible Compensation (Cafeteria Compensation)—Plans that permit employees to choose from among many alternatives in deciding how their financial compensation will be allocated.
e) Telecommuting—Telecommuting is a work arrangement whereby employees are able to remain at home, or otherwise away from the office, and perform their work over telephone lines tied to a computer.
f) Part-Time Work—Use of part-time workers on a regular basis has begun to gain momentum in the United States. This approach adds many highly qualified individuals to the labor market by permitting both employment and family needs to be addressed.
g) Modified Retirement—An option that permits older employees to work fewer than regular hours for a certain period of time proceeding retirement. This option allows an employee to avoid an abrupt change in lifestyle and more gracefully move into retirement.
XII. Other Compensation Issues
Several issues that relate to compensation deserve mention. These issues include comparable worth, pay secrecy, and pay compression.
a) Severance Pay—Although some firms are trimming the amount of severance pay offered, typically, one to two weeks of severance pay is given for every year of service, up to some predetermined maximum. Severance pay is generally shaped according to the organizational level of the employee.
b) Comparable Worth—Requires the value for dissimilar jobs, such as company nurse and welder, to be compared under some form of job evaluation and pay rates for both jobs to be assigned according to their evaluated worth.
c) Pay Secrecy—Organizations tend to keep their pay rates secret for various reasons. If a firm’s compensation plan is illogical, secrecy may indeed be appropriate because only a well.
THE EMPLOYEES' STATE INSURANCE ACT, 1948
The Employees’ State Insurance Act, 1948, provides to workers not only accident benefit but also other benefits such as sickness benefit, maternity benefit and medical benefit. Wage Ceiling: Every employee drawing wages upto Rs. 15000.00 per month is required to be insured under the Act. Objective of the Act: The object of the Act is to secure sickness, maternity, disablement and medical benefits to employees of factories and establishments and dependents’ benefits to the dependents of such employees. Applicability:-Section 2(9) 'employee' under ESI means any person who is engaged/employed for wages/salary in connection with the work of the establishment to which this Act applies. But does not include any person whose wages (excluding OT) exceed the limit prescribed by the Central Govt. (Which is 15000 pm now with effect from 1 May 2010). Section 2(12) 'establishment/factory' under ESI means any premises whereon 20 or more persons are employed or were employed for wages.
If you combine both, you understand that if the total employees are 25 but out of which 14 are drawing gross more than 15000 pm, then only 11 employees come under ESIS and the criteria for 20 employees does not fulfill. Hence on above grounds it is not covered.
CHECK LIST Applicability of the Act & Scheme: Is extended in area-wise to factories using power and employing 10 or more persons and to non-power using manufacturing units and establishments employing 20 or more person upto Rs.15,000/- per month with effect from 01-May-2010. It has also been extend-ed upon shops, hotels, restaurants, roads motor transport undertakings, equipment maintenance staff in the hospitals. | | | | | | | | | | | Coverage of Employees Drawing wages upto Rs. 15000.00 per month engaged either directly or through contractor | | Rate of contribution of the wages Employer's 4.75%Employee's 1.75% | | The ESI Scheme Today | | Benefits to employees | | | | | No. of implemented CentresNo. of Employers coveredNo. of Insured PersonsNo. of BeneficiariesNo. of Regional Offices/SRO’sNo. of ESI Hospitals/AnnexesNo. of ESI DispensariesNo. of Panel Clinics | 6772.38 lacs85 lacs330 lacs2618314532950 | | Medical, sickness, extended sickness for certain diseases, dependents maternity, besides funeral expenses, rehabilitation allowance, medical benefit to insured person and his or her spouse. | | | | | | | | | | | WAGES FOR ESI CONTRIBUTIONSRegisters / Files to be maintained by the employers | | Manner and Time Limit for making Payment of Contribution | To be deemed as wages * Basic pay * Dearness Allowance * House Rent Allowance * City Compensatory Allowance * Overtime Wages (but not to be taken into account for determining the coverage of employee) * Payment for day of rest * Production Incentive * Bonus other than statutory bonus * Night shift Allowance * Heat, Gas & Dust Allowance * Payment for unsubstituted holidays * Meal / Food Allowance * Suspension Allowance * Lay off Allowance * Children Education Allowance (not being reimbursement for actual tuition fees | Not to be deemed as Wages * Contribution paid by the employer to any pension / provident of under ESI Act. * Sum paid to defray special expenses entailed by the nature of employment – Daily allowance paid for the period spent on tour. * Gratuity payable on discharge * Pay in lieu of notice of retrenchment compensation * Benefits paid under the ESI Scheme * Encashment of leave * Payment of Inam which does not form part of the term of employment * Washing Allowances for livery * Conveyance amount towards reimbursement for duty related journey | | The total amount of contribution (employee's share and employer's share) is to be deposited with the authorised bank through a challan in the prescribed form in quadruplicate on or before 21st of month following the calendar month in which the wages fall due. | | | | | | | | Contribution Period If the person joined insurance employment for the first time, say on 5th January, his first contribution period will be from 5th January to 31st March and his corresponding first benefit will be from 5th October to 31st December. * 1st April to 30th September * 1st October to 31st March | | | | | | | | | | | Penalties: Different punishment have been prescribed for different types of offences in terms of Section 85: (i) (six months imprisonment and fine Rs.5000), (ii) (one year imprisonment and fine), and 85-A: (five years imprisonment and not less to 2 years) and 85-C (2) of the ESI Act, which are self explanatory. Besides these provisions, action also can be taken under section 406 of the IPC in cases where an employer deducts contributions from the wages of his employees but does not pay the same to the corporation which amounts to criminal breach of trust. | Designed system can stand careful scrutiny. An open system would almost certainly require managers to explain the rationale for pay decisions to subordinates.
d) Pay Compression—Occurs when workers perceive that the pay differential between their pay and that of employees in jobs above or below them is too small.
PERFORMANCE-RELATED BONUS-SCHEME
It is possible to use ANPAS (or any other performance appraisal system) solely for employee development and feedback purposes. But many organizations will wish to link the appraisal process to specific reward and incentive outcomes.
This is a perfectly legitimate objective. There are studies showing that employees find the process of appraisal more satisfying and credible when it is directly linked to reward outcomes.
Brief Description
Before we look at the step-by-step process for calculating the bonus, a quick overview will be helpful.
The Bonus Plan first calculates a Bonus Fund. This is the actual amount of money that the organization is prepared to allocate for bonus use. Next, an average performance appraisal rating is determined for each employee.
If an employee scores higher than a pre-determined level, he or she is bonus-eligible. The size of the bonus paid depends on the total number of Bonus Points to which an employee is entitled.
The number of Bonus Points is determined by both the employee's performance (as reflected in their average rating) and the employee's current salary range.
Finally, a simple formula is used to exactly allocate the money in the Bonus Fund to all eligible employees.
Full Description
There are five separate steps in the Bonus Plan -
Calculate the Bonus Fund
Determine Bonus Eligibility
Select Bonus Band
Select Salary Band
Calculate Individual Bonuses
Calculate the Bonus Fund
The first step is to determine the amount of money that is available to pay the bonuses. It is suggested this amount be (usually) about 2.5% of the annual wage and salary bill. This amount is known as the Bonus Fund.
The figure of 2.5% may be varied to reflect the policies, needs and circumstances of each organization. For example, a percentage of profit may be preferred, or even a percentage of profit increase. Obviously in such cases there will be no bonus due unless there is a profit or an increase in profit.
Whatever method is selected, it is suggested the size of the final bonus payments (when calculated) should lie in the range 2% to 10% of the bonus recipient's base wage or salary.
Determine Bonus Eligibility
To be eligible for the bonus, the employee must achieve an Average Factor Rating (AFR) of 3.40 or better. The AFR is calculated by summing the ratings and dividing the result by seven.
For example -
(4 + 4 + 3 + 3 + 5 + 3 + 4) / 7
= (26) / 7
= 3.71
This employee's AFR of 3.71 would make them eligible for the bonus.
Select Bonus Band
There are three Bonus Bands, B1, B2 and B3. The employee's Bonus Band depends on their AFR. The table below shows the AFR ranges for each Bonus Band, together with the Bonus Points that apply to each: Bonus Band | Average Factor Rating | Bonus Points | B1 (lower) | 3.40 to 3.99 | 1 | B2 (middle) | 4.00 to 4.49 | 2 | B3 (upper) | 4.50 to 5.00 | 3 |
Select Salary Band
There are three Salary Bands S1, S2, S3. Those in the higher bands will receive proportionately larger bonuses. This is necessary to maintain compensation relativity and provide attractive incentives to employees on higher incomes.
It is up to each organization to decide how it will define the lower, middle and upper bands. As a guide, the proportion of employees in each Salary Band should be about S1 60%, S2 30%, and S3 10%. The most common approach is to define bands according to wage and salary cut-off points; for example:
S1... $0 p.a. to $30000 p.a.
S2... $30001 p.a. to $50000 p.a.
S3... $50001 p.a. and above
Another approach is to use job evaluation cut-off points to achieve the same result, or to group employees loosely into categories, for example:
S1... Junior and non-supervisory staff
S2... Supervisors, specialists, middle managers
S3... Senior and top managers
The method chosen to classify employees into Salary Bands is not important, so long as it is systematic and reflects the general seniority structure of the organization.
Once the Salary Band is known for each employee, the number of Bonus Points can be determined -
Salary
Band | Bonus
Points | S1 (lower) | 1 | S2 (middle) | 2 | S3 (upper) | 3 |
Calculate Individual Bonuses
For each individual, add up their total Bonus Points. Then each individual bonus is calculated by this formula -
This formula will exactly allocate to the recipients the total amount of money available in the Bonus Fund.
Example:
There are 36 employees in the Purchasing Department of a medium-sized organization. The total (gross) annual wage and salary bill for the employees of this Department is $1,062,000. The Bonus Fund is set at $26,550 (2.5% of the total).
Among the employees, 12 have received Average Factor Ratings of 3.40 or better (therefore they are "eligible for performance bonus"). Employee | Bonus Band | Salary Band | Total Bonus
Points | Bonus
Amount
$ | Vikram Singh | B1 | S1 | 2 | 1609 | Ankur Sharma | B1 | S1 | 2 | 1609 | Mahesh | B1 | S2 | 3 | 2414 | Keshav Rathore | B1 | S1 | 2 | 1609 | Ritesh | B1 | S1 | 2 | 1609 | Swati Manchanda | B1 | S1 | 2 | 1609 | Gurcharan singh | B1 | S1 | 2 | 1609 | Rajeev Gupta | B1 | S2 | 3 | 2414 | Bhuwan Tiwari | B2 | S3 | 5 | 4023 | Prateek | B2 | S1 | 3 | 2414 | Hitesh | B2 | S2 | 4 | 3218 | Sagar | B3 | S1 | 3 | 2414 | Totals | - | - | 33 | 26551 |
Example
In John's case - bonus = (2 X 26551) / 33
= $1609
Example
In Helena's case - bonus = (4 X 26551) / 33 = $3218
Payment of Bonus
While the bonus could be paid in a single lump sum, it is suggested that multiple smaller payments - bonus instalments - be paid throughout the next performance period (quarterly instalments may be ideal). A number of payments at intervals can do more to strengthen the link between performance and rewards than a single payment which is all but forgotten in a short time.
It is also important that the bonus be paid by way of a separate check, pay packet or deposit. The payment will lose much of its impact if it is simply consolidated with normal pay. Every separate payment is a reminder to the employee of the value of his or her personal effort, and serves to encourage the type of behavior that leads to superior job performance.
QUESTIONNAIRE
A STUDY ON EMPLOYEE ATTITUDE TOWARDS WAGE& SALARY
ADMINISTRATION IN QUESTIONNAIRE
a) To what extent, you are satisfied with Income given by organization?
Rating | Excellent | Very Good | Good | Satisfactory | Poor | Scale | | | | | |
b) The criteria of Bonus in an organization:
Rating | Excellent | Very Good | Good | Satisfactory | Poor | Scale | | | | | |
c) To what extent, the working pattern of day shift and night shift satisfy you?
Rating | Excellent | Very Good | Good | Satisfactory | Poor | Scale | | | | | |
d) To what extent, if any, factors like healthcare, cost of living, productivity affect at wage/salary level?
Rating | Excellent | Very Good | Good | Satisfactory | Poor | Scale | | | | | |
e) To what extent, if any, did you find the level of satisfaction in an organization?
Rating | Excellent | Very Good | Good | Satisfactory | Poor | Scale | | | | | |
f) In general, to what extent do you feel that the simulation was a worthwhile educational experience? Rating | Excellent | Very Good | Good | Satisfactory | Poor | Scale | | | | | |
g) Payment of salary on time by the organization: Rating | Excellent | Very Good | Good | Satisfactory | Poor | Scale | | | | | |
h) To what extent, do you feel about the criteria of overtime allowance payment? Rating | Excellent | Very Good | Good | Satisfactory | Poor | Scale | | | | | |
CONCLUSION
Going through the analysis of response from the survey conducted, it is concluded that:
* Most of the employee’s rated good wage and salary provided by the TCS during performance in an organization.
* Criteria of Bonus are good.
* Overtime allowance provided to the worker is satisfactory.
* Payment of salary is done on time.
* Leave system of the organization is satisfactory.
* HRMS is provided by the organization which contains full detail about the salary structure.
* Employees are satisfied with the working pattern of shifts.
RECOMMENDATION
* Maintain consistency in the taste and quality of products.
* Include more promotional and advertising measures to increase its sales or to increase its market share.
* The company must receive continuous feedback and suggestions from its customers/ consumers.
* The company must expand further divisions like snacks, biscuits, beverages etc.
BIBLIOGRAPHY
BOOKS REFFERED:
* Labour problems and remedies- H.L. Kumar
* Practice and procedure of labour laws- H.L.kumar
* Labour Management- H.L.Kumar
WEBSITES REFERRED:
* www.citehr.com
* http://www.tcsgroup.org/
* hrmba.blogspot.com/.../wages-and-salary-administration-
* www.egyankosh.ac.in/bitstream/123456789/25306/1/Unit-19.pdf
ANNEXURE - I
Date:______________
VISITING CARD REQUISITION FORM
TO : HUMAN RESOURCES
DATE :
NAME :
DESINATION :
E-MAIL ADDRESS :
(if applicable)
___
______________________ ____________________
Signature of the Manager Signature of the employee
Annexure – 2
NO DUES FORM
Name of Employee :
Employee Code :
Location/Region :
Date of Joining Services :
Date of Leaving :
Date of Last Working Day :
Short-fall in Notice Period :
Accumulated Leave (Annual Leave only) :
Loan(s) (if any, please specify) :
Whether company leased Accommodation given? : Yes/No.
If yes, whether vacation notice given if yes,
Please mention the date :
Handing over of the leased premises
(Pls. mention date) :
Security Deposit Recovered : Rs.
Electricity & Water charges to be paid : Rs.
Whether company telephone given : Yes/No.
If yes, status of telephone :
Any outstanding telephone bill to be paid : Rs.
Travel imprest (Expense Account) to be recovered/to be paid : Rs.
Any other amount (to be recovered/ to be paid) : Rs.
Company’s property surrendered : Yes/No.
Forwarding Address: Remarks:
Contact Telephone No:
Signature:
_________ ___________ ____________ ______
Employee Finance dept. Functional HR Head
ON
“WAGE AND SALARY ADMINISTRATION IN AN ORGANISATION”
IN PARTIAL FULFILLMENT OF THE DEGREE OF
BACHLOR OF BUSINESS ADMINISTRATION
SESSION (2012-2013)
TECHNOCARE SOLLUTION
SUBMITTED TO SUBMITTED BY
TRIPATI INSTITUTE OF PROFFESSIONAL STUDIES
ACKNOWLEDGEMENT
Summer Training is an important part of BBA and I would like to express my heartfelt gratitude towards TECHNOCARE SOLUTION for giving me this opportunity.
Initially I would like to take the privilege to express my deep sense of gratitude to Ms. Harjeet Kaur (Sr. Manager-HR),Technocare Solution, Rudrapur, Uttrakhand who granted me the permission to undertake my project work in this organization. I also like to thank sir for his able guidance, constructive criticism, and the right amount of personal touch, which enable the project in its present state.
I would also like to make Acknowledge to Mr. J.P.Singh (Director), who gave me his valuable time and provided me with relevant information and support. I am also grateful to all staff members of this cooperation
I would like to thank the HR department, TCS Rudrapur for making me familiar with the intricacies of report development and ensuring that work in a systematic manner.
Also, I would like to extend my gratitude to our institute Tripati Institute of Professional studies for giving me an opportunity to have a practical experience of job and for their continues support during the project.
STUDENT’S DECLARATION
This project has been undertaken for the partial fulfillment of the requirement for award bachelors degree in management.
The project was executed during the summer training after the 2nd semester of BBA under the supervision of Ms. Neha Adhar
Further, I declared that this project is my original work and the analysis and the findings are for academic purpose only this project has not been presented in any seminar or submitted elsewhere for the award of any degree or diploma.
TABLE OF CONTENTS
S.NO. | TOPIC | | 1. | PREFACE | | 2. | INTRODUCTION | | 3. | RESEARCH METHODLOGY | | 4. | COMPANY PROFILE | | 5. | WAGE AND DALARY INTRODUCTIONOBJECTIVES | | 6. | SALARY CONCEPT | | 7. | WAGE AND ALLOWANCES | | 8. | ESI AND BONUS | | 9. | QUESTIONNARE | | 10. | CONCLUSION | | 11 | RECOMMADATION | | 12. | BIBLOGRAPHY | | 13. | ANNEXURE | |
PREFACE
Human Resource Management is both an academic theory and a business practices that addresses the techniques of managing a workforce. The theoretical discipline is based on the assumption that employees are individuals with varying goals and needs, and as such should not be thought of as bonded labour or can be purchased at price. The field takes a positive view of employees study of practices followed by organization to manage this intellectual capital to their maximum satisfaction, so that they can work to best of their ability so, as a BBA student I must know the practical implication of concepts of Human Resource Management has given me this golden opportunity to meet this end, by means of this project work.
Project work consists of knowing about how Wage and Salary is maintained in the company and collect information for the same, as an HR student my aim was to get a deep insight into HR functioning and to know about the vital role that HR department plays in functioning of other departments.
I have done my project from Technocare Solution, Rudrapur, as per the requirement of BBA course. I hope to provide relevant information about the various HR functions of the organization in a nutshell by means of this report. It had been a constant Endeavour to remain informative and to the point.
INTRODUCTION OF COMPANY
A team of five entrepreneurs, leaders in their respective fields, joined hands together to form a group called as –TCS Group.
This group over the last three years has crossed many milestones both in quality & financial parameters.
In a short span we are a renowned name in the telecom sector. As a service provider we have won the confidence of prestigious organization as Airtel, Idea, Vodafone & Indus towers,
Our group turnover also have increased ten folds in last three years.
VISION
“We as service provider for telecom sector are delivering operational excellence through innovation technologies, dedicated field force & always a step ahead to satisfy the need of the customers."
We transform our actions to meet our commitments deliver to our custom.
MISSION Integrity - Honesty in every action Commitment - deliver what we promise Passion - energized action Delight customers through superior services Develop entrepreneurs through an Achievement- Oriented culture Build a sustainable global organization Share knowledge and focus on end-result.
We survive because of our customer
Service we offer
* Operation and telecom in charge for telecom sector. * Power Generation. * Erection of telecom towers. * Service providing to a organization require facility management.
-------------------------------------------------
Product & Services ! | | | |
Products and Services
Operation and Maintenance incharge for telecom sector- we as a service provider have made a name of repute due to our sincere efforts & dedicated field force striving hard to deliver the best, We have a record of providing the services to keep the outrages below the minimum standard as set apart by our parent organization . Power Generation –We provide electrification to the towers where ever required after liasioning with the concerned department / persons. We also provide generators of ratings even above 750 KWA & provide all level of services. We also provide the back up support to keep the continuous supply of power. Erection of telecom towers. We also on turnkey basis undertake the tower erection work either roof top or ground level. We provide the support from civil works to installation of sophisticated switch units of power generating equipments. Service providing to a organization requiring facility management—we provide complete solution to the organization to facilitate the smooth & hygiene working -----atmosphere of the organization. We also ensure to provide the best solutions to the organization within the given parameters.
------------------------------------------------- Customers / Partners!
-------------------------------------------------
NEWS & EVENT
Operation Shine
Project Shine: A step taken ahead for Hygiene of sites. 50 days mission to make all the sites LOOK GOOD, FEEL GOOD & WORK GOOD. Under Project Shine our Technical Manager, Mr. Vikram Singh Mehra, has taken this responsibility thoroughly. He with his Team consisting of 1 Technician Supervisor, 2 Technicians & 2 Helper are making the Project Shine mission Successful.
Project Sine was launched on 04th August, 2010 in Office Premises. During the Launch our Board of Members, Senior Official from Our Host Company – Indus Towers, Technician Supervisors, Technicians & Office Staff were together; consisting of total 60 plus members. We sung National Anthem to begin Project Shine.
The main reason to Launch Project Shine is make our Sites more Clean and Environment Friendly. There was lot many steps taken for Project Shine. For Example, removal of extra or raw material from site, proper cleaning and servicing of Electronic Equipments, Servicing of Diesel Generators, Checking the Boundary Walls, Checking Alarms on Site, etc.
Manpower Required S.No. | Designation | Eligibility | No. of Intakes | 1 | DG Technician | ITI | 6 | 2 | AC Technician | ITI | 4 | 3 | Technician for Network | ITI | 4 | 4 | SME & OME | ITI | 8 |
INTRODUCTION
The terms ‘wage’ and ‘salary’ are often used as synonyms. The term wage is commonly used for those employees whose pay is calculated according to the number of hours worked.
The word salary applies to compensation that is uniform from one period to the next and does not depend upon the number of hours worked.
Certain theories were propounded for determination of wages but these could not stand the test of time. A few labor and wage theories are discussed in this unit. It also focuses on job evaluation and methods of job evaluation.
Wage & Salary Administration
The term compensation management, or alternatively, wage and salary administration has come to be accepted as the designation for the field of endeavor concerned with the establishment and implementation of sound policies and methods of employee compensation.
It includes such areas as job evaluation, development and maintenance of wage structures, wage surveys, wage incentives, wage changes and adjustments, supplementary payments, profits haring, control of compensation costs, and other related pay items.
The term wage is commonly used for those employees whose pay is calculated according to the number of hours worked. Thus, the weekly pay check will fluctuate as the number of hours actually worked varies.
The word salary applies to compensation that is uniform from one period to the next and does not depend upon the number of hours worked. Salaried often implies a status distinction, because those who are on salary are generally white-collar, administrative,
Professional, and executive employees, whereas wage-earners are designated as hourly, non supervisory, or blue-collar. Wage-earners in some organizations do receive full wage if they are absent for such reasons as sickness, whereas salaried employees, especially at the lower levels, often receive overtime pay when they work over the standard work week.
A job is defined as a collection or aggregation of tasks, duties, and responsibilities that, as a whole, is regarded as the reasonable assignment to an individual employee. A job may include many positions, for a position is a job performed by an individual and hence related to a particular employee. Thus, an employee has his position, but many positions may involve the same assignment of duties and constitute a single job. The job is impersonal, the position is personal.
OBJECTIVES
Concept of salary and structure
Concept of wage
The concept of allowances
Computation of taxable value of allowances
The computation of basic salary in grade system
Types of commission an employee can get
SALARY CONCEPT
Salary, in simple words, means remuneration of a person, which he has received from his employer for rendering services to him. But receipts for all kinds of services rendered cannot be taxed as salary. The remuneration received by professionals like doctors, architects, lawyers etc. cannot be covered under salary since it is not received from their employers but from their clients. So, it is taxed under business or profession head. In order to understand what is included in salary, let us discuss few characteristics of salary.
CHARACTERISTICS OF SALARY
1. The relationship of payer and payee must be of employer and employee for an income to be categorized as salary income. For example: Salary income of a Member of Parliament cannot be specified as salary, since it is received from Government of India which is not his employer.
2. The Act makes no distinction between salary and wages, though generally salary is paid for non-manual work and wages are paid for manual work.
3. Salary received from employer, whether one or more than one is included in this head.
4. Salary is taxable either on due basis or receipt basis which ever matures earlier:
i) Due basis – when it is earned even if it is not received in the previous year. ii) Receipt basis – when it is received even if it is not earned in the previous year. iii) Arrears of salary- which were not due and received earlier are taxable when due or received, whichever is earlier.
5. Compulsory deduction from salary such as employees’ contribution to provident fund, deduction on account of medical scheme or staff welfare scheme etc. are examples of instances of application of income. In these cases, for computing total income, these deductions have to be added back.
SALARY STRUCTURE at PERFETTI VAN MELLE
Description per Month Per Annum Salary heads: | | | basic salary | | | HRA | | | Special Allowance | | | Conveyance Allowance | | | Education Allowance | | | Medical Reimbursement | | | Night Allowance | | | Leave travel allowance | | | Statutory Bonus | | | Provident Fund | | | Gratuity | | | Total | | |
Advance Salary, if received in previous year for next year is taxable on receipt basis in the same previous year.
Illustration
X joins service in the grade of Rs.12000 – 300 – 13800 – 400 – 17800 on 1st June,
1999. Compute his basic salary for the previous year 2005-06.
Solution:
For the previous year 2005-06, basic salary of X will be calculated as follows:
1st June 1999 – 31st May 2000 12000
1st June 2000 – 31st May 2001 12300
1st June 2001 – 31st May 2002 12600
1st June 2002 – 31st May 2003 12900
1st June 2003 – 31st May 2004 13200
1st June 2004 – 31st May 2005 13500
1st June 2005 – 31st May 2006 13800
Basic Salary for April and May 2005 (Rs.13500 x 2) 27,000
Basic Salary for June 2005 – March 2006 (Rs.13800 x 10) 1, 38,000
Basic Salary for previous year 1, 65, 00
WORKER’S WAGE:
* MINIMUM WAGES—NOT MERELY BARE SUBSISTANCE, BUT PROVISION FOR PRESERVATION OF EFFICIENCY BY PROVIDING SOME MEASURE OF EDUCATION, MEDICINES AND AMINITIES, BE MADE.
* FAIR WAGES—LOWER LIMIT =MINIMUM WAGES. UPPER LIMIT SET BY CAPACITY TO PAY. BETWEEN THE TWO BASED ON 1. PRODUCTIVITY 2 .PREVAILING RATES 3. LEVELS OF NATIONAL INCOME AND DISTRIBUTION. 4. PLACE OF INDUSTRY IN COUNTRY’S ECONOMY * LIVING WAGES—REPRESENTS STANDARD OF LIVING, NOT MERELY PHYSICAL SUSTAINENCE, BUT DECENCY, PROTECTION AGAINST ILL-HEALTH, REQUIREMENTS OF ESSENTIAL SOCIAL NEEDS AND INSURANCE AGAINST IMPORTANT MISFORTUNES AND OLD AGE LIVING. LIVING WAGE IS A DYNAMIC CONCEPT
WAGE FIXATION- STRUCTURE:
1. BASIC WAGES. 2. BONUS. 3. HOUSE RENT ALLOWANCE. 4. DEARNESS ALLOWANCE. 5. OVERTIME PAYMENTS. 6. PAYMENTS BY RESULTS. 7. FRINGE BENEFITS AND OTHER ALLOWANCES. 8. RETIREMENT BENEFITS.
1. BASIC WAGES—
‘Basic Wages’ has been defined under Section
2(b) of the EPF & MP Act, 1952 as below:
Section 2(b) “basic wages” means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include
i. The cash value of any food concession; ii. Any dearness allowance (that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living), house rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment. iii. Any presents made by the employer; Minimum basic wage which the employer of any industrial labour must pay in order to be allowed to be continue an industry.
No industry has right to exit unless it is able to pay its employees at least a bare minimum wages. If any employer cannot maintain his enterprise without cutting down wages of his employees below even a bare subsistence or minimum wages, he would have no right to conduct his enterprise on such terms.
2. BONUS
Payment of Bonus Act was enacted in 1965. The establishment covered under the act. An employee under the act means any person other than apprentice, engaged for hire/reward whether the terms of employment be express or implied and includes supervisors/managerial and administrative employees drawing salary/wages not exceeding Rs. 3500 p.m. Who has worked for not less than 30 days in an accounting year, shall be eligible for bonus for a minimum of 8.33% of the salary/wage even if there is loss in the establishment whereas a maximum of 20% of the employee’s salary/wages is payable as bonus in an accounting year.
In case of the employees in the salary/wage range of Rs. 2500 to Rs. 3500 p.m. for the purposes of payment of bonus, their salary/wages would be deemed to be Rs. 2500 p.m. * Bonus on allowance * Bonus on arrears of wages * Bonus on commission
Eligibility for bonus:
The payment of bonus act indicates that the following categories of persons will be entitled to bonus: a) Skilled or unskilled or manual labour b) Managerial staff c) Supervisory staff d) Administrative staff e) Technical staff f) Clerical staff
An employee who has been engaged on hires or reward on terms which are either express or implied i. His salary does not exceed Rs. 2500 per mensem is entitled to bonus, but he must have worked for at least 30 working days in a year. ii. Who is not an apprentice?
3.House Rent Allowance (H.R.A.)
An allowance granted to a person by his employer to meet expenditure incurred on payment of rent in respect of residential accommodation occupied by him is exempt from tax to the extent of least of the following three amounts:
a) House Rent Allowance actually received by the assessee
b) Excess of rent paid by the assessee over 10% of salary due to him
c) An amount equal to 50% of salary due to assessee (If accommodation is situated in Mumbai, Kolkata, Delhi, Chennai)
‘Or’ an amount equal to 40% of salary (if accommodation is situated in any other place).
Salary for this purpose includes Basic Salary, Dearness Allowance (if it forms part of salary for the purpose of retirement benefits), Commission based on fixed percentage of turnover achieved by the employee.
The exemption of HRA depends upon the following factors:
(1) Basic Salary (3) Rent paid
(2) Place of residence (4) HRA received
If an employee is living in his own house and receiving HRA, it will be fully taxable. Illustration
Mr. X is employed in A Ltd. getting basic pay of Rs.20, 000 per month and dearness allowance of Rs.7, 000 per month (half of the dearness allowance forms part of salary for the purpose of retirement benefits). The employer has paid bonus @Rs.500 per month, Commission @1% on the sales turnover of Rs.20 lakhs, and house rent allowance of Rs.6, 000 per month. X has paid rent of Rs.7,
000 per month and was posted at Agra.
Compute his gross salary for the assessment year 2006-07
Solution:
Computation of Gross Salary Amount / Rs.
Basic Salary (Rs.20,000 x 12) 2,40,000
Dearness Allowance (Rs.7,000 x 12) 84,000
Bonus (Rs.500 x 12) 6,000
Commission (1% of Rs.20,00,000) 20,000
House Rent Allowance(Rs.6,000 x 12 – Amount exempt Rs.53,800) 18,200
Gross Salary 3,68,200 Amount of HRA exempt is least of 3 amounts:
1. 40% of Salary (Rs.2,40,000 + Rs.42,000 + Rs.20,000) = Rs.3,02,000
2. Actual HRA received (Rs.6, 000 x 12) = Rs. 72,000
3. Rent paid (Rs.7, 000 x 12 – 10% of salary Rs.30, 200) = Rs. 53,800
Amount of HRA exempt is = Rs. 53,800
1. DEARNESS ALLOWANCE—
TO COMPENSATE FOR THE INCREASE IN PRICES
Dearness Allowance is a device to protect to a greater or lesser extent the real income of a wage earner.
During the W.W.1, management instead of revising wages, paid a separate amount as exgratia (known as the dear food allowance), hoping that prices would come back to normal after the war.
During the W.W.2, the CPI rose from 105 to 113 and the government persuaded the Mill Owners to pay D.A. @ of 1.75 an as per day per point rise over CPI no:105. On 31.05.1945 Industrial Court awarded Rs. 44.11.11. On 1.09 1953 CPI crossed 325. On 17.01.55 L.A.T. gave revised textile D.A. # They show monthly avg. price paid by the population group covered for a fixed list of basket of goods and services.
# This is over a fixed period called the base period.
#The index at the base is 100 so that indices for later periods is automatically expressed as percentage of the index at the base period.
# Define the group- working class, middle class etc. and its geographic area.
# Determine the consumption level and pattern.
# Ascertain the fixed basket of goods and services.
# Define the quality.
# Give weight ages, depending on consumption pattern. (structure of weight ages is called weighing diagram)
# Collection of price data:
The no:= the % change, in different * by weights before they are averaged to yield the index number.
5. OVERTIME ALLOWANCE: # In appropriate allocation of manpower.
# Absenteeism.
# Urgent breakdowns.
# Work fluctuations.
# Rush jobs at the month end.
# Willful planning by workers.
# Overtime amount to be paid is determined by negotiations and minimum requirement of the factories act 1948 must be met.
6. PROVIDENT FUND: Provident fund is calculated @ 12% on the basic salary, which indeed is deducted from employees salary and the same plus 12% on the basic is contributed by the employer. So the aggregate 12% + 12% is remitted to the provident fund department.
BASIC WAGES FOR E.P.F. Employees provident fund “all emoluments which are earned by an employee while on duty or on leave with wages in accordance with the term of the ‘contract of employment’. According to the scheme of the act, an employee in order to avail the benefit of the scheme, must be regular employee of the establishment. The test of regular employment would not be on the nature of the terms of employment but on the nature of business carried on by the establishment and its commercial norms. It clearly states ‘in accordance’ with the terms of the ‘contract of employment’. Therefore, if in accordance with the terms of the ‘contract of employment’.
* Casual Employees and E.P.F. According to the scheme of the Act, an employee in order to avail the benefit of the scheme of the act must be regular employee of the establishment. The test of regular employment would not be on the nature of the terms of employment but on the nature of business carried on by the establishment and its commercial norms. Unless and until the employees are on the regular monthly contribution it is impossible to conceive that the employer alone can be called upon to make its contribution for those employees who casual and not in regular employment.
7. EMPLOYEE STATE INSURANCE: Employee state insurance is calculated at 1.75% on the gross salary of the employees whose salary is below Rs. 15000/-p.m. (w.e.f 2008) and employer contributes 4.75% on the gross salary of the employee and the aggregate 1.75% + 4.75% is remitted to the ESI Department. The amount of contribution for a wage period shall be as follows: * Employer’s contribution, a sum (rounded to the next of five paise) equal four and three-fourth percent of the wages payable to an employee. * Employee’s contribution, a sum (rounded to the next higher multiple of five paise) equal to one and three-forth per cent of wages payable to an employee. The Scheme, as per provision of the act, is devised so as to provide social protection to workers in contingencies such as illness, long term sickness or any other health risk due to exposure to employment injury or occupational hazards. Medical facility has also now been introduced for retired insured persons and permanently, disabled workers and their spouses at a nominal contribution of Rs. 10 per month. POSITION OF AN APPRENTICE UNDER ESI: The apprentices who are mere trainees or a particular period for a distinct purpose are not employees under sec. 2(9) of the E.S.I. Act. And the employer is not bound to employ them after training period. Medical care is provided to the insured persons and their family members through a vast and widespread network of ESI dispensaries, ESI hospitals and panel clinics. * ESI Contribution on incentive bonus The E.S.I . authorities can ask for payment of incentive bonus payable to the employees more particularly when such an incentive is linked with production. In this context reference is made to one case wherein it was held that production bonus paid to the employees for more production falls within the latter definition of wages in sec. 2(22) of the E.S.I. Act. * ESI On Overtime There has been differences of opinion of various High Courts on this point. Finally the Supreme court has held that overtime wage will be liable for the deductions for ESI’s contributions. The employer is obligated to pay wages an employee receives for normal work. In other words, both the remuneration received during the working hours and overtime constitute a composite wages and thereby it is a ‘wage’ within the meaning of section 2(22) of the Act. Whatever remuneration , paid or payable for overtime work, forms wages under an implied term of the contract of employment and the remuneration paid therefore forms part of the ‘wages’.
* ESI Contribution on paid holidays The payment made by an employer in respect of ‘paid holidays’ is not ‘wages’ and therefore the employer is not liable to pay special contribution on such payment made to his employees in respect of ‘paid holidays’. Paid holiday is a holiday which could not be substituted for another holiday and under the terms of the contract, the parties agree that on that day no service would be taken and yet payment would be made. * ESI Disputes and civil courts Sec. 75 of the Employees State Insurance Act provides a forum for adjudication of the dispute as to whether any person is an employer and is liable to pay employee’s contribution , act applies to find out the principal employer, it would be necessary to find out the owner of occupier of the factory as far as clause(1)17 of section 2 is concerned. It has been held that it is only in relation to a factory or an establishment to which the act applies that the question or dispute can be adjudicated as provided for in clauses (a) to (d) of sec. 75(1)of the act. The dispute would squarely fall under clauses (c), (d) and (g)of sec. 75(1). It is covered then by virtue of 75(3) the jurisdiction of the civil court to decide or deal with such disputes would be barred. * ESI Contributions on closure of the establishment The ESI authorities can ask for payment of incentive bonus payable to the employees more particularly when such bonus payable to the employees more particularly when such an incentive is linked with production. In this context reference is made to one case wherein it was held that production bonus paid to the employees for more production falls within the latter part of definition of wages In sec. 2(22) of the ESI Act. The Bombay high court has also held that the amount paid to employees towards incentive or production bonus will constitute wages for ESI purpose
RETIREMENT BENEFITS
Every employee must know the quantum of the various retirement benefits he would be getting, as well as its tax implications. The employee may get more benefits if he chooses a good employer but he has no choice in respect of taxes.
Retirement benefits received by an employee are taxable under the head Salary. Thus, the employer must take these benefits into account while computing the Tax Deducted at Source (TDS) at the time of retirement of an employee. Some retirement benefits are fully or partially exempt from tax.
Some of the retirement benefits are:
Pension
Pension is the income received by an employee after his retirement. It is a periodical allowance, on account of past service, given by a former employer after the retirement of an employee. Periodical pension is called un-commuted pension. When a lump-sum payment is made in lieu of a periodical pension, it is termed as commuted pension. Pension of an employee is taxable under the head salary. Taxability of pension depends on whether it is periodic or lump-sum.
Periodic payment (un-commuted pension) is fully taxable in case of both government and non-government employees. Lump-sum Payment (commuted pension) is tax-free in case of government employees. In case of other employees, if that employee is also receiving gratuity, then 1/3rd of the commuted pension would be exempt from tax. If gratuity is not received by an employee, half of the commuted pension will be exempt from tax.
GRATUITY
Gratuity is a lump-sum payment made by an employer as a mark of gratitude for the services rendered by his employee. It is an important form of social security benefit. Gratuity is payable at the end of the employment (by way of retirement, death, termination or resignation). Every employer who has more than 10 salaried workers is allowed to grant gratuity to workers. The law which governs gratuity in India is the Payment of Gratuity Act, 1972.
To receive gratuity, the employee should at least have completed 5 years of service. The payment of gratuity is made to the employee based on the duration of his total service to that employer. The benefit is payable by taking the last drawn salary as the basis for calculation.
For the purpose of Income Tax, gratuity received by an employee of the central government, state government or any local authority is completely exempt from tax.
For other employees, the least of the following is exempt from tax * Rs. 10,00,000 (as per amendment from march 2010) * Gratuity actually received, or * Half month's average salary (average of last 10 months salary) for each completed year of service. a) GRATUITY ON ALLOWANCES
Bonus, commission, House rent allowance, overtime wages and other allowances through paid in cash have been deliberately excluded by the legislature to form part of emolument.
b) AVERAGE MONTHLY WAGES
This can only mean the wage earned by an employee during a month divided by the no. of days for which he has worked and multiplied by 26 days in order to arrive at the monthly wages for computation of gratuity payable under a scheme of gratuity framed by the employer
c) GRATUITY AND BREAK IN SERVICE
Under this sec. an employee said to be in ‘continuous service’ for a period if he has, been in uninterrupted service including service which may be interrupted on account of absence from duty without leave.
Leave Encashment
Leave encashment is the encashment of unused leave of an employee. The employee surrenders the leave at the time of retirement and is paid for the same. Taxability of leave encashment received at the time of retirement is as follows * In case of government employees, it is fully exempt from tax. * In case of non-government employees, the least of the following is exempt * Rs. 3,00,000/- * 10 months average salary * Leave encashment actually received * Cash equivalent to the leaves surrendered
Employees are provided leaves on the basis of calendar year from Jan to Dec.
CASUAL LEAVE- Casual leave may be asked for meeting in estimate able and unforeseen circumstances suddenly arising. Each application for casual leave has to be judged on its own merits. The merit of an application for casual leave has to be weighed according to the circumstances for which the leave is required.
In TCS there are 7 casual leaves which are availed to the employees.
SICK LEAVE- An employee availing more than 3 consecutive sick leaves at a time will have to produce a medical certificate duly attested by the local doctor or physician. In a calendar year, employee can avail maximum 30 sick leaves. Pending sick leaves at the end of the year can be carry forwarded & gets credited to the leave account.
EARNED LEAVE- an employee earns at least 30 earned leaves in a calendar year ranging from Jan to Dec. Employee can carry up to 60 earned leaves for next year, balance leaves are automatically credited to the leave account of the employee.
Encashment of earned leaves is done at the end of the year Jan to Dec calculated on the basis of basic salary estimated for no. of earned leaves to be encashed & the amount gets automatically credited to the employee’s account.
Medical claim or reimbursement
An employee can claim for medical benefit after producing the complete bills of any treatment or surgery done with the proper approval & prescription of concerned doctor. The document attached with bills & medical reports like reports of CT scan, MRIs, Delivery reports, any operation performed etc. are duly signed by the concerned HOD & HR manager & then forwarded to the corporate office for further processing through HR. The documents there are properly verified & if the bills & documents are found genuine, the claimed amount gets credited to the employee’s account according to their limit to which they can claim.
Any employee having salary below Rs. 15000/- pm can avail for medical benefit under ESI scheme. The norms & policy according to the ESI act imposed by Govt of India deducts some amount from the employee’s salary on monthly basis which is credited to employee’s ESI account. In case of any accident or emergency or any medical treatment undergone, the employee gets treated in a local ESI hospital & the payment of treatment is done by the insurance company according to the policy & norms. Monthly ESI challans & account is updated by HR & the employees are provided a ID card without which they cannot avail this benefit.
Contingency Loan
Contingency loan can be availed by an individual for maximum 3 times in 10 years of service in same organization maximum eventually when employee is in need for loan emergency reasons like marriage, treatment, car loan, personal etc.
For Staff- the maximum loan amount can be availed up to four times of basic salary per month given at no interest till Rs 25000, but above Rs.25000, 8% interest is charged. Further, the amount is deducted from salary in 18 regular installments on monthly basis. To claim for a loan,there must be no previous loan due or loan must be completed. With special approval in written application by the manager, and duly signed by HR manager, employee gets the loan amount in cash or cheque.
In case of Shop Floor Employees the individual can avail loan amount up to Rs 30000 with no interest with proper application letter signed by HOD & duly approved by the HR manager
Further the salary amount is deducted within 18 installments of the loan on monthly basis. The terms & conditions for staff & sfe’s remains same.
Voluntary Retirement Compensation
Many companies today provide its employee with the option of taking voluntary retirement under the Voluntary Retirement Scheme (VRS). This scheme is drawn to right-size the existing strength of employees within a company. The benefits derived by an employee by opting VRS can also be considered as retirement benefit. VRS is applicable to only those employees who have completed 10 years of service or are of the age of 40 years. Under VRS, the employees are offered a onetime lump-sum amount. For income tax purposes, this compensation amount received is exempt up to Rs. 5,00,000/- if all the conditions under the scheme are fulfilled. WAGES AND ALLOWANCES
Wages are central concern for both the employers and thee employees the employers and the employees. The employer always thinks of how to decrease the production cost while the employees on the other hand, see wages in terms of their pre-occupation, better, housing, schooling and food etc.
Allowances
Adjudication dearness allowance
The guideline for adjudication in respect of D.A. as laid down by supreme court are as follows: 1. Full neutralization is not normally given except to the very lowest class of employees. 2. D.A. should be on a sliding scale and provide the increase according to rise in the cost of living index and decrease on a fall in the cost of living index. 3. The fixation on D.A. should be on industry-cum-region basis. 4. Employees getting the same wages should get the same DA irrespective of the category to which they belong. 5. The additional financial burden upon an employer and his capacity to bear such burden.
Adjustment of loan from wages It is within the right of employer to adjust the outstanding loan against an employee resigned from service and a sum of Rs. 66.35 paise was payable to him as arrear of wages. However, the employee owned a sum of Rs. 983.46 paise to the employer as balance of advance paid to him.the employer adjusted the entire amount of arrears of wages against the dues payable to him which was objected by the employee on the plea that he has resigned from service and the permissible deduction was being made while he was in the employment and, therefore, the employer was entitled to deduct from Rs. 22.50 paise only from wages for September and part of October, 1975.
Allowance for suspension period
Ordinarily, the law is that a work man may be suspended pending enquiry and disciplinary action. If after the enquiry the misconduct is proved and the workmen is dismissed, he is not entitled to any wages for the suspension period but if the enquiry exonerates the workman he is not entitled not only to reinstatement but also to full wages for the suspension period because in such a case the workman would be deemed to have remained in the service of the employer.
The tribunal must award the full wages for the whole period of suspension when it set aside the order of dismissal, or even when it set aside the order if no enquiry has been held by the employer.
Calculation of average monthly wages
The expression, ‘average monthly wage’ can only mean the wage earned by a workman during a month divided by the no. of days for which he has worked and multiplied by 26 days in order to arrive at the monthly wages for computation of gratuity payable under a scheme of gratuity framed by the employer. While fixing the minimum wages for a daily wage worker, made under the minimum wage act, the same pattern is adopted.
Contracting out
Sec. 25 of the minimum wage act as in force provides that any contract or agreement irrespective of whether it was made before or after the commencement of the act, whereby an employee either relinquishes or agrees to forgo into or impart his right to minimum rate of his wages or else forgoes any privilege or concession to which he is entitled under the act, shall render such contract or agreement null and void, but only to the extent it purports to reducing the rate of wages fixed under the act.
Deduction of wages and absence of ten persons from duty
If ten or more employed persons acting in concert absent themselves without due notice and without reasonable cause from duty, the employer can deduct from their wages. And such deduction from any such person may include such amount as not exceeding his wages for eight days as may be and such terms be due to the employer in lieu of due notice. Tool down strike also amounts to absence from duty. However, while making penal deductions from wages a show cause notice must be issued to the employee.
Night-shift allowance
Night shift allowance is an allowance for doing work in the night shifts in cases where the factory is run on shifts. Decisions of the courts on the question of night shift allowance are not uniform.
In some cases, the courts have negative the claim for night shift allowance on the ground that where the industry is of such a nature that continuous working is essential for technical reasons, the rotation of workmen in night shifts would be a condition of service and a part the job and, therefore, no special allowance is called for.
Special allowance
A special allowance can be granted only to the employees whose work carries some special risk or special strain which is not shared by the other employees in the same class or category. Thus, where the office of the company is situated in the heart of the company and only a short distance from the bank and the sepoys who are entrusted with the work of carrying money from the bank do not run risk and the duty of bringing the money is not more strenuous than any other duty usually allotted to sepoys, the sepoys concerned are not entitled to any special allowance. Similarly, sepoys who are given duplicating and filling work are not entitled to any special allowance.
Conveyance allowance
Considering the demands of workmen for transport facility along with various other demand such as wage scales, dearness allowance etc. the tribunal has jurisdiction in a proper case to call upon an employer to reimburse the workmen atleast to a limited extent regarding transport expenses incurred by the latter for going to his place of work. The tribunal is justified in having regards to the practice obtaining in that region on the principle of region-cum-industry when considering the claim of the workers of the payment of transport allowance. Though the tribunal cannot impose any new obligation on an employer merely on the ground that the financial capacity of the employer is sound, nevertheless while imposing the new obligation the tribunal has also to consider the capacity of the employer to bear the burden. It has been held that the award of the sum of 15 paise per day to workmen saying at a distance of 5 miles or more could not be stated to be unreasonable.
Managing compensation
The basic purpose of wage and salary administration is to establish and maintain an equitable wage and salary structure.
Its secondary objective is the establishment and maintenance of an equitable labor cost structure i.e., an optimal balancing of conflicting personnel interests so that the satisfaction of employees and employers is maximized and conflicts are minimized.
The wage and salary administration is concerned with the financial aspects of needs, motivation and rewards Managers, therefore, analyze and interpret the needs of their employees so that reward can be individually designed to satisfy these needs.
Labor was always looked upon as a commodity governed by the law of supply and demand.
Certain theories were propounded for determination of wages but these could not stand the test of time.
A few theories are discussed below:
1. Subsistence theory:
This theory, also known as 'Iron Law of Wages', was propounded by David Ricardo According to this theory; wages tend to settle at a level just sufficient to
Maintain the workers and his family at minimum subsistence levels. The theory applies only to backward countries where laborers are extremely poor and are unable to get their share from the employers.
2. Standard of living theory:
This theory is a modified form of subsistence theory. According to this theory, wages are determined not by subsistence level but also by the standard of living to which a class of laborers becomes habituated.
3. Residual claimant theory:
Francis A. Walker propounded this theory. According to him, there were four factors of production/ business activity viz., land, labor, capital and entrepreneurship. Wages represent the amount of value created in the production which remains after payment has been made for all these factors of production. In other words, labor is the residual claimant
4. The wage fund theory:
According to this theory, after rent and raw materials are paid for, a definite amount remains for labor. The total wage fund and the number of workers determine the average worker's share in the form of wages.
5. Demand and supply theory:
According to this theory, wages depend upon the demand and supply of labour.
6. Marginal productivity theory:
This is an improved form of demand and supply theory. Wages are determined by the value of the net product of the marginal unit of labor employed.
7. Purchasing power theory:
According to this theory the prosperity, productivity and progress of industry depend on there being sufficient demand to ensure the sale of its products and pocketing of reasonable profits. A large part of the products of industry is consumed by workers and their families and if wages are high, demand will be good. However, if wages and the purchasing power of the workers are low, some of the goods will remain unsold; output will go down, which will result in unemployment.
8.The bargaining theory of wages:
John Davidson propounded this theory. According to him, wages are determined by the relative bargaining power of workers or trade unions and of employers. When a trade union is involved, basic wages, fringe benefits, job differentials and individual differences tend to be determined by the relative strength of the organization and the trade union.
FACTORS:
The following factors should be taken into consideration for fixation of wages:
1. The degree of skill.
2. The strain of work.
3. The experience involved.
4. The training involved.
5. The responsibility undertaken.
6. The mental and physical requirements.
7. The disagreeableness of the task.
8. The hazard attendant on the work, and
9. The fatigue involved.
CLASSIFICATIONS: The International Labor Organization (ILO) in one of its publications,classified wages as under:
1. The amount necessary for mere subsistence;
2. The amount necessary for health and decency; and
3. The amount necessary to provide a standard of comfort.
a. MINIMUM WAGE
b. FARE WAGE; Depends on the following:
i) The productivity of labor; ii) The prevailing rates of wages in the same or neighboring localities; iii) The level of the national income and its distribution; and iv).The place of industry in the economy.
c. LIVING WAGE
Methods of fixing wages
* Collective Bargaining * Voluntary Arbitration * Wage Legislation * Conciliation * Adjudication * Wage Boards
COMPENSATION SYSTEM
Pay:
Pay is a statement of an employee’s worth by an employer.
Or
Pay is a perception of worth by an employee
HR Management Strategy Model:
Human resource department uses different strategies to manage the workforce so that the desired results can be attained. These desired result can be attained if organization is able to attract,select, develop and retain workforce in successful manner in short, the effective hiring and retaining workforce can be helpful in achieving organizational goals. This purpose can be attained through fair and effective rewards systems in the organization. Rewards are used as basic motivational tools in the organization so that performance of the employees can be influenced in desirable way. So to be more successful organizations need attractive and fair compensation and reward systems to be paid to the workforce.
A. Job Pricing
Job pricing means placing a dollar value on the worth of a job.
I. Pay Grades—the grouping of similar jobs together to simplify the job pricing process.
Plotting jobs on a scatter diagram is often useful in determining the appropriate number of pay grades.
II. Wage Curve—the fitting of plotted points in order to create a smooth progression between pay grades.
III. Pay Ranges—includes a minimum and maximum pay rate with enough variance between the two to allow some significant pay difference.
IV. Broad Banding—a technique that collapses many pay grades (salary grades) into a few wide bands in order to improve organizational effectiveness.
V. Single-Rate System—Pay ranges are not appropriate for some workplace conditions. When single rates are used, everyone in the same job receives the same base pay, regardless of seniority or productivity. This rate may correspond to the midpoint of a range determined by a compensation survey.
VI. Adjusting Pay Rates—when pay ranges have been determined and jobs assigned to pay grades, it may become obvious that some jobs are overpaid and others underpaid. Underpaid jobs normally are brought to the minimum of the pay range as soon as possible.
Compensation: An Overview
Compensation—The total of all rewards provided employees in return for their services.
Direct Financial Compensation—Consists of the pay that a person receives in the form of wages, salaries, bonuses, and commissions.
Indirect Financial Compensation—All financial rewards that are not included in direct compensation.
iv. Non-financial Compensation—Consists of the satisfaction that a person receives from the job itself or from the psychological and/or physical environment in which the person works. All such rewards comprise a total compensation program.
I. Equity in financial compensation:
Organizations must attract, motivate, and retain competent employees. Because achievement of these goals is largely accomplished through a firm’s compensation system, organizations must strive for compensation equity.
a. Equity—Workers’ perceptions that they are being treated fairly. Compensation must be fair to all parties concerned and be perceived as fair.
b. External Equity—Exists when a firm’s employees are paid comparably to workers who perform similar jobs in other firms.
c. Internal Equity—Exists when employees are paid according to the relative value of their jobs within an organization.
d. Employee Equity—Exists when individuals performing similar jobs for the same firm are paid according to factors unique to the employee, such as performance level or seniority.
e. Team Equity—Achieved when more productive teams are rewarded more than less productive teams.
Determinants of individual financial compensation:
Compensation theory has never been able to provide a completely satisfactory answer to what an individual is worth for performing jobs.
• The Organization,
• The Labor Market,
• The Job, and
• The Employee
These all have an impact on job pricing and the ultimate determination of an individual’s financial compensation.
The Organization as a Determinant of Financial Compensation:
• Compensation Policies—An organization often establishes—formally or informally—
Compensation policies that determine whether it will be a pay leader, a pay follower, or strive for an average position in the labor market.
1. Pay Leaders: Those organizations that pay higher wages and salaries than competing firms.
2. Market Rate or Going Rate: The average pay that most employers provide for the same job in a particular area or industry.
3. Pay Followers: Companies that choose to pay below the market rate because of poor financial condition or a belief that they simply do not require highly capable employees.
• Organizational Politics—Political considerations may also enter into the equation. A sound, objective compensation system can be destroyed by organizational politics. Managers should become aware of this possibility and take appropriate action.
• Ability to Pay—An organization’s assessment of its ability to pay is also an important factor in determining pay levels. Financially successful firms tend to provide higher-than average compensation. However, an organization’s financial strength establishes only the upper limit of what it will pay.
The labor market as a determinant of financial compensation:
Potential employees located within the geographical area from which employees are recruited comprise the labor market.
• Compensation Surveys—Large organizations routinely conduct compensation surveys to determine prevailing pay rates within labor markets.
1. Compensation surveys: Provide information for establishing both direct and indirect compensation. 2. Benchmark job: A job that is well known in the company and industry, one that represents the entire job structure, and one in which a large percentage of the workforce is employed.
• Cost of Living—A pay increase must be roughly the equivalent to the cost of living increase if a person is to maintain a previous level of real wages.
• Labor Unions—When a union uses comparable pay as a standard for making compensation demands, the employer must obtain accurate labor market data. When a union emphasizes cost of living, management may be pressured to include a cost-of-living allowance (COLA). This is an escalator clause in the labor agreement that automatically increases wages as the U.S Bureau of Labor Statistics’ cost-of-living index rises.
• Society—Compensation paid to employees often affects a firm’s pricing of its goods and/or services. Consumers may also be interested in compensation decisions.
• Economy—In most cases, the cost of living will rise in an expanding economy. Thus, the economy’s health exerts a major impact on pay decisions.
• Legislation—The amount of compensation a person receives can also be affected by certain federal and state legislation.
The job as a determinant of financial compensation:
Organizations pay for the value they attach to certain duties, responsibilities, and other job related factors.
Techniques used to determine a job’s relative worth include job analysis, job descriptions, and job evaluation.
• Job Analysis and Job Descriptions—Before an organization can determine the relative difficulty or value of its jobs, it must first define their content, which it normally does by analyzing jobs. Job analysis is the systematic process of determining the skills and knowledge required for performing jobs. The job description is the primary by-product of job analysis, consisting of a written document that describes job duties and responsibilities. Job descriptions are used for many different purposes, including job evaluation.
• JOB EVALUTION—That part of a compensation system in which a firm determines the relative value of one job compared with that of another.
The employee as a determinant of financial compensation:
In addition to the organization, the labor market, and the job, factors related to the employee are also essential in determining pay and employee equity.
I. Performance Based Pay—PA data provide the input for such approaches as merit pay,
Variable pay, skill-based pay, and competency-based pay.
1. Merit Pay: A pay increase given to employees based on their level of performance as indicated in the appraisal.
2. Bonus: The most common type of variable pay for performance and is a one-time award that is not added to employees’ base pay.
3. Skill-based Pay: A system that compensates employees on the basis of job-related skills and knowledge they possess, not for their job titles.
4. Competency-Based Pay: A compensation plan that rewards employees for their demonstrated expertise.
II. Seniority—The length of time an employee has been associated with the company, division, department, or job is referred to as seniority.
III. Experience—Regardless of the nature of the task, very few factors has a more significant impact on performance than experience.
IV. Membership in the Organization—Some components of individual financial compensation are given to employees without regard to the particular job they perform or their level of productivity.
V. Potential—Organizations do pay some individuals based on their potential.
. Political Influence—Political influence is a factor that obviously should not be used as a determinant of financial compensation. However, to deny that it exists would be unrealistic.
f. Luck—The expression has often been stated, “It certainly helps to be in the right place at the right time.” There is more than a little truth in this statement as it relates to the determination of a person’s compensation.
g. Special Employee Classes—These include pay for executives, which are discussed in a later section, and pay for professionals and sales employees.
Executive Compensation:
Executive skill largely determines whether a firm will prosper, survive, or fail. Therefore, providing adequate compensation for these managers is vital. A critical factor in attracting sand retaining the best managers is a company’s program for compensating executives.
a) Determining Executive Compensation—In determining executive compensation, firms typically prefer to relate salary growth for the highest-level managers to overall corporate performance. In general, the higher the managerial position, the greater the flexibility managers have in designing their jobs.
b) Types of Executive Compensation—Executive compensation often has five basic elements:
(1) Base Salary,
(2) Short-Term Incentives or Bonuses,
(3) Long-Term Incentives and Capital Appreciation Plans,
(4) Executive Benefits, and
(5) Perquisites. The way an executive compensation package is designed is partially dependent on the ever-changing tax legislation.
• Base Salary: Salary is obviously important. It is a factor in determining standard of living.
Salary also provides the basis for other forms of compensation.
• Short-Term Incentives or bonuses: Payment of bonuses reflects a managerial belief in their incentive value. Today, virtually all top executives receive bonuses that are tied to base salary.
• Long-Term Incentives and Capital Appreciation: The stock option is a long-term incentive designed to integrate further the interests of management with those of the organization. The typical stock option plan gives the manager the option to buy a specified amount of stock in the future at or below the current market price.
• Executive Benefits: Executive benefits are generally more generous than those received by other employees because the benefits are tied to their higher salaries. However, current legislation (ERISA) does restrict the value of executive benefits to a certain level above those of other workers.
• Perquisites (Perks): Any special benefits provided by a firm to a small group of key executives that are designed to give the executives something extra. A “golden parachute” contract is a perquisite that protects executives in the event that their firm is acquired by another.
Compensation for professionals:
People in professional jobs are initially compensated primarily for the knowledge they bring to the organization. Because of this, the administration of compensation programs for professionals is somewhat different than for managers. Many professional employees eventually become managers. For those who do not desire this form of career progression, some organizations have created a dual track of compensation. The dual track provides a separate pay structure for professionals, which may overlap a portion of the managerial pay structure.
Sales Compensation:
Designing compensation programs for sales employees involves unique considerations. For example, job content, relative job worth, and job market value should be determined. The straight salary approach is at one extreme in sales compensation. In this method, salespersons receive a fixed salary regardless of their sales levels. At the other extreme, the person whose pay is totally determined as a percentage of sales is on straight commission. Between these extremes, there are endless part salary–part commission combinations.
The possibilities increase when various types of bonuses are added to the basic compensation package. In addition to salary, commissions, and bonuses, salespersons often receive other forms of compensation that are intended to serve as added incentives.
Role of Line managers and HRM Department in Compensation:
Line managers perform the function of job evaluation that is base for the compensation systems, according to the worth of the job negotiation regarding the salaries and other benefits is negotiated with potential employees through line mangers. Basic compensation packages are mostly recommended by the line managers in the organizations. All these information is communicated to the employees by HRM department beside communicating this information HRM department also facilitates the departments in establishing rates of pay, monitoring in job evaluation process, and Conducting salary surveys in order to establish procedures for administering pay plans, and to ensure compliance with antidiscrimination laws.
Total Compensation
Total compensation constitutes of two types of the rewards which are direct rewards and indirect rewards. Direct rewards include the salaries wages, commission, bonuses and gain sharing all of these rewards are directly paid to employees in monetary or financial terms, second type of the rewards are benefits provided by organization. Benefits are not direct payments in financial terms.
B. Employee Benefits
Benefits are all financial rewards that generally are not paid directly to an employee. Benefits absorb social costs for health care and retirement and can influence employee decisions about employers.
I. Benefits (Indirect Financial Compensation)
Most organizations recognize that they have a responsibility to provide their employees with insurance and other programs for their health, safety, security, and general welfare. These benefits include all financial rewards that generally are not paid directly to the employee.
II. Mandated Benefits (Legally Required)
Although most employee benefits are provided at the employer’s discretion, others are required by law.
Legally required benefits include Social Security, unemployment compensation, and workers’ compensation.
a) Social Security—It is a system of retirement benefits that provides benefits like disability insurance, survivor’s benefits, and, most recently, Medicare.
b) Unemployment Compensation—An individual laid off by an organization may receive unemployment compensation.
c) Workers’ Compensation—Workers’ compensation benefits provide a degree of financial protection for employees who incur expenses resulting from job-related accidents or illnesses.
d) Family and Medical Leave:
This provides for unpaid leave per year for absences due to the employee’s own serious health condition or the need to care for a newborn or newly adopted child or a seriously ill child, parent, or spouse.
III. Discretionary Benefits (Voluntary)
Organizations voluntarily provide numerous benefits. These benefits may be classified as (1) payment for time not worked,
(2) Health and security benefits,
(3) Employee services, and
(4) Premium pay.
Generally speaking, such benefits are not legally required.
Payment for Time Not Worked—
In providing payment for time not worked, employers recognize that employees need time away from the job for many purposes, such as paid vacations, payment for holidays not worked, paid sick leave, jury duty, national guard or other military reserve duty, voting time, and bereavement time. Some payments are provided for time off taken during work hours, such as rest periods, coffee breaks, lunch periods, cleanup time, and travel time.
• Paid Vacations: Payment for time not worked serves important compensation goals. Paid vacations provide workers with an opportunity to rest, become rejuvenated, and hopefully,become more productive.
• Sick Leave: Each year many firms allocate, to each employee, a certain number of days of sick leave, which they can use when ill.
b) Health Benefits—Health benefits are often included as part of an employee’s indirect financial compensation. Specific areas include health, dental, and vision care.
c) Security Benefits—Security benefits include retirement plans, disability insurance, life insurance, and supplemental unemployment benefits.
• Retirement Plans: Private retirement plans provide income for employees who retire after reaching a certain age or having served the firm for a specific period of time.
• Disability Protection: Workers’ compensation protects employees from job-related accidents and illnesses. Some firms, however, provide additional protection that is more comprehensive.
• Life Insurance: Group life insurance is a benefit commonly provided to protect the employee’s family in the event of his or her death. Although the cost of group life insurance is relatively low,some plans call for the employee to pay part of the premium.
d) Employee Services—Organizations offer a variety of benefits that can be termed employee services. These benefits encompass a number of areas including relocation benefits, child care, educational assistance, food services/ subsidized cafeterias, and financial services.
• Relocation Benefits: Include shipment of household goods and temporary living expenses, covering all or a portion of the real estate costs associated with buying a new home and selling the previously occupied home.
• Child Care: Another benefit offered by some firms is subsidized child care. Here, the firm may provide an on-site child care center, support an off-site center, or subsidize the costs of child care.
• Educational
Assistance: According to a recent benefits survey, 81 percent have educational benefits that reimburse employees for college tuition and books.
• Food Services/ Subsidized Cafeterias: Most firms that offer free or subsidized lunches feel that they get a high payback in terms of employee relations.
• Financial Services: One financial benefit that is growing in popularity permits employees to purchase different types of insurance policies through payroll deduction.
e) Premium Pay—Compensation paid to employees for working long periods of time or working under dangerous or undesirable conditions.
• Hazard pay: Additional pay provided to employees who work under extremely dangerous conditions. • Shift differentials: Paid to employees for the inconvenience of working undesirable hours.
f) Benefits for Part-Time Employees—Recent studies indicate that employers are offering this group more benefits than ever. Growth in the number of part-timers is due to the aging of the workforce and also to an increased desire by more employees to balance their lives between work and home.
V. Communicating Information about the Benefits Package
Employee benefits can help a firm recruit and retain a quality workforce. Management depends on an upward flow of information from employees in order to know when benefit changes are needed, and, because employee awareness of benefits is often severely limited, the program information must be communicated downward.
vi. Incentive Compensation
Compensation programs that relate pay to productivity.
a) Individual Incentive Plans—A specific form of performance-based pay is an individual incentive plan called piecework. In such a plan, employees are paid for each unit produced.
b) Team-Based Compensation Plans—Team performance consists of individual efforts.
Therefore, individual employees should be recognized and rewarded for their contributions.
However, if the team is to function effectively, a reward based on the overall team performance should be provided as well.
c) Companywide Plans—Companywide plans offer a feasible alternative to the incentive plans previously discussed. They may be based on the organization’s productivity, cost savings, or profitability. • Profit Sharing: A compensation plan that results in the distribution of a predetermined percentage of the firm’s profits to employees. There are several variations, but the three basic forms are current, deferred, and combination. Current plans provide payment to employees in cash or stock as soon as profits have been determined. Deferred plans involve placing company contributions in an irrevocable trust to be credited to the account of individual employees. The funds are normally invested in securities and become available to the employee (or his/her survivors) at retirement, termination, or death. Combination plans permit employees to receive payment of part of their share of profits on a current basis, whereas payment of part of their share is deferred. Profit sharing tends to tie employees to the economic success of the firm.
• Employee Stock Option Plan (ESOP): A defined contribution plan in which a firm contributes stock shares to a trust.
• Gain Sharing: Plans that are designed to bind employees to the firm’s performance by providing an incentive payment based on improved company performance. The first gain sharing plan was developed by Joseph Scanlon during the Great Depression, and it continues to be a successful approach to group incentive, especially in smaller firms.
• Scanlon Plan: Provides a financial reward to employees for savings in labor costs that result from their suggestions.
Vii. Non-financial Compensation
Compensation departments in organizations do not normally deal with non-financial factors.
However, non-financial compensation can be a very powerful factor in the compensation equation. Viii. The job
Some jobs can be so exciting that the incumbent can hardly wait to get to work each day.
IX. The Job as a Total Compensation Factor
The job itself is a central issue in many theories of motivation, and it is also a vital component of a total compensation program.
a) Skill Variety—The extent to which work requires a number of different activities for successful completion.
b) Task Identity—The extent to which the job includes an identifiable unit of work that is carried out from start to finish.
c) Task Significance—The impact that the job has on other people.
d) Autonomy—The extents of individual freedom and discretion employees have in performing their jobs.
e) Feedback—The amount of information employees receive about how well they have performed the job.
g) Cyber-work—A possibility of a never-ending workday created through the use of technology.
X. The Job Environment as a Total Compensation Factor
Employees can draw satisfaction from their work through several non-financial factors.
a) Sound Policies—Human resource policies and practices reflecting management’s concern for its employees can serve as positive rewards.
b) Competent Employees—Successful organizations emphasize continuous development and assure that competent managers and non-managers are employed.
c) Congenial Coworkers—Although the American culture has historically embraced Individualism, most people possess, in varying degrees, a desire to be accepted by their work group.
d) Appropriate Status Symbols—Organizational rewards that take many forms such as office size and location, desk size and quality, private secretaries, floor covering, and title.
e) Working Conditions—The definition of working conditions has been broadened considerably during the past decade.
XI. Workplace Flexibility
Flexible work arrangements do more than just assist new mothers’ return to full-time work. They comprise an aspect of non-financial compensation that allows many families to manage a stressful work/home juggling act.
a) Flextime—The practice of permitting employees to choose, with certain limitations, their own working hours.
b) Compressed Workweek—Any arrangement of work hours that permits employees to fulfill their work obligation in fewer days than the typical five-day workweek.
c) Job Sharing—An approach to work that is attractive to people who want to work fewer than 40 hours per week.
d) Flexible Compensation (Cafeteria Compensation)—Plans that permit employees to choose from among many alternatives in deciding how their financial compensation will be allocated.
e) Telecommuting—Telecommuting is a work arrangement whereby employees are able to remain at home, or otherwise away from the office, and perform their work over telephone lines tied to a computer.
f) Part-Time Work—Use of part-time workers on a regular basis has begun to gain momentum in the United States. This approach adds many highly qualified individuals to the labor market by permitting both employment and family needs to be addressed.
g) Modified Retirement—An option that permits older employees to work fewer than regular hours for a certain period of time proceeding retirement. This option allows an employee to avoid an abrupt change in lifestyle and more gracefully move into retirement.
XII. Other Compensation Issues
Several issues that relate to compensation deserve mention. These issues include comparable worth, pay secrecy, and pay compression.
a) Severance Pay—Although some firms are trimming the amount of severance pay offered, typically, one to two weeks of severance pay is given for every year of service, up to some predetermined maximum. Severance pay is generally shaped according to the organizational level of the employee.
b) Comparable Worth—Requires the value for dissimilar jobs, such as company nurse and welder, to be compared under some form of job evaluation and pay rates for both jobs to be assigned according to their evaluated worth.
c) Pay Secrecy—Organizations tend to keep their pay rates secret for various reasons. If a firm’s compensation plan is illogical, secrecy may indeed be appropriate because only a well.
THE EMPLOYEES' STATE INSURANCE ACT, 1948
The Employees’ State Insurance Act, 1948, provides to workers not only accident benefit but also other benefits such as sickness benefit, maternity benefit and medical benefit. Wage Ceiling: Every employee drawing wages upto Rs. 15000.00 per month is required to be insured under the Act. Objective of the Act: The object of the Act is to secure sickness, maternity, disablement and medical benefits to employees of factories and establishments and dependents’ benefits to the dependents of such employees. Applicability:-Section 2(9) 'employee' under ESI means any person who is engaged/employed for wages/salary in connection with the work of the establishment to which this Act applies. But does not include any person whose wages (excluding OT) exceed the limit prescribed by the Central Govt. (Which is 15000 pm now with effect from 1 May 2010). Section 2(12) 'establishment/factory' under ESI means any premises whereon 20 or more persons are employed or were employed for wages.
If you combine both, you understand that if the total employees are 25 but out of which 14 are drawing gross more than 15000 pm, then only 11 employees come under ESIS and the criteria for 20 employees does not fulfill. Hence on above grounds it is not covered.
CHECK LIST Applicability of the Act & Scheme: Is extended in area-wise to factories using power and employing 10 or more persons and to non-power using manufacturing units and establishments employing 20 or more person upto Rs.15,000/- per month with effect from 01-May-2010. It has also been extend-ed upon shops, hotels, restaurants, roads motor transport undertakings, equipment maintenance staff in the hospitals. | | | | | | | | | | | Coverage of Employees Drawing wages upto Rs. 15000.00 per month engaged either directly or through contractor | | Rate of contribution of the wages Employer's 4.75%Employee's 1.75% | | The ESI Scheme Today | | Benefits to employees | | | | | No. of implemented CentresNo. of Employers coveredNo. of Insured PersonsNo. of BeneficiariesNo. of Regional Offices/SRO’sNo. of ESI Hospitals/AnnexesNo. of ESI DispensariesNo. of Panel Clinics | 6772.38 lacs85 lacs330 lacs2618314532950 | | Medical, sickness, extended sickness for certain diseases, dependents maternity, besides funeral expenses, rehabilitation allowance, medical benefit to insured person and his or her spouse. | | | | | | | | | | | WAGES FOR ESI CONTRIBUTIONSRegisters / Files to be maintained by the employers | | Manner and Time Limit for making Payment of Contribution | To be deemed as wages * Basic pay * Dearness Allowance * House Rent Allowance * City Compensatory Allowance * Overtime Wages (but not to be taken into account for determining the coverage of employee) * Payment for day of rest * Production Incentive * Bonus other than statutory bonus * Night shift Allowance * Heat, Gas & Dust Allowance * Payment for unsubstituted holidays * Meal / Food Allowance * Suspension Allowance * Lay off Allowance * Children Education Allowance (not being reimbursement for actual tuition fees | Not to be deemed as Wages * Contribution paid by the employer to any pension / provident of under ESI Act. * Sum paid to defray special expenses entailed by the nature of employment – Daily allowance paid for the period spent on tour. * Gratuity payable on discharge * Pay in lieu of notice of retrenchment compensation * Benefits paid under the ESI Scheme * Encashment of leave * Payment of Inam which does not form part of the term of employment * Washing Allowances for livery * Conveyance amount towards reimbursement for duty related journey | | The total amount of contribution (employee's share and employer's share) is to be deposited with the authorised bank through a challan in the prescribed form in quadruplicate on or before 21st of month following the calendar month in which the wages fall due. | | | | | | | | Contribution Period If the person joined insurance employment for the first time, say on 5th January, his first contribution period will be from 5th January to 31st March and his corresponding first benefit will be from 5th October to 31st December. * 1st April to 30th September * 1st October to 31st March | | | | | | | | | | | Penalties: Different punishment have been prescribed for different types of offences in terms of Section 85: (i) (six months imprisonment and fine Rs.5000), (ii) (one year imprisonment and fine), and 85-A: (five years imprisonment and not less to 2 years) and 85-C (2) of the ESI Act, which are self explanatory. Besides these provisions, action also can be taken under section 406 of the IPC in cases where an employer deducts contributions from the wages of his employees but does not pay the same to the corporation which amounts to criminal breach of trust. | Designed system can stand careful scrutiny. An open system would almost certainly require managers to explain the rationale for pay decisions to subordinates.
d) Pay Compression—Occurs when workers perceive that the pay differential between their pay and that of employees in jobs above or below them is too small.
PERFORMANCE-RELATED BONUS-SCHEME
It is possible to use ANPAS (or any other performance appraisal system) solely for employee development and feedback purposes. But many organizations will wish to link the appraisal process to specific reward and incentive outcomes.
This is a perfectly legitimate objective. There are studies showing that employees find the process of appraisal more satisfying and credible when it is directly linked to reward outcomes.
Brief Description
Before we look at the step-by-step process for calculating the bonus, a quick overview will be helpful.
The Bonus Plan first calculates a Bonus Fund. This is the actual amount of money that the organization is prepared to allocate for bonus use. Next, an average performance appraisal rating is determined for each employee.
If an employee scores higher than a pre-determined level, he or she is bonus-eligible. The size of the bonus paid depends on the total number of Bonus Points to which an employee is entitled.
The number of Bonus Points is determined by both the employee's performance (as reflected in their average rating) and the employee's current salary range.
Finally, a simple formula is used to exactly allocate the money in the Bonus Fund to all eligible employees.
Full Description
There are five separate steps in the Bonus Plan -
Calculate the Bonus Fund
Determine Bonus Eligibility
Select Bonus Band
Select Salary Band
Calculate Individual Bonuses
Calculate the Bonus Fund
The first step is to determine the amount of money that is available to pay the bonuses. It is suggested this amount be (usually) about 2.5% of the annual wage and salary bill. This amount is known as the Bonus Fund.
The figure of 2.5% may be varied to reflect the policies, needs and circumstances of each organization. For example, a percentage of profit may be preferred, or even a percentage of profit increase. Obviously in such cases there will be no bonus due unless there is a profit or an increase in profit.
Whatever method is selected, it is suggested the size of the final bonus payments (when calculated) should lie in the range 2% to 10% of the bonus recipient's base wage or salary.
Determine Bonus Eligibility
To be eligible for the bonus, the employee must achieve an Average Factor Rating (AFR) of 3.40 or better. The AFR is calculated by summing the ratings and dividing the result by seven.
For example -
(4 + 4 + 3 + 3 + 5 + 3 + 4) / 7
= (26) / 7
= 3.71
This employee's AFR of 3.71 would make them eligible for the bonus.
Select Bonus Band
There are three Bonus Bands, B1, B2 and B3. The employee's Bonus Band depends on their AFR. The table below shows the AFR ranges for each Bonus Band, together with the Bonus Points that apply to each: Bonus Band | Average Factor Rating | Bonus Points | B1 (lower) | 3.40 to 3.99 | 1 | B2 (middle) | 4.00 to 4.49 | 2 | B3 (upper) | 4.50 to 5.00 | 3 |
Select Salary Band
There are three Salary Bands S1, S2, S3. Those in the higher bands will receive proportionately larger bonuses. This is necessary to maintain compensation relativity and provide attractive incentives to employees on higher incomes.
It is up to each organization to decide how it will define the lower, middle and upper bands. As a guide, the proportion of employees in each Salary Band should be about S1 60%, S2 30%, and S3 10%. The most common approach is to define bands according to wage and salary cut-off points; for example:
S1... $0 p.a. to $30000 p.a.
S2... $30001 p.a. to $50000 p.a.
S3... $50001 p.a. and above
Another approach is to use job evaluation cut-off points to achieve the same result, or to group employees loosely into categories, for example:
S1... Junior and non-supervisory staff
S2... Supervisors, specialists, middle managers
S3... Senior and top managers
The method chosen to classify employees into Salary Bands is not important, so long as it is systematic and reflects the general seniority structure of the organization.
Once the Salary Band is known for each employee, the number of Bonus Points can be determined -
Salary
Band | Bonus
Points | S1 (lower) | 1 | S2 (middle) | 2 | S3 (upper) | 3 |
Calculate Individual Bonuses
For each individual, add up their total Bonus Points. Then each individual bonus is calculated by this formula -
This formula will exactly allocate to the recipients the total amount of money available in the Bonus Fund.
Example:
There are 36 employees in the Purchasing Department of a medium-sized organization. The total (gross) annual wage and salary bill for the employees of this Department is $1,062,000. The Bonus Fund is set at $26,550 (2.5% of the total).
Among the employees, 12 have received Average Factor Ratings of 3.40 or better (therefore they are "eligible for performance bonus"). Employee | Bonus Band | Salary Band | Total Bonus
Points | Bonus
Amount
$ | Vikram Singh | B1 | S1 | 2 | 1609 | Ankur Sharma | B1 | S1 | 2 | 1609 | Mahesh | B1 | S2 | 3 | 2414 | Keshav Rathore | B1 | S1 | 2 | 1609 | Ritesh | B1 | S1 | 2 | 1609 | Swati Manchanda | B1 | S1 | 2 | 1609 | Gurcharan singh | B1 | S1 | 2 | 1609 | Rajeev Gupta | B1 | S2 | 3 | 2414 | Bhuwan Tiwari | B2 | S3 | 5 | 4023 | Prateek | B2 | S1 | 3 | 2414 | Hitesh | B2 | S2 | 4 | 3218 | Sagar | B3 | S1 | 3 | 2414 | Totals | - | - | 33 | 26551 |
Example
In John's case - bonus = (2 X 26551) / 33
= $1609
Example
In Helena's case - bonus = (4 X 26551) / 33 = $3218
Payment of Bonus
While the bonus could be paid in a single lump sum, it is suggested that multiple smaller payments - bonus instalments - be paid throughout the next performance period (quarterly instalments may be ideal). A number of payments at intervals can do more to strengthen the link between performance and rewards than a single payment which is all but forgotten in a short time.
It is also important that the bonus be paid by way of a separate check, pay packet or deposit. The payment will lose much of its impact if it is simply consolidated with normal pay. Every separate payment is a reminder to the employee of the value of his or her personal effort, and serves to encourage the type of behavior that leads to superior job performance.
QUESTIONNAIRE
A STUDY ON EMPLOYEE ATTITUDE TOWARDS WAGE& SALARY
ADMINISTRATION IN QUESTIONNAIRE
a) To what extent, you are satisfied with Income given by organization?
Rating | Excellent | Very Good | Good | Satisfactory | Poor | Scale | | | | | |
b) The criteria of Bonus in an organization:
Rating | Excellent | Very Good | Good | Satisfactory | Poor | Scale | | | | | |
c) To what extent, the working pattern of day shift and night shift satisfy you?
Rating | Excellent | Very Good | Good | Satisfactory | Poor | Scale | | | | | |
d) To what extent, if any, factors like healthcare, cost of living, productivity affect at wage/salary level?
Rating | Excellent | Very Good | Good | Satisfactory | Poor | Scale | | | | | |
e) To what extent, if any, did you find the level of satisfaction in an organization?
Rating | Excellent | Very Good | Good | Satisfactory | Poor | Scale | | | | | |
f) In general, to what extent do you feel that the simulation was a worthwhile educational experience? Rating | Excellent | Very Good | Good | Satisfactory | Poor | Scale | | | | | |
g) Payment of salary on time by the organization: Rating | Excellent | Very Good | Good | Satisfactory | Poor | Scale | | | | | |
h) To what extent, do you feel about the criteria of overtime allowance payment? Rating | Excellent | Very Good | Good | Satisfactory | Poor | Scale | | | | | |
CONCLUSION
Going through the analysis of response from the survey conducted, it is concluded that:
* Most of the employee’s rated good wage and salary provided by the TCS during performance in an organization.
* Criteria of Bonus are good.
* Overtime allowance provided to the worker is satisfactory.
* Payment of salary is done on time.
* Leave system of the organization is satisfactory.
* HRMS is provided by the organization which contains full detail about the salary structure.
* Employees are satisfied with the working pattern of shifts.
RECOMMENDATION
* Maintain consistency in the taste and quality of products.
* Include more promotional and advertising measures to increase its sales or to increase its market share.
* The company must receive continuous feedback and suggestions from its customers/ consumers.
* The company must expand further divisions like snacks, biscuits, beverages etc.
BIBLIOGRAPHY
BOOKS REFFERED:
* Labour problems and remedies- H.L. Kumar
* Practice and procedure of labour laws- H.L.kumar
* Labour Management- H.L.Kumar
WEBSITES REFERRED:
* www.citehr.com
* http://www.tcsgroup.org/
* hrmba.blogspot.com/.../wages-and-salary-administration-
* www.egyankosh.ac.in/bitstream/123456789/25306/1/Unit-19.pdf
ANNEXURE - I
Date:______________
VISITING CARD REQUISITION FORM
TO : HUMAN RESOURCES
DATE :
NAME :
DESINATION :
E-MAIL ADDRESS :
(if applicable)
___
______________________ ____________________
Signature of the Manager Signature of the employee
Annexure – 2
NO DUES FORM
Name of Employee :
Employee Code :
Location/Region :
Date of Joining Services :
Date of Leaving :
Date of Last Working Day :
Short-fall in Notice Period :
Accumulated Leave (Annual Leave only) :
Loan(s) (if any, please specify) :
Whether company leased Accommodation given? : Yes/No.
If yes, whether vacation notice given if yes,
Please mention the date :
Handing over of the leased premises
(Pls. mention date) :
Security Deposit Recovered : Rs.
Electricity & Water charges to be paid : Rs.
Whether company telephone given : Yes/No.
If yes, status of telephone :
Any outstanding telephone bill to be paid : Rs.
Travel imprest (Expense Account) to be recovered/to be paid : Rs.
Any other amount (to be recovered/ to be paid) : Rs.
Company’s property surrendered : Yes/No.
Forwarding Address: Remarks:
Contact Telephone No:
Signature:
_________ ___________ ____________ ______
Employee Finance dept. Functional HR Head
You May Also Find These Documents Helpful
-
I express my sincere gratitude to Ms. Brinda Gopal (Assistant Manager) HR in WNS Bangalore, for her valuable guidance and consistent support of all types through out the project work.…
- 12023 Words
- 49 Pages
Powerful Essays -
With great pleasure and deep sense of gratitude, we take this opportunity to express our sense of indebtedness to Dr. K Bharathi, our project guide for accepting us under her good self to carry out this project work, and providing us his invaluable guidance and constant encouragement at each and every step throughout the progress of this project. To be sincere it was an inextinguishable treasure of pleasure for us…
- 4967 Words
- 20 Pages
Powerful Essays -
First and foremost we are thankful to Mr. P Y Patel for giving us this valuable opportunity to have our Project at his company. I thank him to take keep interest in my work, and guide me throughout my training. It is with a deep sense of gratitude that we would like to acknowledge our Director and all Faculty members, who have been kind enough to me in regard to completion of the project.…
- 7494 Words
- 30 Pages
Powerful Essays -
And special thanks to Mr. Pradipta Pradhan (Deputy Manager) who guided me and helped me in every phase of the project and give me proper time from his very-very busy and tight office schedule.…
- 11302 Words
- 46 Pages
Good Essays -
I would like to show my whole hearted gratitude to Mr.Divin Davis (Branch Manager, AMUL, ERNAKULAM) for his valuable advice, timely guidance and enthusiasm imparted to me for completing this project. He gave me expert guidance, timely encouragement and oral support throughout the duration of the project work. I would also like to express my gratitude towards my college Kirloskar Institute of Advanced Management Studies, Harihar for giving me the opportunity to undergo SIP in the leading company AMUL. I desire to put on record my deep sense of gratitude to Prof. T. Vishwanathan (faculty in charge) and S Arun ( Alumni, KIAMS) for their valuable inputs during the completion of the project. Finally I thank almighty god, in supporting me with good health and fine mental stature to complete this project.…
- 7540 Words
- 31 Pages
Powerful Essays -
A report submitted to IIMT, Greater Noida as a part fulfillment of full time postgraduate diploma in management…
- 7159 Words
- 29 Pages
Powerful Essays -
At first I want to render my gratitude to Mr. HIMANSU KUMAR BEHERA, (Officer HR) who, with his immense treasure of knowledge and helpfulness…
- 16279 Words
- 66 Pages
Satisfactory Essays -
I would also like to put on paper my sincere thanks to my guide Mr. Pritesh Rathi (HOD-Finance) & Mrs.Sangeetha for extending their support, cooperation and guidance with out whose help the project would not have been success, and I would like to express my special thanks to our principal Mr. P. venkateshwar rao.…
- 2669 Words
- 11 Pages
Powerful Essays -
I would like to our heartfelt gratitude and thanks to Prof VL Rao for his guidance and support throughout this project. I am thankful to my Institute for providing me with proper resources and fostering this project work.…
- 10732 Words
- 43 Pages
Powerful Essays -
In the venture , cooperation is sought from many persons . It is my humble duty to express great sense of gratitude to my project guide Dr.Azra Israt under whose support and supervision made my project successful. .…
- 16093 Words
- 65 Pages
Powerful Essays -
I would like to convey my sincere regards to Mr. Miller Khandhar who has been a constant source of motivation and discipline throughout the project, without whose guidance and support this project would have been a distant dream. It was his experience and dedication that really helped me to flourish as a summer trainee.…
- 677 Words
- 4 Pages
Satisfactory Essays -
I would like to express my sincere thanks to Mr Altaf Hussain (HR Manager- ITC Limited) for providing me with guidance, direction and advise at right time to make this project a real learning experience…
- 9804 Words
- 40 Pages
Satisfactory Essays -
I would also like to acknowledge my sincere gratitude to the Director of my Institute Dr. Manoj Narawade for allowing me to complete the project in Reitzel Group India.…
- 1098 Words
- 11 Pages
Powerful Essays -
I extend my immense gratitude to the Head of the Department Mr.S.Jayakumar for his motivation, inspiration, encouragement and cooperation for the completion for my project.…
- 7362 Words
- 30 Pages
Powerful Essays -
We extend our deep appreciation and gratitude to all those who gave us the possibilities to complete this project. We would like to thank Prof. Surya Krishna Mantrala, Head of Department, LDRP Institute of Technology & Research, Prof. Hemali Broker, who helped us throughout the project and also in the successful completion of our project. She has given a lot of extra input in our project. Besides practical experience, we have gained a lot out of this project. We wish to express gratitude to Prof. Anand in helping us to take the right path towards the completion of the project. We thankful to all the faculty members of MBA Department for their continuous support & guidance for the completion of this project.…
- 5962 Words
- 24 Pages
Good Essays