Miss Priya Bhagwat
Mr. Azhar Anwar Talgharkar
NORMALLY COMPENSATION PAYABLE TO AN EMPLOYEE
INCLUDES THE FOLLOWING THREE COMPONENTS:-
a) Basic Compensation:-
For the job (wage/salary)
b) Supplementary Compensation:-
( Fringe benefits such as Housing, medical,
paid leave etc.)
c) Incentive Compensation for the employee on job:-
( D.A, profit sharing, bonus etc)
DEFINITION OF COMPENSATION:-
Compensation may be defined as money received in the performance of work, plus
many kinds of benefits & services that organization provide to their employees.
MEANING OF COMPENSATION PAYMENT:-
“ Wage is a Monitory payment made by the employer to his employee for the work
done or services rendered ”
• Commissions, Bonuses, Gainsharing, Profit Sharing
• Pay for Time Not Worked (vacation, sick leave, holidays,
• Insurance Coverage (medical, dental, life, etc.)
• Income Security (pensions and disability)
• Services(education assistance, child care, recreation,
• Retirement Schemes
• Paid Leaves
TYPES OF COMPENSATION
A NOTE ON SALARY SLIP:-
An employee is given full details of compensation payment on a printed slip called
The Salary slip is given to every worker along with the packet containing salary
payment. The Slip gives full details of salary payment, This includes basic pay,
allowances, incentives payments, house rents etc.
Remuneration Package/Compensation of an Employee
Wage/Salary Incentives Fringe
Perquisites Non-monitory Benefits
Total Compensation Package
DETAILS OF EMPLOYEE COMPENSATION PACKAGE/SALARY
ii. Fringe benefits:
v. Non-monetary benefits:
1) Wage Salary:-
Wage is the payment as per the pay scale decided by the employer. Wage
represents hourly-rate of pay while salary refers to monthly rate of pay,
irrespective of the number of hours put by an employee.
The salary payment is made regularly on specific day decided by the
Along with basic salary, allowances are given to employees.
a) Dearness Allowance (DA):
b) House Rent Allowance (HRA):
c) City Compensatory Allowance (CCA):
d) Transport Allowance(TA):
Dearness Allowance (DA): It is as per the cost of living. It is paid as a percentage
of basic pay.
House Rent Allowance (HRA): It is paid to employees to whom living
accommodation is not provided. It is calculated as a
percentage of basic pay.
City Compensatory Allowance (CCA): It is paid to employees in metros and big
Transport Allowance (TA): Some employers pay such allowance. It is a fixed
amount payable every month.
Salary payment is not uniform to all employees as it depends on the nature of the
job, responsibilities assigned , merits available, status of the post, seniority of the
employee and so on.
2) Fringe benefits:-
There are monetary benefits provided to employees.
They includes the benefit of:-
(a) Provident Fund (b) Gratuity (c) Medical Care
(d) Hospitalization (e) Accident Relief (f) Health &
insurance (g) Subsidized Canteen facility (h) Recreation
Facilities (i) Provision of uniforms to employees etc.
There are special benefits offered to managers/ executives. The
purpose is to retain competent executives by offering them
(a) Company’s car for travelling (b) Club membership (c) Paid
Holidays (d) Furnished house/accomodation (e) Stock option
Monetary incentives are offered as a supplement to regular wage
payment. The incentives are linked with better performance. The
basic purpose behind incentives is to encourage/ motivate
employees to take more interest in the work show concrete results
in terms of actual performance & collect extra incentive payment as
per rules. Extra salary paid for the extra work is called as incentives
& is calculated twice as normal working hours. Incentives depends
on productivity, actual production given, cost reduction efforts of
5) Non-monitory benefits:-
They include comfortable working conditions,
provision of housing and medical facilities, impartial
promotions, support to workers facing special
problems, provision of welfare facilities to employees
and so on.