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compensation and benefits

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  1. 1. Session Two Compensation & Benefits
  2. 2. Session 2 - Session Plan <ul><li>Various acts </li></ul><ul><li>Motivation Theories and linkages to compensation </li></ul><ul><li>Wage Boards & Collective Bargaining </li></ul>
  3. 3. Various Acts <ul><li>Minimum Wages Act, 1948 </li></ul><ul><li>Payment of Wages Act , 1936 </li></ul><ul><li>Employees Provident Fund Act , 1952 </li></ul><ul><li>Employees State Insurance Act, 1948 </li></ul><ul><li>Employees Pension Scheme, 1955 </li></ul><ul><li>The Workmen’s Compensation Act, 1923 </li></ul><ul><li>The Payment of Bonus Act , 1965 </li></ul><ul><li>Payment of Gratuity Act,1972 </li></ul><ul><li>Others related areas: </li></ul><ul><li>Collective Bargaining </li></ul><ul><li>Wage Boards </li></ul>
  4. 4. Payment of Wages Act , 1936 <ul><li>Includes: </li></ul><ul><ul><li>All remuneration by way of salary or allowances expressed in terms of money </li></ul></ul><ul><ul><li>Payable under any award or settlement , on account of holidays, leave , termination etc </li></ul></ul><ul><ul><li>Does not include: </li></ul></ul><ul><ul><li>Bonus, Value of house accommodation, PF , Gratuity, Traveling allowance </li></ul></ul>
  5. 5. To whom does it apply : (employers) <ul><li>Every person employed in any factory or person employed in an industrial or other establishment. </li></ul><ul><li>Beneficiaries under the act: </li></ul><ul><ul><li>Every person who is employed in any of the establishments and who is drawing less than Rs. 6, 500 per mth. </li></ul></ul>
  6. 6. Benefits: <ul><li>Regular and timely payment of wages per industry wise </li></ul><ul><li>Penalties : </li></ul><ul><li>They are from Rs 500 – 22, 500 . Repeat offences prisonment upto 1 – 6mths </li></ul>
  7. 7. Minimum Wages Act, 1948 <ul><li>Includes : </li></ul><ul><ul><li>All remuneration expressed in terms of money including HRA , does not include: </li></ul></ul><ul><ul><li>Value of house accommodation, supply of light , water medical , attendance </li></ul></ul><ul><ul><li>Any traveling allowance </li></ul></ul><ul><ul><li>Any gratuity payable on discharge </li></ul></ul>
  8. 8. To whom does it apply: ( Employers) <ul><li>Any person who directly or indirectly employs one or more employees in any scheduled employment in respect of which minimum rates of wages have been fixed under the Act. </li></ul><ul><li>Beneficiaries under the act (Employees): </li></ul><ul><ul><li>Any person who is employed for hire/ reward to do any work in a scheduled employment and includes outdoor worker to whom any articles or materials are given for doing some work. </li></ul></ul>
  9. 9. Benefits <ul><li>The Act prescribes the minimum rates of wages payable to employees for different scheduled employment for difference class or work and for adults – hour, by the day , month. </li></ul><ul><li>Penalties : </li></ul><ul><ul><li>Imprisonment upto 6 mths and / or fine upto Rs. 500 </li></ul></ul>
  10. 10. <ul><li>Employees State Insurance Act, 1948 </li></ul><ul><li>Employees Pension Scheme, 1955 </li></ul><ul><li>Employees Provident Fund Act, 1952 </li></ul><ul><li>The Workmen’s Compensation Act, 1923 </li></ul><ul><li>The Payment of Bonus Act , 1965 </li></ul><ul><li>Payment of Gratuity Act, 1972 </li></ul>
  11. 11. Collective Bargaining <ul><li>It is a process whereby standards are created to govern labour relations including wages and working conditions. </li></ul><ul><li>Level of Bargaining </li></ul><ul><ul><li>Sectoral Bargaining at National Level </li></ul></ul><ul><ul><li>Banks, coal ,steel etc </li></ul></ul><ul><ul><li>They negotiate long terms settlements with the all India federations </li></ul></ul>
  12. 12. <ul><li>Industry cum Region wide agreements </li></ul><ul><ul><li>These are common in cotton / jute textiles engineering and tea. </li></ul></ul><ul><ul><li>Decentralised Firm / Plant Level agreements </li></ul></ul><ul><ul><li>Amicable settlements </li></ul></ul><ul><ul><li>Charter of demands </li></ul></ul>
  13. 13. Wage Boards <ul><li>First one was set up by the government in 1957 in the cotton textile industry. </li></ul><ul><li>They are set up to provide better climate for industrial relations to represent consumers / public interests. </li></ul><ul><li>To standardize wage structure. </li></ul><ul><li>To align wage settlements with the social and economic polices of the government </li></ul>
  14. 14. <ul><li>Constitution </li></ul><ul><ul><li>Tripartite in nature- chairperson, equal no. of representatives of employees and employees and 2 independent members </li></ul></ul><ul><ul><li>Determine wages payable to employees </li></ul></ul>
  15. 15. Behavioural Theories ( Motivation) <ul><li>Maslow- Physiological, Safety and Security, Belonging, Esteem & Self Actualisation </li></ul><ul><li>Herzberg 2 factor theory- Hygiene & Motivation factors </li></ul><ul><li>Mc Clelland- n Ach, n Aff & n Pow </li></ul><ul><li>Alderfer (ERG ) –Existence, Relatedness & Growth </li></ul>
  16. 16. <ul><li>Vroom’s Expectancy Theory: </li></ul><ul><ul><li>Efforts- Perceived probability of success , Valence-Perceived value of reward & Outcome – Probability of receipt of reward. </li></ul></ul><ul><li>Equity Theory: </li></ul><ul><ul><li>When employees feel that what they give ( inputs ) and they receive (outcomes) is similar to what others are giving and receiving equity exists . Employees make comparisons to determine equity in various work situations. </li></ul></ul>
  17. 17. Designing of Compensation Polices- Factors to be considered <ul><li>Attraction & Retention </li></ul><ul><li>Internal Consistency </li></ul><ul><li>External Parity </li></ul><ul><li>Capacity to pay </li></ul><ul><li>Pay for performance </li></ul><ul><li>Labour cost and productivity </li></ul><ul><li>Cost of living ( DA& CCA) </li></ul><ul><li>Merit & Seniority Pay </li></ul><ul><li>Motivation </li></ul>
  18. 18. Team assignment <ul><li>Background and theory of compensation </li></ul><ul><li>Compensation Manual / guidelines </li></ul><ul><li>Compensation Philosophy and policies </li></ul><ul><li>Compensation Model </li></ul><ul><li>Compensation for different levels from Trainees to senior levels </li></ul>
  19. 19. <ul><li>Salary structure and design </li></ul><ul><li>Employee’s Payslip </li></ul><ul><li>Reward Management </li></ul><ul><li>Competency Based Pay </li></ul><ul><li>Salary audits </li></ul>