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Unit 3

SANJAY KANAGALA
SANJAY KANAGALA
SANJAY KANAGALAHEAD OF THE DEPARTMENT at RAJIV GANDHI INSTITUTE OF MANAGEMENT AND SCIENCE

MIR-3RD UNIT-JNTUK

Unit 3

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UNIT-3
QUALITY OF WORK LIFE
 Workers’ Participation in Management
 Worker’s Participation in India
 shop floor
 Plant Level
 Board Level
 Workers’ Welfare in Indian scenario
 Collective bargaining concepts & Characteristics
WAGE AND SALARY ADMINISTRATION
 Nature & Significance of wage
 salary administration
 essentials of Minimum wage
 Fair wage
 Real wage
 Incentives & fringe benefits
 Issues and Constraints in Wage Determination in India.
 "QWL is the degree to which members of a work
organisation are able to satisfy important personal
needs through their experiences in the
organisation".
 - J. Richard and J. Loy
 Richard E.Walton explains quality of work life in terms of eight
broad conditions of employment that constitute desirable
quality of work life (QWL). He proposed the same criteria for
measuring QWL. Those conditions/criteria include :
1. Adequate and fair compensation.
2. Safe and healthy working condition.
3. Opportunity to use and develop human capacities.
4. Opportunity for career growth.
5. Social integration in the work force.
6. Constitutionalism in the work organisation. 
7. Work and quality of life and
8. Special relevance of work.
 Hours of work and arrangements of working time.
 Work organization and job content.
 Impact of new technologies on working conditions.
 Working conditions of women, young workers,
older workers and other special categories.
 Work-related welfare services and facilities.
 Shopfloor participation in the improvement of
working conditions.
 Attitude
 Environment
 Opportunities
 Nature of Job
 People
 Stress Level
 Career Prospects
 Challenges
 Growth and Development
 Risk Involved and Reward

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Unit 3

  • 2. QUALITY OF WORK LIFE  Workers’ Participation in Management  Worker’s Participation in India  shop floor  Plant Level  Board Level  Workers’ Welfare in Indian scenario  Collective bargaining concepts & Characteristics WAGE AND SALARY ADMINISTRATION  Nature & Significance of wage  salary administration  essentials of Minimum wage  Fair wage  Real wage  Incentives & fringe benefits  Issues and Constraints in Wage Determination in India.
  • 3.  "QWL is the degree to which members of a work organisation are able to satisfy important personal needs through their experiences in the organisation".  - J. Richard and J. Loy
  • 4.  Richard E.Walton explains quality of work life in terms of eight broad conditions of employment that constitute desirable quality of work life (QWL). He proposed the same criteria for measuring QWL. Those conditions/criteria include : 1. Adequate and fair compensation. 2. Safe and healthy working condition. 3. Opportunity to use and develop human capacities. 4. Opportunity for career growth. 5. Social integration in the work force. 6. Constitutionalism in the work organisation.  7. Work and quality of life and 8. Special relevance of work.
  • 5.  Hours of work and arrangements of working time.  Work organization and job content.  Impact of new technologies on working conditions.  Working conditions of women, young workers, older workers and other special categories.  Work-related welfare services and facilities.  Shopfloor participation in the improvement of working conditions.
  • 6.  Attitude  Environment  Opportunities  Nature of Job  People  Stress Level  Career Prospects  Challenges  Growth and Development  Risk Involved and Reward
  • 7.  A  process by which subordinate employees, either individually or collectively, become involved in one or more aspects of organizational decision making within the enterprises in which they work.
  • 8.  democratic participation in decision-making;  maximum employer-employee collaboration;  minimum state intervention  realisation of a greater measure of social justice;  greater industrial efficiency; and  higher level of organisational health and effectiveness.
  • 9. 1. Workers have ideas which can be useful 2. Workers may work more intelligently 3. According to Keith Davis, Participation refers to the mental and emotional involvement of a person in a group situation which encourages him to contribute to group goals and share the responsibility of achievement. 4. According to Walpole, Participation in Management gives the worker a sense of importance, pride and accomplishment; it gives him the freedom of opportunity for self-expression; a feeling of belongingness with the place of work and a sense of workmanship and creativity. 5. Clegg says, “It implies a situation where workers representatives are, to some extent, involved in the process of management decision making, but where the ultimate power is in the hands of the management”. 6. According to Dr. Davis, “it is a mental and emotional involvement of a person in a group situation which encourages him to contribute to goals and share responsibilities in them”.
  • 10. 1. To raise level of motivation of workers by closer involvement. 2. To provide opportunity for expression and to provide a sense of importance to workers. 3. To develop ties of understanding leading to better effort and harmony. 4. To act on a device to counter-balance powers of managers. 5. To act on a panacea for solving industrial relation problems.
  • 11. 1. It helps in managing resistance to change which is inevitable. For the growth and development of industry, changes have to be welcomed, otherwise the organization will stagnate and be left behind. If the need for change is jointly felt by all partners of production its acceptance can be high. Workers' participation in change strategy can facilitate acceptable solutions with a view to secure effective and smooth implementations of decisions. 2. Workers' participation can encourage communication at all levels. Since both partners of production are involved in the decision- making there will be fewer changes of distortion and/ or failure in communicating the decision.  3. Joint decision- making ensures the there will be minimum industrial conflict an economic growth can be free form distracting strife.  4. Workers' participation at the plant level can be seen as the first step to establishing democratic values in society at large.
  • 12.  The term “participation” has different meanings for different purposes in different situations.  McGregor is of the view that participation is one of the most misunderstood idea that has emerged from the field of human relations.  Keith Davis has defined the term “participation” as the mental and emotional involvement of a person in a group situation which encourages him to contribute to group goals and share responsibilities in them. This definition envisages three important elements in participation. Firstly, it means mental and emotional involvement rather than mere physical activity; secondly, participation must motivate a person to contribute to a specific situation to invest his own resources, such as initiative, knowledge, creativity and ingenuity in the objectives of the organisation; and thirdly, it encourages people to share responsibility for a decision or activity.  Sharing of responsibility commits people to ensure the success of the decision or activity.
  • 13.  Information participation  Consultative participation  Associative participation  Administrative participation  Decisive participation
  • 14.  there should be a strong, democratic and representative unionism for the success of participative management.  there should be mutually-agreed and clearly-formulated objectives for participation to succeed.  there should be a feeling of participation at all levels.  there should be effective consultation of the workers by the management.  both the management and the workers must have full faith in the soundness of the philosophy underlying the concept of labour participation.  till the participative structure is fully accepted by the parties, legislative support is necessary to ensure that rights of each other are recognised and protected.  education and training make a significant contribution to the purposeful working of participative management.  forums of participation, areas of participation and guidelines for implementation of decisions should be specific and there should be prompt follow-up action and feedback.
  • 15.  Workers’ participation in Management in India was given importance only after Independence. Industrial Disputes Act,1947 was the first step in this direction, which recommended for the setting up of works committees. The joint management councils were established in 1950 which increased the labour participation in management. Since July 1975 the two-tier participation called shop councils at shop level and Joint councils were introduced. Workers’participation in Management Bill, 1990 was introduced in Parliament which provided scope for up liftment of workers.
  • 16.  Employers resist the participation of workers in decision-making. This is because they feel that workers are not competent enough to take decisions.  Workers’ representatives who participate in management have to perform the dual roles of workers’ spokesman and a co-manager. Very few representatives are competent enough to assume the two incompatible roles.
  • 17.  Generally Trade Unions’ leaders who represent workers are also active members of various political parties. While participating in management they tend to give priority to political interests rather than the workers’ cause.  Schemes of workers’ participation have been initiated and sponsored by the Government.However, there has been a lack of interest and initiative on the part of both the trade unions and employers.
  • 18.  In India, labour laws regulate virtually all terms and conditions of employment at the workplace. Workers do not feel the urge to participate in management, having an innate feeling that they are born to serve and not to rule.  The focus has always been on participation at the higher levels, lower levels have never been allowed to participate much in the decision- making in the organizations.
  • 19.  The unwillingness of the employer to share powers with the workers’ representatives, the disinterest of the workers and the perfunctory attitude of the government towards participation in management act as stumbling blocks in the way of promotion of participative management.
  • 20.  Employer should adopt a progressive outlook. They should consider the industry as a joint endeavor in which workers have an equal say. Workers should be provided and enlightened about the benefits of their participation in the management.  Employers and workers should agree on the objectives of the industry. They should recognize and respect the rights of each other.
  • 21.  Workers and their representatives should be provided education and training in the philosophy and process of participative management. Workers should be made aware of the benefits of participative management.  There should be effective communication between workers and management and effective consultation of workers by the management in decisions that have an impact on them.
  • 22.  Participation should be a continuous process. To begin with, participation should start at the operating level of management.  A mutual co-operation and commitment to participation must be developed by both management and labour.
  • 23.  Collective Bargaining  Works Councils  Joint Management Councils and Committees  Workers Ownership of Enterprise
  • 24.  The various forms of workers’ participation in management currently prevalent in the country are:
  • 25.  Government of India on the 30th of October 1975 announced a new scheme in WPM. In every Industrial establishment employing 500 or more workmen, the employer shall constitute a shop council. Shop council represents each department or a shop in a unit. Each shop council consists of an equal number of representatives from both employer and employees. The employers’ representatives will be nominated by the management and must consist of persons within the establishment. The workers’ representatives will be from among the workers of the department or shop concerned. The total number of employees may not exceed 12.
  • 26.  The joint councils are constituted for the whole unit, in every Industrial Unit employing 500 or more workers; there should be a Joint Council for the whole unit. Only such persons who are actually engaged in the unit shall be the members of Joint Council. A joint council shall meet at least once in a quarter. The chief executive of the unit shall be the chairperson of the joint council. The vice- chairman of the joint council will be nominated by the worker members of the council. The decisions of the Joint Council shall be based on the consensus and not on the basis of voting.
  • 27.  In 1977 the above scheme was extended to the PSUs like commercial and service sector organizations employing 100 or more persons. The organizations include hotels, hospitals, railway and road transport, post and telegraph offices, state electricity boards.
  • 28.  The joint councils are constituted for the whole unit, in every Industrial Unit employing 500 or more workers; there should be a Joint Council for the whole unit. Only such persons who are actually engaged in the unit shall be the members of Joint Council. A joint council shall meet at least once in a quarter. The chief executive of the unit shall be the chairperson of the joint council. The vice-chairman of the joint council will be nominated by the worker members of the council. The decisions of the Joint Council shall be based on the consensus and not on the basis of voting.
  • 29.  Co-partnership involves employees’ participation in the share capital of a company in which they are employed. By virtue of their being shareholders, they have the right to participate in the management of the company. Shares of the company can be acquired by workers making cash payment or by way of stock options scheme. The basic objective of stock options is not to pass on control in the hands of employees but providing better financial incentives for industrial productivity. But in developed countries, WPM through co-partnership is limited.
  • 30.  Under this method, one or two representatives of workers are nominated or elected to the Board of Directors. This is the full- fledged and highest form of workers’ participation in management. The basic idea behind this method is that the representation of workers at the top-level would usher Industrial Democracy, congenial employee-employer relations and safeguard the workers’ interests. The Government of India introduced this scheme in several public sector enterprises such as Hindustan Antibiotics, Hindustan Organic Chemicals Ltd etc. However the scheme of appointment of such a director from among the employees failed miserably and the scheme was subsequently dropped.
  • 31.  Under this system Joint Management Councils are constituted at the plant level. These councils were setup as early as 1958. These councils consist of equal number of representatives of the employers and employees, not exceeding 12 at the plant level. The plant should employ at least500 workers. The council discusses various matters relating to the working of the industry. This council is entrusted with the responsibility of administering welfare measures, supervision of safety and health schemes, scheduling of working hours, rewards for suggestions etc.
  • 32.  Wages, bonus, personal problems of the workers are outside the scope of Joint management councils. The council is to take up issues related to accident prevention, management of canteens,water, meals, revision of work rules, absenteeism, indiscipline etc. the performance of Joint Management Councils have not been satisfactory due to the following reasons:
  • 33. ◦ Workers’ representatives feel dissatisfied as the council’s functions are concerned with only the welfare activities. ◦ Trade unions fear that these councils will weaken their strength as workers come under the direct influence of these councils.
  • 34.  Under the Industrial Disputes Act, 1947, every establishment employing 100 or more workers is required to constitute a works committee. Such a committee consists of equal number of representatives from the employer and the employees. The main purpose of this committee is to provide measures for securing and preserving amity and good relations between the employer and the employees.
  • 35.  Works committee deals with matters of day-to-day functioning at the shop floor level. Works committees are concerned with: ◦ Conditions of work such as ventilation, lighting and sanitation. ◦ Amenities such as drinking water,canteens, dining rooms, medical and health services. ◦ Educational and recreational activities.
  • 36. ◦ Safety measures, accident prevention mechanisms etc. ◦ Works committees function actively in some organizations like Tata Steel, HLL, etc but the progress of Works Committees in many organizations has not been very satisfactory due to the following reasons: ◦ Lack of competence and interest on the part of workers’ representatives. ◦ Employees consider it below their dignity and status to sit alongside blue-collar workers. ◦ Lack of feedback on performance of Works Committee. ◦ Undue delay and problems in implementation due to advisory nature of recommendations.
  • 37.  Participation of workers can take place through suggestion scheme. Under this method workers are invited and encouraged to offer suggestions for improving the working of the enterprise. A suggestion box is installed and any worker can write his suggestions and drop them in the box. Periodically all the suggestions are scrutinized by the suggestion committee or suggestion screening committee.
  • 38.  The committee is constituted by equal representation from the management and the workers. The committee screens various suggestions received from the workers. Good suggestions are accepted for implementation and suitable awards are given to the concerned workers. Suggestion schemes encourage workers’ interest in the functioning of an enterprise.
  • 39.  The role of a worker representative in the board of directors is essentially one of negotiating the worker’s interest with the other members of the board. At times, this may result in tension and friction inside the board room. The effectiveness of workers’ representative at the board depend upon his ability to participate in decision-making, his knowledge of the company affairs, his educational background, his level of understanding and also on the number of worker representatives in the Board.
  • 40.  Social self-management in Yugoslavia is an example of complete control of management by workers through an elected board and workers council. Even in such a system, there exist two distinct managerial and operative functions with different sets of persons to perform them. Though workers have the option to influence all the decisions taken at the top level, in actual practice, the board and the top management team assume a fairly independent role in taking major policy decisions for the enterprises, especially in economic matters.
  • 41.  Collective bargaining results in collective agreements which lay down certain rules and conditions of service in an establishment. Such agreements are normally binding on the parties. Theoretically, collective bargaining is based on the principle of balance of power, but, in actual practice, each party tries to outbid the other and get maximum advantage by using, if necessary, threats and counterthreats like; strikes, lockouts and other direct actions. Joint consultation, on the other hand, is a particular technique which is intended to achieve a greater degree of harmony and cooperation by emphasising matters of common interest. Workers prefer to use the instrument of collective bargaining rather than ask for a share in management. Workers’ participation in the U.S.A has been ensured almost exclusively by means of collective agreements and their application and interpretation rather than by way of labour representation in management.
  • 42. Good-faith process between an organization's management and a trade union representing its employees, for negotiating wages, working hours, working conditions, and other matters of mutual interest. To the management, this process presents (usually) one set of people to negotiate with; to the employees, it gives greatly enhanced bargaining- power. Collective bargaining is the fundamental principle on which the trade union system is based.
  • 43. PROMOTING PEACE WAGE AND SALARY ADMINISTRATION
  • 44.  Salary and wage administration is the process of compensating an organization's employees in accordance with accepted policy and procedures.  An important component of a successful organization's policy for administering salaries and wages is monitoring and evaluating all employees' compensation to ensure that they're being paid appropriately, both with respect to others in the same organization and to the marketplace as a whole.  This process is often an integral function of the organization's human resources department, but in general, the larger the organization, the more likely is is that it will be handled by a separate department.
  • 45.  The first element of salary and wage administration, the periodic is a critical component of any organization's functioning.  If payroll is incompetently processed, the employer itself could conceivably collapse.  Employees' personal budgets and plans are contingent upon getting paid regularly, and if compensation is late, short, or missing even a single time, morale is severely affected, as is confidence in the employer's stability.  Whether an employer utilizes the services of a third-party or handles all payroll functions internally, it will usually devote significant resources to making sure that employees are paid the right amount on time.   
  • 46.  (1) Wage policies should be carefully developed having in mind the interests of management, the employees, the consumers and the community. (2) There should be a definite plan to ensure that differences in pay for jobs are based upon variations in job requirements such as skill, effort, responsibility or job or working conditions, mental and physical requirements. (3) The general level of wages and salaries should be reasonably in line with that prevailing in the labour market. 
  • 47.  (4) The plan should carefully distinguish between jobs and employees. A job carries a certain wage-rate and a person is assigned to fill it at that rate. (5) Wage policies should be clearly expressed in writing to ensure uniformity and stability. (6) Wage decisions should be checked against the carefully formulated policies. (7) Management should see to it that employees know and understand the wage policies. .
  • 48.  (8) Wage policies should be evaluated from time to time to make certain that they are adequate for current need. (9) Departmental performance should be checked periodical against the standards set in advance. (10) Job descriptions and performance ratings should be periodically checked to keep them up- to-date
  • 49.  Minimum wage- Fair wage, Real wage, Incentives & fringe benefits. Issues and Constraints in Wage Determination in India.
  • 50.  Accordingly, the objectives of system should be to:  1. Enable an organisation to have the quantity and quality of staff it requires.  2. Retain the employees in the organisation.  3. Motivate employees for good performance for further improvement in performance.  4. Maintain equity and fairness in compensation for similar jobs.  5. Achieve flexibility in the system to accommodate organisational changes as and when these take place.  6. Make the system cost-effective.
  • 51. 1. Ensures a fair compensation. 2. Provides compensation according to employee’s worth. 3. Avoids the chances of favouritism from creeping in when wage rates are assigned. 4. Enhances employee morale and motivation.
  • 52.  1. Compensation in ahead of inflation.  2. Matching with market rates.  3. Increase in compensation reflecting increase in the prosperity of the company.  4. Compensation system free from management discretion.
  • 53.  1. To recruit persons for a firm  2. To control pay-rolls  3. To satisfy people, reduce the incidence of turnover, grievances, and frictions.  4. To motivate people to perform better  5. To maintain a good public image.
  • 54.  The main principles that govern wage and salary fixation are three:  1. EXTERNAL EQUITY  2. INTERNAL EQUITY  3. INDIVIDUAL WORTH.
  • 55.  This principle acknowledges that factors/variables external to organisation influence levels of compensation in an organisation. These variables are such as demand and supply of labour, the market rate, etc. If these variables are not kept into consideration while fixing wage and salary levels, these may be insufficient to attract and retain employees in the organisation. The principles of external equity ensure that jobs are fairly compensated in comparison to similar jobs in the labour market.
  • 56.  Organisations have various jobs which are relative in value term. In other words, the values of various jobs in an organisation are comparative. Within your own Department, pay levels of the teachers (Professor, Reader, and Lecturer) are different as per the perceived or real differences between the values of jobs they perform.  This relative worth of jobs is ascertained by job evaluation. Thus, an ideal compensation system should establish and maintain appropriate differentials based on relative values of jobs. In other words, the compensation system should ensure that more difficult jobs should be paid more.
  • 57.  According to this principle, an individual should be paid as per his/her performance. Thus, the compensation system, as far as possible, enables the individual to be rewarded according to his contribution to organisation.  Alternatively speaking, this principle ensures that each individual’s pay is fair in comparison to others doing the same/similar jobs, i.e., ‘equal pay for equal work’. In sum and substance, a sound compensation system should encompass factors like adequacy of wages, social balance, supply and demand, fair comparison, equal pay for equal work and work measurement.
  • 58.  The concept of fair wage could vary from US to Europe to India to Bangladesh.. Wage is a quantitative figure and hence, we need to attach a figure to this “fairness” in wage… The challenge It is defined as “Enough to meet the basic needs of his or her family and allow some savings”
  • 59.  Living wage could be considered as a fair wage. Fair wage = Living wage (A wage enough to meet the basic needs of the producer) Still how to put a figure to it ??  Living wage = Minimum + 10 %
  • 60.  Each country has a minimum wage and it is illegal to pay less than that. Certifying organizations object to payment of wages less than the minimum. If a FT organization is paying less than minimum or minimum then what is fair trade about it ? Hence, the concept living wage,
  • 61.  1. Wages and benefits paid for a standard working week meet, at a minimum, national legal standards or industry benchmark standards, whichever is higher. In any event wages should always be enough to meet basic needs and to provide some discretionary income. CONT…
  • 62.  2. All workers shall be provided with written and understandable Information about their employment conditions in respect to wages before they enter employment and about the particulars of their wages for the pay period concerned each time that they are paid. CONT…
  • 63.  3. Deductions from wages as a disciplinary measure shall not be permitted nor shall any deductions from wages not provided for by national law be permitted without the expressed permission of the worker concerned. All disciplinary measures should be recorded. CONT…
  • 64.  Income of an individual, organization, or country, after taking into consideration the effects of inflation on purchasing power. also called real wages. also called real income.
  • 65.  The income of an individual or group after taking into consideration the effects of inflation on purchasing power.  For example, if you received a 2% salary rise over the previous year and inflation for the year was 1%, then your real income only rose 1%. Conversely, if you received a 2% raise in salary and inflation stood at 3%, then your real income would have shrunk 1%
  • 66.  Human resource management: Compensation in addition to direct wages or salaries, such as company car, house allowance, medical insurance, paid holidays, pension schemes, subsidized meals. Some fringe benefits are regarded part of a taxable income.
  • 67.  Fringe benefits (perks) include most benefits given to employees in addition to their salary or wages. You should also be aware of attributed and non- attributed benefits.
  • 68.  To create and improve sound industrial relations  2.To boost up employee morale.  3.To motivate the employees by identifying and satisfying their unsatisfied needs.  4.To provide qualitative work environment and work life.  5.To provide security to the employees against social risks like old age benefits and maternity benefits.
  • 69.  6.To protect the health of the employees and to provide safety to the employees against accidents.  7.To promote employee’s welfare by providing welfare measures like recreation facilities.  8.To create a sense of belongingness among employees and to retain them. Hence, fringe benefits are called golden hand-cuffs.  9.To meet requirements of various legislations relating to fringe benefits.
  • 70.  i)Rising prices and cost of living has brought about incessant demand for provision of extra benefit to the employees.  (ii)Employers too have found that fringe benefits present attractive areas of negotiation when large wage and salary increases are not feasible.
  • 71.  (iii)As organizations have developed ore elaborate fringe benefits programs for their employees, greater pressure has been placed upon competing organizations to match these benefits in order to attract and keep employees.  (iv)Recognition that fringe benefits are non- taxable rewards has been major stimulus to their expansion
  • 72.  (v)Rapid industrialization, increasingly heavy urbanization and the growth of a capitalistic economy have made it difficult for most employees to protect themselves against the adverse impact of these developments. Since it was workers who are responsible for production, it was held that employers should accept responsibility for meeting some of the needs of their employees. As a result, some benefits-and-services programs were adopted by employers
  • 73.  (vi)The growing volume of labor legislation, particularly social security legislation, made it imperative for employers to share equally with their employees the cost of old age, survivor and disability benefits.  (vii)The growth and strength of trade unions has substantially influenced the growth of company benefits and services.  (viii)Labor scarcity and competition for qualified personnel has led to the initiation, evolution and implementation of a number of compensation plans.
  • 74.  (ix)The management has increasingly realized its responsibility towards its employees and has come to the conclusion that the benefits of increase in productivity resulting from increasing industrialization should go, at least partly, to the employees who are responsible for it, so that they may be protected against the insecurity arising from unemployment, sickness, injury and old age. Company benefits-and-services programs are among some of the mechanisms which managers use to supply this security.
  • 75.  Fringe benefit tax (FBT) is a tax on benefits that employees receive and enjoy as a result of their employment. FBT replaces the PAYE tax that would be deducted from the employee if the employee was given the money to purchase the benefit as part of salary or wages instead of the actual benefit.
  • 76. 1. Motor vehicles 2. Low-interest loans other than low-interest loans provided by life insurance companies 3. Free, subsidised or discounted goods and services, including subsidised transport for employers in the public transport business 4. Employer contributions to sick, accident or death benefit funds, superannuation schemes and specified insurance policies.
  • 77.  Gifts, prizes and other goods are fringe benefits. If you pay for your employees' entertainment or private telecommunications use, these benefits may also be liable for fringe benefit tax.  Benefits in all these categories are liable for fringe benefit tax (although see each individual category for exceptions). They may be attributed or non- attributed benefits.
  • 78.  cash remuneration (eg, salary and wages, lump sums, bonuses, schedular payments (formerly withholding payments), interest and dividends)  benefits given instead of a non-taxable cash allowance (for example, a meal given instead of a meal allowance)  free board and lodging CONT…
  • 79.  some forms of entertainment  private use of employer owned or leased business tools where they are primarily for business purposes and the cost price of each tool does not exceed $5,000  benefits arising from health and safety obligations and the minimising of hazards as identified in the Health and Safety in Employment Act ie health checks will be exempt regardless of whether the check is undertaken at the employers premises or not.
  • 80. Free, subsidised, or discounted goods and services: 1. $300 exemption per employee per quarter or maximum exemption of $22,500 per annum for all employees 2. For annual and income year filers the exemption is $1,200.00 per employee per year and $22,500 per year for all employees
  • 81.  Flexible benefits allows allow employees to pick benefits that most their needs.
  • 82.  Giving all employees the same benefits assumed that all employees have the same needs. Of course we know that assumption is false. Thus, flexible benefits turn the benefit expenditure into a motivator. Consistent with expectancy theory’s thesis that organizational rewards should be linked to each individual employees goals, flexible benefits individualized rewards by allowing each employ to choose the compensation package that best satisfies his or her current needs.
  • 83.  In India and most countries of Asia with the exception of Japan Flexible benefits are not offered by employers for various reasons which may create personnel and trade union problems.. In India some flexible benefits are offered in a limited way to the top management personnel like Executive Directors, President, Vice President, General Manager etc., It may take a few more years to offer flexible benefits to employees in India and other Asian counties by the managements.
  • 84.  1.For Employment Security :  2.For Health Protection:  3.For Old Age and Retirement:  4.For Personnel Identification, Participation and Stimulation:
  • 85. 1. Payment for Time Not worked 2. Extra Pay for time Worked: 3. Employee Security 4. Retrenchment Compensation 5. Lay-off Compensation: 6. Safety and Health
  • 86.  Compensation can be divided into salary, benefits and incentives. While salary and benefits must be competitive, incentives are the most likely drivers of attracting and retaining the best employees in startups.
  • 87.  Individuals are rewarded based on attainment of performance-based goals (individual, team and/or company).  Goals must be realistic and closely matched to the business and people involved.  Payout potential should be large enough to be significant to the individual.  Bonuses can be set up to directly drive and support the company’s needs (for example, profitability, annual results, successful completion of projects and/or significant project milestones).
  • 88.  Payment is tied to company profits.  A pre-determined percentage of profit is shared among all employees.  Profit-sharing bonuses are generally paid out once a year in the form of cash or on a deferred basis.
  • 89.  An individual receives the option to buy company shares for a set price during a specified time frame.  Option can be exercised by the individual at any time during the agreed-upon term and subject to any vesting schedule.
  • 90.  Stock options are often part of management’s executive compensation but may be offered to key employees in lieu of a higher salary—especially where the business is not yet profitable and/or cash flow is constrained.  If the business does well and the company’s stock rises, the holders of the options share in the financial benefits.
  • 91.  In general, if the company permits a long period from the date of issue to the last date for exercising the option, it will encourage the employee to stay with the company and be fully committed to its success.
  • 92.  Commissions are a common way to remunerate employees (salespeople) for securing the sale of a product or service. The intent is to create a strong incentive for the individual to invest the maximum effort into their work. Commissions are usually calculated as a percentage of the sale of the product or service (for example, 5% of a computer component’s retail selling price).
  • 93.  Payment may be either straight commission (no base salary) or a combination of base salary and commission. In general, the commission structure is based on reaching specific targets or quotas that have been previously agreed upon by management and the employee. These targets or quotas are typically tied to sales revenue, unit sales or some other volume-based metric.
  • 94.  Theoretically speaking, since capital is scarce and labour abundant and less productive, wages are relatively lower in India. But minimum wages are not market clearing wages. They are regulatory wages to ensure that market wages do not fall below subsistence level. Minimum wages are expected to cover the essential current costs of accommodation, food and clothing of a small family.
  • 95.  The Minimum Wage Act while being very progressive has led to specific problems. Doubts have been raised on the existence of a clear and coherent wage policy in India. This is mainly due to its poor norms of fixation, enforcement, implementation and coverage in various parts of the country.
  • 96.  The Act does not set out a minimum wage in rupee terms but just stipulates that the wage be a living wage which is to be decided by each state. Certain norms have been laid out including that of calorie requirements, yards of cloth per family and so on. The Act stipulates that minimum wage rates are to be revised keeping in mind inflation. However, in many states while fixing the minimum wages, they are not linked to the payment of dearness allowance. As a result, real wages of workers keep eroding due to inflation (example).   
  • 97.  Additionally, the guidelines laid down for the minimum wage by the 15th Indian Labour Conference (ILC) and the Supreme Court suggest that a minimum wage for 8 hours of work should be high enough to cover all the basic needs of the worker, his/her spouse and two children.
  • 98.  Another inadequacy is that though the MWA requires wages to be revised every five years, this rarely happens and there are instances of wages not being revised for more than 20 years. The MWA also has a clause which states that if wages are not revised, the existing wages should continue. This has only led to greater laziness and unaccountability on the part of labour departments, leaving some workers to live below poverty line.
  • 99.  Further to overcome these inadequacies, the National Commission on Rural Labour in 1990, recommended that the MWA should be amended to compel timely revision of wages and it should be linked to VDA. It should also ensure automatic enhancement of wages every six months on the basis of the Consumer Price Index. But this amendment has remained an unfulfilled dream for workers.
  • 100.  The machinery for fixation of minimum wages in India has not been uniform. Fixation of different rates in different regions for different categories of workers often makes the structure of minimum wage very complex. Also, different wages are fixed for the same work in different sectors.
  • 101.  For instance, a peon in the metal-rolling industry may be fixed higher or lower wages than a peon in the plastic industry or in a shop or commercial establishment though a peon's job will be the same wherever he may work.
  • 102.  To overcome these deficiencies, several states (examples) have rationalised all the different occupation categories into just four categories, that is, unskilled, semi-skilled, skilled and highly-skilled. As per this system, only one notification is applicable to all industrie, rather than the time-consuming system of notifying wages individually for various industries. Though the system gives a clear and detailed information of minimum wages, it has not been adopted by all states, including the Indian Labour Ministry website, which gives the minimum wage rate (unskilled) for each occupation.
  • 103.  In order to have minimum wage fixed, the employment or industrial activity has to be included in the schedule of Employments. Currently the number of scheduled employments in the Central government is 45 whereas in the state sphere the number is 1232. The criterion for inclusion in the list of scheduled employment is that there should be at least 1000 workers engaged in that activity in the state. Thus, many activities are excluded from the list. This criterion for inclusion has left a very large number of workers in the unorganised sector outside the purview of the Minimum Wage Act.   
  • 104.  Poor enforcement of the Act is another issue prevalent in most of the states in India. This is mainly due to lack of awareness amongst the workers about minimum wage provisions and their entitlement under the labour laws. This is particularly true in remote areas and in areas where workers are not unionized or otherwise organised. As a result their wages have long since failed to keep pace with rising costs and continue to diminish in real value over time.
  • 105.  The main problem of minimum wage legislation in India is its poor implementation. The Act empowers the appropriate government (Central, Sate or Local) to fix a minimum wage for workers in unorganised sectors. However, often exemptions from the payment of minimum wages have been granted to industries. In addition, minimum wage levels have been revised only at long intervals (where the actual prescribed limit is within 5 years). Such a failure in implementation of MWA is not only due to loopholes in policy design but is also an outcome of lapses in the administration.
  • 106.  Poor implementation of MWA does not affect organised workers as much as it does to workers in unorganized sectors. Unorganised workers are employed with millions of employers (generally small trade, enterprise, sole proprietor or household) who are scattered and hence becomes difficult to cover them under law. This diversity in locations and nature of work has left them vulnerable to exploitation in the absence of a broad legal standard. Also, many workers for the fear of losing their jobs do not report about payments lower than the minimum wage rate. At times, these workers are even forced by their employers to certify payments below minimum wages.
  • 107.  Low incomes of women in informal wage employment appear to be mainly due to low level of education. But much of the gender disparity in incomes among women wage workers is explained by imperfections in the labor market.