This document discusses workers' participation in management in India. It provides context on the historical development of workers' participation in India through various acts and policies since independence. It highlights some key challenges to effective participation including resistance from employers who see workers as not competent for decision making, lack of interest from workers, and perfunctory government attitudes. It emphasizes the need for education and training of workers, clear objectives agreed by both sides, and participation starting at operational levels to strengthen participative management in India. The main forms of participation currently used are collective bargaining, works councils, joint management councils and workers ownership of enterprises.

1. 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.

108. THANK YOU