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