What are Fringe Benefits?

Fringe benefits are compensations made to an employee beyond the regular benefit of being paid for their work. Some fringe benefits are fairly standard, such as offering a few days of sick time or paid vacation time. Others can be significantly greater, and more rare. Key executives in large companies might also enjoy fringe benefits like use of time-share condominiums, paidcontinuing education, use of a company jet, use of a company credit card, discounted or free health club memberships, and a significant amount of paid vacation.
A wage is remuneration paid by an employer to an employee. It may be a calculated as a fixed amount, or at an hourly rate, or based on the quantity of work done. Remuneration to manual workers is often referred to as "wages", while remuneration to white-collar workers is called "salary".

WAGE POLICY IN INDIA

The term wage policy refers to all systematic efforts of the Government in relation to a national wage and salary system, The policy lays down guidelines concerning the level and structure of wages. The guiding principles of national wage policy are as follows: 1. Sub serves the national objective of economic growth with social justice. 2. Promote employment, productivity and capital formation. Remove sectorial imbalances and wage differentials. 3. Promote price stability. 4. Avoid automatic double linkages. 5. Ensure rising real wages consistent with the capacity of the industry and the national economy. 6. Have relationship with national income, state of the industry and prevailing wage rates. Pay structure in a company depends upon several factors, e.g., wage settlements, labor market situation, companys nature and size, etc. Pay structure consists of certain grades, scale and range of pay in each scale. Each scale has a minimum and a maximum limit. Jobs placed within a particular grade carry the same value though the actual pay in a grade depends upon length of service and or performance of the employee. Pay structure in India generally consists of the following components: Basic wage/salary. Dearness allowance (D.A.) and other allowances. Bonus and other incentives. Fringe benefits or perquisites.
1. Basic Wage

The basic wage provides the foundation of pay pocket. It is a price for services rendered. It varies according to mental and physical requirements of the job as measured through job evaluation. In India, basic wage has been influenced by statutory minimum wage, wage settlements, and awards of wage boards, tribunals, pay commissions, etc. Minimum Wage

Minimum wage is that wage which is sufficient to cover the bare physical needs of a worker and his family. But the committee felt that the minimum wage should provide not merely for the base subsistence or sustenance of life but for the preservation of the health, efficiency and well-being of the worker by some measure of education, medical facilities and other amenities. Minimum wage has got to be paid to every worker irrespective of the capacity of the industry to pay. If an enterprise is unable to pay its workers at least a bare minimum, it has no right to exist. The Fair Wages Committee defined the components of minimum wage but did not quantify them. The Indian Labor Conference at its 15th Session held in July 1957 formally quantified the minimum wage. The Conference laid down the following criterion for the calculation of minimum wage. Fuel, lighting and other miscellaneous expenditure is to constitute 20 per cent of the minimum wage.

Fair Wage
A fair wage is something more than the minimum wage providing the bare necessities of life. While the lower limit of the fair wage is set by the minimum wage, the upper limit should be the capacity of the industry to pay. Between these two limits, fair wage should depend on several factors like: The productivity of labour The prevailing rates of wages in the same or similar occupations in the same region or neighbouring regions, Level of national income and its distribution, The place of the industry in the economy of the country The employers capacity to pay. Thus, the fair wage should be determined on industry-cum-region basis. Fair wage is a step toward the ideal of living wage.

Living Wage
It is the wage that provides, in addition to the necessities of life, certain amenities considered necessary for the well-being of the worker in a particular society. It should ensure a normal standard of life to the average employee regarded as human beings living in a civilized community. According to the Fair Wages Committee, the living wage should enable the male earner to provide for himself and his family not merely the bare essentials of food, clothing and shelter but also a measure of frugal comfort including education for children, protection against ill-health, requirements of essential social needs and measure of insurance against the more important misfortunes including old age. The concept of living wage is dynamic related with the level of economic development in a country. There should be progressive improvement in the wage with improvements in the economic life of the nation. In an underdeveloped country like India living wage is the ideal or target that is to be achieved through higher productivity.

2. Dearness Allowance (D.A.) and Other Allowances

This allowance is given to protect the real wages of workers during inflation.

Under Section 3 of the Minimum Wages Act it is described as cost of living allowance. Dearness allowance has now become an integral part of the wage system in India. The following methods are used to calculate dearness allowance: According to this method, D.A. is paid at a flat rate to all workers irrespective of their wage levels and regardless of changes in the consumer price index. This method was used in jute, cotton and engineering industries in West Bengal in the early days of adjudication. Graduated Scale. Under this method, D.A. increases with each slab of salary. Therefore, D.A. as a percentage of basic pay decreases steadily. Types of Allowances paid to Employees Index Based D.A. In this method a flat rate per point of index is prescribed so that all workers determine the same amount of D.A. irrespective of their pay scale. For example, if Rs. 1.50 is the rate Rs. 15 will be paid as D.A. whenever the All India Consumer Price Index (AICPP) increases by 10 points. This method is in force in the cotton mills of Mumbai and Chennai and in many Central Government undertakings. D.A. Linked to Index and Pay Scale. Under this method, a higher rate of D.A. is prescribed for lower pay scales and a lower rate for higher pay scales. This method is used to pay D.A. to employees in Government offices and in many central public sector undertakings. Types of Allowances Paid to Employees

3. Bonus
Bonus is a deferred wage aimed at bridging the gap between actual wage and the need based wage. Bonus is a share of the workers in the prosperity of an enterprise. Bonus may also be regarded as an incentive to higher productivity. According to the Bonus Commission (1961), bonus is sharing by the workers in the prosperity of the concern in which they are employed. In the case of low paid workers such sharing in the prosperity augments their earnings and helps to bridge the gap between the actual wage and the need based wage. It has little direct incentive effect because it is usually paid to all workers at the same rate irrespective of their individual efficiency and long after the close of the financial year. Payment of Bonus Act, 1965. The Act provides for the payment of bonus to persons employed in specified establishments. The main provisions of the Act are as follows: Every employee in the specified establishments drawing a salary (basic pay plus D.A.) not exceeding Rs. 3,500 per month is entitled to bonus provided he has worked for not less than 30 days in the year. Bonus is to be calculate on a salary of Rs. 2,500 per month wherever the actual salary exceeds this amount. Every employer is bound to pay a minimum bonus of 8.33 per cent of the salary of an employee or Rs. 100 per year whichever is higher whether or not he has

any allocable surplus1? in the accounting year2. Where an employee has not worked for all the working days in any accounting year, the minimum bonus of Rs. 100 or 60 as the case may be, shall be proportionately reduced, if such bonus is higher than 8.33 of his salary or wage. No minimum bonus is payable by a newly set up establishment in the circumstances prescribed under Section 16 of the Act. The bonus is to be paid within 8 months from the close of the accounting year. An employee dismissed from service for fraud, theft, misappropriation of sabotage of property and riotous/violent behavior on the premises or the establishment is not entitled to bonus. Thus, the Payment of Bonus Act imposes a statutory liability upon an employer to pay bonus. It also defines the principle of bonus payment as per the prescribed formula. Basic pay
Basic pay usually refers to the pay received without taking into account any additional benefits or bonuses, such as a car, medical cover, commissions, clothing, food etc. It also refers to the amount of pay before taking any deductions such as tax off.

D.A in hindi meaning (

As of June 2012, dearness allowance (DA) is calculated as a percentage of an Indian citizen's [1] basic salary and was introduced to mitigate the impact of inflation upon low income earners. Indian citizens may receive a basic salary or pension that is then complemented by a housing and/or dearness allowance; the guidelines that govern the DA vary according to the area of residence (for example, rural or urban).(Allowances paid to employees in order to enable them to face the increasing dearness of essential commodities. )
Dearness allowance (D.A.) is part of a person's salary. It is calculated as a percent of the basic salary. This amount is then added to the basic salary along with house rent allowance to get the total salary. Or you can say that The Dearness Allowance< is a part of the total compensation a person receives for having performed his or her job. Rate for Dearness allowance (D.A.) can vary in rural and urban areas. Dearness Allowanceis calculated on the original pension without commutation. It is a payment towards the rise in cost of living, which is calulated based on cost of living index.

How to Calculate Dearness allowance (D.A.)

How much Dearness allowance you will receive it depends on the rate at which your are getting this. The present rate of Dearness allowance is 65% so to calculate your Dearness allowance just calculate the 65% of your basic salary. The amount which you get after the calculation will be your Dearness allowance.

HRA

ypically, the employee receives a certain amount of HRA. He either already owns a flat or is about to buy one. Consequently, he is concerned that on account of the ownership flat, he may lose the HRA deduction. Or, the other way around since he is receiving HRA, the concern is that he may not be eligible for hohe other factor that influences the HRA deduction is where you live. If you live in a metro city, you would be eligible for a deduction of up to 50% of your salary (basic plus DA, if applicable); otherwise, the limit is 40%. So, in a nutshell, the HRA deduction is the least of the following: i. Actual HRA received, ii. 50% of salary for employees living in metros and 40% otherwise, and iii. Excess of the rent paid over 10% of salary. Say, Vikram earns a basic salary of Rs 35,000 per month and rents an apartment in Mumbai for Rs 15,000 per month. The actual HRA he receives is Rs 20,000. Vikrams HRA deduction will be the least of the following three figures: i. Actual HRA received, i.e. Rs 20,000, ii. 50% of the salary, i.e. Rs 17,500, and iii. Excess of rent paid over 10% of salary, i.e. Rs 15,000 - Rs 3,500 = Rs 11,500. me loan deductions.

In cost accounting, when we study about labor cost, we have to study two main topics one is system of wage payment and other is wage incentive plans. We are covering both the topic. But in this content, we starts to explain from system of wage paymentbecause all wage incentive plans can also be classified within these two wide categories. Now, understand about how to pay labor? Laborers are paid with two systems. Both system can be used but same labor can not be paid with both system. 1. Time Wage System or Time Rate System : Under this system, laborers get wage on the basis of time which is utilized in organisation. This wages may be charged on per hour, per day, per month or per year basis. There is no relation or quantity of output and wages in this method. In India's industry, this method is most popular. Its other name is day wages system or time wok system. We can calculate wages with following formula Total Wages = Time taken X Rate For Example A worker produced 10000 articles in 7600 hours. His hourly wage rate is Rs. 2 /- . Calculate the wage of the worker when he is paid on the basis of time. Solution : Applying the formula, we get : Wage = T.T. X R = 7600 X 2 = Rs. 15200 2. Piece Wage System or Work Rate System : Under this method or system, laborers can get the wages on the basis of their work done. No time element will be used for calculation of wages. Rate is also on the basis of quantity or unit produced. Under this, method, laborer tries to best for producing the products fastly for getting more wages. This method is also called payment by result.

formula Total Wages = Unit Produced X Rate per unit

For Example : 2500 units were produced by a worker in 1200 hrs. Rate of production is Rs. 3 /- per unit. Calculate the wage of the worker if he is paid according piece rate method. Solution : By applying formula, we get : Wages = units produced X rate per unit = 2500 X 3 = Rs. 7500

Overtime
Overtime is the amount of time someone works beyond normal working hours. Normal hours may be determined in several ways: by custom (what is considered healthy or reasonable by society), by practices of a given trade or profession, by legislation, by agreement between employers and workers or their representatives.

What is Provident Fund (PF)?

PF is a long term investment. It is one of the lowest risk investment avenues, as it is backed by the government. Each month, a certain percentage of your salary (usually, a percentage of your Basic Pay) is invested in it. This percentage varies from company to company, and is usually between 8% and 12%. (12% is the norm).

PF, Income Tax (IT) and the double benefit

Your contribution towards PF is considered as a part of investments under Section 80C of the Income Tax (IT) Act. Thus, this amount gets deducted from your salary, and you do not pay any tax on it! (Want to know more about Section 80C and investments that make a part of it? Please read Saving Income Tax Understanding Section 80C Deductions) Moreover, the company you work for contributes an equal amount to your PF account on your behalf.

And thats the best part its not just you making the investment: the company makes an equal investment for your retirement! Isnt that great? Its free money, after all! (Well not totally free for those of you working for private companies, the companys contribution to PF would be part of the cost to company CTC salary computation).

Interest Rate for PF

The rate of interest that you earn on your PF investment is fixed by the Central Government every year in March / April. The rate of interest changes every year, but due to the nature of politics in India, it is usually higher than the prevailing market rates. The current rate of interest on PF (for FY 2010-11) is 9.5% (now you know what I mean when I say it is usually higher than the prevailing market rates!)

How do you get your money back?

PF is a long term investment, and it is meant to give you a sizable lump-sum amount at the time of your retirement. Thus, you get your PF money back at the time of your retirement. (Note: There are other ways in which you can get your PF money back, like taking a loan from your provident fund account. But it is not prudent to use your retirement savings for anything other than retirement so I have not talked about those avenues here)

PRINCIPLES OF FIXATION OF WAGES AND SALARY Salary or wage means all remuneration (other than remuneration in respect of over-time work) capable of being expressed in terms of money. Wages are defined broadly as any economic compensation paid by the employer to his labourers under some contract for the services rendered by them. In its actual sense which is prevalent in the practice, wages are paid to workers which include basic wages and other allowances which are linked with the wages like dearness allowances, etc. , but does not include(i) Any other allowance which the employee is for the time being entitled to; (ii) the value of any house accommodation or supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of food grains or other articles; (iii) Any traveling concession; (iv) Any Bonus (including incentive, production and attendance bonus); (v) Any contribution paid or payable by the employer

to any pension fund or provident fund or for the benefit of the employee under any law for the time being in force; (vi) Any retrenchment compensation or any gratuity or other retirement benefit payable to the employee or any ex gratia payment made to him; (vii) Any commission payable to the employee. Principles of Wage Determination The basic principle of wage and salary fixation is that it should be based on the relative contributions of different jobs and not on the basis of who the job holders are. If this principle is adopted, the first requirement is to identify the likely contributions of different jobs. This is what job evaluation precisely does. It provides the information about what is the worth of a job in terms of its contributions to the achievement of organizational effectiveness. Overcoming Anomalies Job evaluation, if carried on periodically and objectively, helps in overcoming various anomalies which may develop in an organization over the period of time with regard to compensation management. Knowles and Thomposon have identified that there are following anomalies and evils which may develop in an organization and may be overcome by job evaluation: 1. Payment of high wages and salaries to persons who hold jobs and Positions not requiring great skill, effort and responsibility; 2. Paying beginners less than that they are entitled to receive in terms of What is required of them? 3. Giving a raise to persons whose performance does not justify the raise; 4. Deciding rates of pay on the basis of seniority rather than ability; 5. Payment of widely varied wages and salaries for the same or closely Related jobs and positions; and 6. Payment of unequal wages and salaries on the basis of race, sex, religion, or political differences. As the major production cost, wages affect profits, business investment, competitiveness, and are a cost push inflationary factor. As the major income in the economy, wages affect standard of living, income distribution and poverty, and demand pull inflation. As the source of wage disputes is the employer treating wages as their major cost, and the employee viewing wages as their major income.

Norms for fixation of wages in industry. 1. While computing the minimum wages, the standard working class family should be considered as consisting of four consumption units and the earnings of women, children and adolescents should be excluded. 2. The minimum food requirements should be determined on the grounds of a net intake of 2700 calories as laid down by Akroyd for a normal adult in India. 3. Clothing needs should be established on the basis of a per capita consumption of 16.62 meters per year. 4. As regards housing, the minimum wages should be determined from the standpoint of the rent corresponding to the minimum area specified under the government Industrial Housing Scheme. 5. Miscellaneous expenditure on items such fuel, lighting etc. should from 20 per cent of the total minimum wage. The resolution further prescribes that the authorities involved in the issue should justify any deviation from these norms. The following principles have always been the bases of the wage determination process. All are economically valid. At different stages they have collectively, and singularly, been used to determine wage increases. 1. Preserving real income: This is the argument used by employees and Unions viewing wages as an income. Following this principle usually results in wages being indexed to inflation. In periods of rising inflation, indexation becomes a problem of an institutionalized wage-price spiral. Underlying aspects that have also impacted on real wage preservation arguments have been a "basic" minimum wage, and comparative wage justice. 2. Labour productivity: A valid economic theory connects wages to labour productivity. Conflict arises over the measurement of productivity. Rewarding labour with a wage increase when technology, and/or capital investment, increases labour efficiency may not be justified. 3. The capacity of business to afford wage increases: This emphasizes wages as a cost of production, and the threat of wage increases to squeeze profits. This "capacity" argument is that followed by business owners. 4. The capacity of the Economy to absorb wage increases: This "capacity" argument views the macro impact of wage increases on inflation, competitiveness, and other aspects of internal and external balance; as

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well as the affect on business profits and investment from 3. This is the main argument of the Federal Government recognizing the macro policy potential of an Incomes Policy to address external and internal balance goals to supplement demand management policies, and the effects on income distribution. Supply and Demand of labour: The labour market conditions or supply and demand forces operated at the national, regional and local levels, and determine organizational wage structure and level. If the demand for certain skills and the supply are low, the result is a rise in the price to be paid for these skills. The other alternative is to pay higher wages if the labour supply is scarce, and lower wages when it is excessive. Prevailing Market rate: This is also known as the comparable wage or going wage rate and is most widely used criterion. An organizations compensation policies generally tend to conform to the wage rates payable by the industry and the community. It is observed: Some Companies pay on the high side of the market in order to obtain goodwill or to insure adequate supply of labour, while other organizations pay lower wages because economically they have to, or because by lowering hiring requirements they could keep jobs adequately manned. Living wage: This means that wages paid should be adequate to enable an employee to maintain himself and his family at a reasonable level of existence. However, employers do not generally favor using the concept of a living wage as a guide to wage determination because they prefer to base the wages of an employee on his contribution rather on his need. Managerial Attitudes: Top managements desire to maintain or enhance the companys prestige is a major factor in the wage policy of a number of firms. Desires to improve or maintain morale, to attract high caliber employees, to reduce turnover, and to provide a high living standard for employees as possible also appear to be factors in managements wage policy decisions. Psychological and social factors: these determine in a significant measure how hard a person will work for the compensation received or what pressures he would exist to get his compensation increased. Psychologically, persons perceive the level of wages as a measure of success in life, people might feel secure, has an inferiority complex, seem inadequate or feel the reverse of all these. Sociologically and ethically, people feel that equal work should carry equal wages that wages

should be commensurate with their efforts that they are not exploited and that no distinction is made on the basis of caste, color, sex or religion. To satisfy the conditions of equity, fairness and justice, a management should take these factors into consideration.
Adjudication is the legal process by which an arbiter or judge reviews evidence and argumentation including legal reasoning set forth by opposing parties or litigants to come to a decision which determines rights and obligations between the parties involved. Three types of disputes are resolved through adjudication: 1. Disputes between private parties, such as individuals or corporations. 2. Disputes between private parties and public officials. 3. Disputes between public officials or public bodies.
Definition of WAGE BOARD

: a board established by law to investigate wage rates

Sec. 31-61. Wage board. (a) A wage board shall be composed of not more than three representatives of the employers in any occupation or occupations, an equal number of representatives of the employees in such occupation or occupations and not more than three disinterested persons representing the public, one of whom shall be designated as chairman. The commissioner shall appoint the members of such wage board, the representatives of the employers and employees to be selected so far as practicable from nominations submitted by employers and employees in such occupation or occupations. Two-thirds of the members of such wage board shall constitute a quorum and the recommendations or report of such wage board shall require a vote of not less than a majority of all its members. Members of a wage board shall serve without pay. The commissioner shall make, from time to time, rules and regulations governing the selection of a wage board and its mode of procedure not inconsistent with this part. (b) A wage board shall have power to administer oaths and to require by subpoena the attendance and testimony of witnesses and the production of all books, records and other evidence relative to any matter under investigation. Such subpoenas shall be signed and issued by the chairman of the wage board and shall be served and have the same effect as if issued out of the Superior Court. A wage board shall have power to cause depositions of witnesses residing within or without the state to be taken in the manner prescribed for like depositions in civil actions in the Superior Court.

(c) The commissioner shall present to a wage board, promptly upon its organization, all the evidence and information in the possession of the commissioner relating to the wages of workers in the occupation for which the wage board was appointed and all other information which the commissioner deems relevant to the establishment of a minimum fair wage for such persons. (d) Within sixty days of its organization a wage board shall submit a report, including its recommendations as to minimum fair wage standards for the persons in the occupation the wage standards of which the wage board was appointed to investigate. If its report is not submitted within such time, the commissioner may reconstitute the same board or may constitute a new wage board. (e) A wage board may differentiate and classify employments in any occupation according to the nature of the service rendered and recommend appropriate minimum fair rates for different employments. A wage board, for the purpose of establishing a fair wage, may recommend overtime or part-time rates, or special pay for special or extra work, deductions for board, lodging, apparel or other items or services supplied by the employer or such other conditions or circumstances as may be usual in a particular employer-employee relationship, including gratuities. A wage board may also recommend minimum fair wage rates varying with localities if, in the judgment of the wage board, conditions make such local differentiation equitable and do not effect an unreasonable discrimination against any locality. (f) A wage board may recommend a suitable scale of rates for learners and apprentices, which may be less than the regular minimum fair wage rates recommended for experienced workers in such occupation or occupations.
Wage Fixation Definition
- This is when an Industrial Tribunal will establish an appropriate wage level for workers, rather than letting workers and their employer work it out themselves through enterprise bargaining.

Pay commsion
A Pay Commission is a panel of members of the Union Cabinet of India for review and revision of the salaries of government employees. It was set up by the Central Government in 1965 and as an

administrative committee to determine the salaries of central government employees. Six pay [1] commissions have been set up till date.

First Pay Commission

The first pay commission was constituted in May 1946, and had submitted its report in a year. and the importance is on the report. chairman was Srinivasa Varadachariar wef The first pay commission was based upon the idea of living wages to the employees, this idea was taken from the Islington Commission and the commission observed that the test formulated by theIslington Commission is only to be liberally interpreted to suit the conditions of the present day and to be qualified by the condition that in no case should be a mans pay be less than a living wage." The co mmission emphasised on the idea of the living wages and stated that the government which is going to introduce the minimum wages legislation for the workers of the private industry should also follow the same principle for its own employees. The commission basically recommended that the lowest rung [2] employee should at least get minimum wages. [edit]Second

Pay Commission
[2]

The second pay commission was set up in August 1957, 10 years after independence and it gave its report after two years. The recommendations of the second pay commission had a financial impact of Rs 396 million. The chairman of the second pay commission was Jaganath Das.The second pay commission reiterated the principle on which the salaries have to be determined. It stated that the pay structure and the working conditions of the government employee should be crafted in a way so as to ensure efficient functioning of the system by recruiting persons with a minimum qualification. [edit]Third

Pay Commission

The third pay commission set up in April 1970 gave its report in March 1973 i.e. it took almost 3 years to submit the report, and created proposals that cost the government Rs. 1.44 billion. The chairman was Raghubir Dayal. The third pay commission added three very important concepts of inclusiveness, comprehensibility, and adequacy for pay structure to be sound in nature.The third pay commission went beyond the idea of minimum subsistence that was adopted by the first pay commission.the commission report say that the true test which the government should adopt is to know weather the services are attractive and it retains the people it needs and if these persons are satisfied by that they are getting paid. [edit]Fourth

Pay Commission

Constituted in June 1983, its report was given in three phases within four years and the financial [3] burden to the government was Rs.12.82 billion. This commission has been set up on dated 18.3.1987, Gazette of India (Extra ordinary) Notification No 91 dated 18.3.1987, The chairman of fourth pay commission was P N Singhal. [edit]Fifth

Pay Commission

The Fifth Pay Commission was set up in 1994 at a cost of Rs. 17,000 crore. The chairman of fifth pay commission was Justice S. Ratnavel Pandian. [edit]Financial

Impact of Fifth pay commission

With the implementation of the Fifth Pay commission a huge burden was taken up by the central government. It declared hike in salary of about 3.3 million central government employees. Further, it also insisted on pay revision at the state government level. The Fifth pay commission disturbed the

financial situation of both the Central and the State Governments and led to a hue and cry after its implementation. The Central government's wage bill before the implementation of the commissions recommendations was 218.85 billion in 1996-1997 which also included pension dues and by 1999 it shoot up by about 99% and the burden on the exchequer was about to Rs 435.68 billion in 19992000.With regards to the state government the bill went up by 74%. The state governm ents which paid about Rs 515.48 billion in 1997 as salaries, had to pay Rs 898.13 billion in 1999 as salaries. This [who?] clearly indicates the burden on the state and the central government. Many economists say that [verification needed] about 90% of the revenue of the state went in as salaries . 13 states of India were not in a position to pay salaries to its employees due to the hike and hence the central governments help [citation needed] was sought . [edit]Other

recommendations of the Fifth pay commission

One of its recommendations was to slash government work force by about 30%. It also recommended to reduce the number of pay scale from 51 to 34 and to not recruit to about 3,50,000 vacant position [4] in the government. None of these recommendations were implemented. [edit]Criticisms

of World Bank on fifth pay commission

The World Bank criticized the Fifth Pay commission, stating that the Fifth Pay Commission as the 'single largest adverse shock' to the public finance of the nation. It also said that the number of employees of the government was 'not unduly' large, but there was a 'pronounced imbalance' in the skills. It noted that about 93% of the employees were of 3rd or 4th grade. [edit]Sixth

Pay Commission

Main article: Sixth Central Pay Commission In July 2006, the Cabinet approved setting up of the sixth pay commission. This commission has been set up under Justice B.N.Srikrishna with a timeframe of 18 months. The cost of hikes in salaries is anticipated to be about Rs. 20,000 crore for a total of 5.5 million government employees as per media speculation on the 6th Pay Commission, the report of which is expected to be handed over in late March/early April 2008. The employees had threatened to go on a nationwide strike if the government failed to hike their salaries. Reasons for the demand of hikes include rising inflation and rising pay in the private sector due to the forces of Globalization. The Class 1 officers in India are grossly underpaid with an IAS officer with 25 years of work experience earning just Rs.55,000 as his take home pay. Pay arrears are due from January 2006 till September 2008. Almost all the Government employees received 40% of the pay arrears in 2008 and balance 60% arrears (as promised by Government) has also been credited in Government employees account in 2009. The Sixth Pay Commission mainly focused on removing ambiguity in respect of various pay scales and mainly focused on reducing number of pay scales and bring the idea of pay bands. It recommended for removal of Group-D cadre. Collective bargaining is a process of negotiations between employers and a group of employees aimed at reaching agreements that regulate working conditions. The interests of the employees are commonly presented by representatives of a trade union to which the employees belong. The collective agreements reached by these negotiations usually set out wage scales, working hours, training, health and safety, overtime, grievance mechanisms, and rights to [1] participate in workplace or company affairs.

Collective bargaining
The union may negotiate with a single employer (who is typically representing a company's shareholders) or may negotiate with a group of businesses, depending on the country, to reach an industry wide agreement. A collective agreement functions as a labor contract between an employer and one or moreunions. Collective bargaining consists of the process of negotiation between representatives of a union and employers (generally represented [which?] bymanagement, in some countries by an employers' organization) in respect of the terms and conditions of employment of employees, such as wages, hours of work, working conditions, grievance-procedures, and about the rights and responsibilities of trade unions. The parties often refer to the result of the negotiation as a collective bargaining agreement (CBA) or as a collective employment agreement (CEA).

A wide variety of incentive wage plans has been devised by industries under which the workers earnings are related directly to some measurement of work done either by himself or by his group. There are three broad categories of incentive schemes as classified by Dunn and Rachel. They are: 1. Simple incentive plan. 2. Sharing incentive wage plan. 3. Group incentive plan.

Categories
1. Simple Incentive Plan:
The simplest of all wage incentives may be described as the straight piece-rate system. The piecework method is perhaps one of the oldest and simplest of the incentive plans. The basis of computation is the rate per piece multiplied by the number of pieces produced. For example, if the piece-rate is Rs.2 for each unit of output, then a worker who produces 10 units in a given time, say 8 hours, will be paid Rs.20. Another worker whose production is 12 units in the given time (i.e., 8 hours) will receive Rs.24 and so on. This method of payment is suitable if the process of production is standardised and large quantities are produced by repetition. The system is not suitable where workers by working rapidly to earn more wages are likely to lower the quality of the goods they produce.

2. Sharing Incentive Wage Plan:

There are a large number of plans in this category. These plans are the modifications of the Taylors differential piece rate incentive plan. Under this plan, the workers exceeding the standard or even just attaining it are entitled to the higher rate and those, whose output is less than the standard output are paid at a lower rate. Taylors philosophy was to attain a high level of output and therefore, there was a differential piece rate, low rates for output below the standard, and high rates for output above the standard.

3. Group Incentive Plan:

Individual incentive scheme is not suited to cases where several workers are required to perform jointly a single operation. In such cases, a team approach is called for, with all the members of that team doing their share to achieve and maintain the output. The advantage of group incentive plans is that they encourage team spirit and a sense of mutual cooperation among workers. Under the group incentive plan, the earnings of each member of the group are determined first of all by measuring the amount of the production which passes inspection as it leaves the group. The total earnings for the group are then determined and if all the members are of equal skilled, these earnings are usually divided among them equally.

Employee State Insurance Act, 1948 An overview Introduction The Employee State Insurance Act, [ESIC] 1948, is a piece of social welfare legislation enacted primarily with the object of providing certain benefits to employees in case of sickness, maternity and employment injury and also to make provision for certain others matters incidental thereto. The Act in fact tries to attain the goal of socioeconomic justice enshrined in the Directive principles of state policy under part 4 of our constitution, in particular, articles 41, 42 and 43 which enjoin the state to make effective provision for securing, the right to work, to education and public assistance in cases of unemployment, old age, sickness and disablement. The act strives to materialize these avowed objects through only to a limited extent. This act becomes a wider spectrum than factory act, in the sense that the factory act is concerned with the health, safety, welfare, leave etc of the workers employed in the factory premises only. But the benefits of this act extend to employees whether working inside the factory or establishment or elsewhere or they are directly employed by the principal employee or through an intermediate agency, if the employment is incidental or in connection with the factory or establishment. Related Legislations: ESI (Central) Rules, 1950 and ESI (General) Regulations, 1950 Origin The Employee State Insurance act was promulgated by the Parliament of India in the year 1948. To begin with the ESIC scheme was initially launched on 2nd February 1952 at just two industrial centers in the country namely Kanpur and Delhi with a total

coverage of about 1.20 lakh workers. There after the scheme was implemented in a phased manner across the country with the active involvement of the state governments. Objectives: The ESI Act is a social welfare legislation enacted with the object of providing certain benefits to employees in case of sickness, maternity and employment injury. Under the Act, employees will receive medical relief, cash benefits, maternity benefits, pension to dependents of deceased workers and compensation for fatal or other injuries and diseases. Definitions According to Section 2 (m) of Factories Act, 1948, Factory means any premises including the precints thereof - (a) whereon ten or more persons are employed or were employed for wages on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power or is ordinarily so carried on, or (b) whereon twenty or more persons are employed or were employed for wages on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power or is ordinarily so carried on. But does not include a mine subject to the operation of Mines Act, 1952 or a railway running shed; According to Section 2 (k) of Factories Act, "manufacturing process" means any process for - (i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal, or (ii) pumping oil, water, sewage or any other substance; or; (iii) generating, transforming or transmitting power; or (iv) composing types for printing, printing by letter press, lithography, photogravure or other similar process or book binding; lra-6 ] [ lra-7 or lra-7 ] (v) constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels; (vi) preserving or storing any article in cold storage; According to Section 2 (h) of The Minimum Wages Act, "wages"- means all remuneration capable of being expressed in terms of money which would if the terms of the contract of employment express or implied were fulfilled be payable to a person employed in respect of his employment or of work done in such employment and includes house rent allowance but does not include (i) the value of - (a) any house accommodation supply of light water medical attendance or (b) any other amenity or any service excluded by general or special order of the appropriate government; (ii) any contribution paid by the employer to any person fund or provident fund or under any scheme of social insurance; (iii) any traveling allowance or the value of any traveling concession; (iv) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or (v) any gratuity payable on discharge Applicability:

The ESI Act extends to the whole of India. It applies to all the factories including Government factories (excluding seasonal factories), which employ 10 or more employees and carry on a manufacturing process with the aid of power and 20 employees where manufacturing process is carried out without the aid of power. The act also applies to shops and establishments. Generally, shops and establishments employing more than 20 employees are covered by the Act.

Shop according to the Delhi Shops and Establishment Act, 1954 means any premises where goods are sold either by retail or wholesale or where services are rendered to customers, and includes an office, a store-room, godown, warehouse or workhouse or work place, whether in the same premises or otherwise, used in or in connection with such trade or business but does not include a factory or a commercial establishment. Establishment means a shop, a commercial establishment, residential hotel, restaurant, eating-house, theatre or other places of public amusement or entertainment to which this Act applies and includes such other establishment as Government may, by notification in the Official Gazette, declare to be an establishment for the purpose of this Act. According to the Delhi Shops and Establishment Act, 1954, Commercial Establishment means any premises wherein any trade, business or profession or any work in connection with, or incidental or ancillary thereto is carried on and includes a society registered under the Societies Registration Act, 1860, and charitable or other trust, whether registered or not, which carries on any business, trade or profession or work in connection with, or incidental or ancillary thereto, journalistic and printing establishments, contractors and auditors establishments, quarries and mines not governed by the Mines Act, 1952, educational or other institutions run for private gain, and premises in which business of banking, insurance, stocks and shares, brokerage or produce exchange is carried on, but does not include a shop or a factory registered under the Factories Act, 1948, or theatres, cinemas, restaurants, eating houses, residential hotels, clubs or other places of public amusements or entertainment. Form 01 Employers Registration Form also requires a copy of the registration certificate or licence obtained under the Shops and Establishment Act to be attached along with this form. From this it is quite evident that ESI Act will be applicable to shops and establishments. Again the definition of shops and establishment will vary from state to state depending on the shops and establishment act of that particular state. The act does not apply to any member of Indian Naval, Military or Air Forces.

All employees including casual, temporary or contract employees drawing wages less than Rs 10,000 per month are covered. The ceiling limit has been raised from Rs.7500 to Rs.10000 with effect from 01.10.06. Apprentices covered under the Apprenticeship Act are not covered under this Act. According to Apprenticeship Act 1961, apprentice means a person who is undergoing apprenticeship training in pursuance of a contract of apprenticeship. The apprentices under any scheme as the name suggests come to learn the tricks of the trade and may not count much so far as the output of the factory is

concerned, with that end in view, the apprentices are exempted from the operation of laws relating to labour unless the State Government thought otherwise.-- Regional Director ESIC v. M/s Arudyog 1987 (1) LLJ 292. A factory or establishment, to which this Act applies, shall continue to be governed by its provisions even if the number of workers employed falls below the specified limit or the manufacturing process therein ceases to be carried on with the aid of power subsequently. Where a workman is covered under the ESI scheme, Compensation under the Workmen's Compensation Act cannot be claimed in respect of employment injury.

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No benefits can be claimed under the Maternity Benefits Act.

Areas Covered The ESI Scheme is being implemented area-wise by stages. The Scheme is being implemented in almost all union territories and states except Nagaland, Manipur, Tripura, Sikkim, Arunachal Pradesh and Mizoram. Administration of the Act

The provisions of the Act are administered by the Employees State Insurance Corporation. It comprises members representing employees, employers, the central and state government, besides, representatives of parliament and medical profession. A standing committee constituted from amongst the members of the corporation, acts as an executive body. The medical benefit council, constituted by the central government, is another statutory body that advises the corporation on matters regarding administration of medical benefit, the certification for purposes of the grant of benefits and other connected matters. Registration The employer should get his factory or establishment registered with the ESI Corporation within 15 days after the Act becomes applicable to it and also obtain the employers code number. Application should be made in Form 01 and after h aving being satisfied with the application form, the regional office will allot a code number to the employer, which must be quoted in all documents and correspondence. Identity Card An employee is required to file a declaration form upon employment in factory or establishment to show that he is covered under the Act. On registration every insured person is provided with a temporary identification certificate which is valid ordinarily for a period of three months but may be extended, if necessary, for a further period of 3 months. Within this period, the insured person is given a permanent family photo identity card in exchange for the certificate. The identity card serves as a means of identification and has to be produced at the time of claiming medical care at the dispensary / clinic and cash benefit at the local office of the corporation. In the event of change of employment, it should be produced before the new employer as evidence of registration under the scheme to prevent any duplicate registration. The identity card bears the signature/thumb impression of the insured person. Since medical benefit is also available to the families of Insured persons, the particulars of family members entitled to medical benefit are also given in the identity card affixed with a postcard size family photo. If the identity card is lost, a duplicate card is issued on payment as prescribed. Employers / Employees Contribution Like most of the social security schemes, the world over, ESI scheme is a self-financing health insurance scheme. Contributions are raised from covered employees and their employers as a fixed percentage of wages. Presently covered employees contribute 1.75% of the wages, whereas as the employers contribute 4.75% of the wages, payable to the insured persons. Employees earning less than and up to Rs. 50 per day are exempted from payment of contribution. The contribution is deposited by the employer in cash or by cheque at the designated branches of some nationalized banks. The responsibility for payment of all contributions is that of the employer with a right to deduct the employees share of contribution from employees wages relating to the period in respect of which the contribution is payable. There are two contribution periods each of six months duration and two corresponding benefit periods. Cash benefits under the scheme are generally linked with contribution paid. Contribution period - 1st April to 30th September, its corresponding Cash Benefit period is 1st January to 30th June of the following year. Contribution period - 1st October to 31st March, its corresponding Cash Benefit period is 1st July to 31st December of the following year. Certification of Return of Contribution by Auditor

Regulation 26 of Employees State Insurance (General) Regulations, 1950 was amended by Notification No.N-12/13/1/2008-P&D to include certain details to be mentioned in the Return of Contribution to be submitted by employers. The salient features of amendments made in the Returns of Contribution are as under:1. Self-declaration by Employers regarding maintenance of records and registers, submission of Declaration Forms, employees engaged directly or through immediate employers and wages paid to the workers. 2. All the Employers employing 40 and more employees shall have to append a certificate duty certified by a Chartered Accountant, in the revised format of Returns of Contribution. 3. The Employers employing less than 40 employees will have to provide self- certification without any certification from the Chartered Accountants in Return of Contribution.

The Chartered Accountant should certify that he has verified the return from the records and registers of the company. This notification has come into force with effect from 01-04-2008. Benefits under the Scheme Employees covered under the scheme are entitled to medical facilities for self and dependants. They are also entitled to cash benefits in the event of specified contingencies resulting in loss of wages or earning capacity. The insured women are entitled to maternity benefit for confinement. Where death of an insured employee occurs due to employment injury or occupational disease, the dependants are entitled to family pension. Various benefits that the insured employees and their dependants are entitled to, the duration of benefits and contributory conditions thereof are as under:

Medical benefits Sickness benefits Extended sickness benefit Enhanced sickness benefit Maternity benefit Disablement benefit Dependants benefit

Other benefits like funeral expenses, vocational rehabilitation, free supply of physical aids and appliances, preventive health care and medical bonus. Obligations Of Employers 1. The employer should get his factory or establishments registered with the E.S.I. Corporation within 15 days after the Act becomes applicable to it, and obtain the employers Code Number. 2. The employer should obtain the declaration form from the employees covered under the Act and submit the same along with the return of declaration forms, to the E.S.I. office. He should arrange for the allotment of Insurance Numbers to the employees and their Identity Cards. 3. The employer should deposit the employees and his own contributions to the E.S.I. Account in the prescribed manner, whether he has sufficient resources or not, his liability under the Act cannot be disputed. He cannot justify non-payment of E.S.I. contribution due to non-availability of finance. 4. The employer should furnish a Return of Contribution along with the challans of monthly payment, within 30 days of the end of each contribution period.

5. The employer should not reduce the wages of an employee on account of the contribution payable by him (employer). 6. The employer should cause to be maintained the prescribed records/registers namely the register of employees, the inspection book and the accident book. 7. The employer should report to the E.S.I. authorities of any accident in the place of employment, within 24 hours or immediately in case of serious or fatal accidents. He should make arrangements for first aid and transportation of the employee to the hospital. He should also furnish to the authorities such further information and particulars of an accident as may be required. 8. The employer should inform the local office and the nearest E.S.I.

dispensary/hospital, in case of death of any employee, immediately. 9. The employer must not put to work any sick employee and allow him leave, if he has been issued the prescribed certificate. 10. The employer should not dismiss or discharge any employee during the period he/she is in receipt of sickness/maternity/temporary disablement benefit, or is under medical treatment, or is absent from work as a result of illness duly certified or due to pregnancy or confinement.

Records To Be Maintained For Inspection By ESI authorities

1. 2. 3. 4. 5. 6. 7. 8. 9. Attendance Register / Muster Roll Salary / Wage Register / Payroll EC (Employees & Employers Contribution) Statement Employees Register Accident Book Return of Contribution Return of Declaration Forms Receipted Copies of Challans Books of Account viz. Cash/Bank, Expense Register, Sales/Purchase

Register, Petty Cash Book, Ledger, Supporting Bills and Vouchers, Delivery Challans (if any). 10. Form of annual information on company

Employees Insurance Court Any dispute arising under the ESI Act will be decided by the Employees Insurance Court and not by a Civil Court. It is constituted by the State Government for such local areas as may be specified and consists of such number of judges, as the Government may think fit.