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Wage and Salary Administration
amount of wage and salary paid to an employee for a fair days work. Wage
share of their income "Pay" in one form or another is certainly one of the
paid by the employer for the services of hourly, daily, weekly and
fortnightly employees.2
distinction between wage and salary does not seem to be valid in these
human resources and are viewed at par. Hence these two terms are used
reduce it. But they also realise that it is not possible because of
these reasons:
(a) Wage & salary are essential to attract and retain an effective
work force.
maintain their standard. They also want it equitable with similar skills
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Principles of Wage & Salary administration:
conformity with the social & economic objectives of the country like
inflationary trends.
responsive to the changing local and national conditions. The plans should
3. Abrar, Ul, Mustafa, (2013), "Wage and salary administration : Objectives, Principles.
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organisation. As such, the organisation should aim at payment of
salaries at that level, where they can attract competent and qualified
people.
If the salary level does not compare favourable with that of other
similar organisation, employees quit the present one and join other
Internal equity does mean payment of similar wages for similar jobs
5. To keep labour and administrative costs in line with the ability of the
organisation to pay.
wage legislations.
4. Chandra. Bose, (2012) "Principles of Management and Administration, 2nd Edition, PH-1,
Learning Private Ltd., 2012, Pg. 265.
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7. To pay according to the content and difficulty of the job and in tune
salary control.
following systems:
1. Job evaluation:
categories.
Each job grade will be assigned a salary range. These individual salary
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3. Wage and salary adjustments:
the data and information collected 'about the salary levels of similar
goals.
employees.
unattained goals.
10. Adjusting the salary levels accordingly with a view to enable the
(ii) The present worth of that type of job in other organisation, and
(iii) The effectiveness with which the individual performs the job.
5. Merrill R. Lott, "Wage Scales and Job Evaluation", The Ronald Press Co., 1926, P. 20 :
Quoted in Richard I. Hernderson, Op. Cit., P. 151.
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The first two factors are related to job evaluation and wage survey,
wage surveys to determine the going wage for the given job.
Chart 5.1
Wage Survey:
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must be determined taking into consideration wages of similar job in other
organisations.
similar jobs in other enterprises in the same region and in the same
the organisation's pay scale are like those of other enterprises in the
region. So they must be taken into consideration while fixing the wages for
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1. Wage boards:
Five-Year Plan, appointed wage boards for fixing wages. The first wage board
was set up in 1957 for the cotton textile industry. The wage board are tripartite
for fixing wages. Wage board were set up because workers were not satisfied
with the method of compulsory adjudication for wage determination not only
because it was a lengthy procedure but also because they had no role to play
in determining wages.
2. Job evaluation:
hand, uses the information in job analysis to evaluate each job-valuing its
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Job evaluation aims to assess the relative worth of a given collection of
the absence of proper job evaluation, it is very likely that jobs would not be
properly priced. Consequently, high valued jobs may receive less pay than
low-valued jobs. The employees realizing this may be come dissatisfied, leave
the organization, reduce their efforts or may adopt other modes of behaviour
attention to the relative worth of jobs so that they are able to determine what a
particular job should be paid. A person is paid for what he brings to a job- his
3. Collective bargaining:
4. Wage legislation:
tow workers. There are four main acts that comprise the legal framework
(a) The payment of Wages Act, 1936. The payment of wages act, 1936
obligatory for the employers to make payment of wages, fix the wage
period and time of payment. The Act authorizes the employers to make
(b) The Minimum Wages Act, 1948. The Minimum Wages Act aims to:
6. K.N. Subramaniam, "Wages in India", Mc, Graw Hill Publication, 1995, Pg. 174.
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• Eliminate chances of exploitation of labour through payment of very low
• Provide for maximum daily working hours, weekly rest and overtime.
• The rates fixed under the Act prevail up on the rates fixed under the
award or agreement7.
The Act, defines wage as all remuneration which are capable of being
from service.
(d) The Payment of Bonus Act, 1965. The Payment of Bonus Act, 1965
any day, covered in the related accounting year. The Act lays down a
has not made profits during the related accounting year. Although, the
became a constraint for many good employers like Tata's, who earlier
paid much more than the prescribed limit. In reality many of the then
British firms operating in West Bengal paid some kind of bonus in the
form of Puja that was more than the provisions under the act.