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LEARNING OUTCOMES
1. Describe six elements of a salary reform system and two models of a salary
reform system
2. Correlate the legislative frameworks and the compensation administration
system
3. Explain the importance of legislation in the determination of the rate of pay and
wage
4. Assess the functions of legislative control over the rate of pay and wage.
Describe six elements of a salary reform system and two models of a
salary reform system
Six elements of a salary reform
2. Fixed salary components should portray work values and the payment of salary
increment is the recognition of an employee's period of service and performance
(ii) (ii) Salary increment will be paid when 4.The payment of variable productivity depends on an organization's performance.
profit is greater than the determined level or 5.An organization that does not have its own productivity indicators can use the
value that is calculated based on the return of
industry indicator or the country's productivity or growth indicator as a guide to
investments, return on assets or return on equity
and the average profit acquired in the past few determine the salary adjustments for that particular year
years. 6. The productivity indicators used should be based on the added values of every
employee or other methods.
LINK BETWEEN LEGISLATION AND
COMPENSATION
LINK BETWEEN LEGISLATION ANDADMINISTRATION
COMPENSATION ADMINISTRATION
Employment Act 1955
1.Those who work in the private sector in Peninsular Malaysia and Federal Territory of
Labuan
2.Those whose wages do not exceed RM2,000 per month under a contract of service with an
employer or those, without taking into account their total earnings. This applies to those two:
This Act was introduced with the purpose of giving compensation to employees who are involved in accidents,
suffer injuries in the workplace or suffer illness caused by the employment.
This Act also covers the payment of compensation to an employee's dependents if the employee dies as a result
of a work-related accident.
Industrial Relations Act 1967
The enforcement of the Industrial Relations Act 1967 has allowed the intervention of the
government in industry conflicts. Harmonious relations between employees and employers can
exist when the interests of both parties are protected.
Payment System
The payment system must be prepared in the easiest manner possible
The rate differences must be related to the employment needs, and if required, the rates should be considered with
methods that have been agreed upon or accepted
Overall work rate, performance bonus and other remuneration have to be determined according to definite
methods
The payment rate must be negotiated between employers and employees, or their representatives
Employment Guarantee
Give hope for advancement and promotion in the industry by giving opportunities for any
required training
Make provisions for retirement schemes, employee reduction and paid leave in addition to the
statutory provisions.
Redundancy and Retrenchment of Employees
If retrenchment still needs to be done despite taking specific measures, employers have to undertake the
following steps
Offer retirement to employees who are past the normal retirement age
Assist employees in looking for jobs outside the industry with the cooperation of the Ministry of Human
Resources
Ensure that the announcement of the employee termination is not made prior to informing the employees
and their representatives or trade unions.
IMPORTANCE OF THE LAW IN DETERMINATION OF
SALARY AND WAGE PAYMENT RATES
Four aspects of the compensation administration system
1. Achieving Justice and Fairness
Employment Act 1955 -salary determinations for public holidays, off days and
overtime have been set at reasonable rates
The Workmen's Compensation Act 1952- guarantees that employees who suffer from
accidents get fair treatment from their employers, that is, receive compensation that
is proportionate to the severity of the accident that has taken place.
The main aim of the Wages Council is to regulate on the minimum remuneration and
conditions of employment of certain categories of employees.
Wages Regulation (Catering and Hotel) Order 1967