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 Workmens 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 Workmens 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

 Vrooms Expectancy Theory:

Efforts- Perceived probability of success , ValencePerceived 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 PolicesFactors to be considered

Attraction & Retention
Internal Consistency External Parity

Labour cost and

Capacity to pay
Pay for performance

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

Employees Payslip Reward Management

Competency Based Pay

Salary audits