Glossary of

Compensation & Benefits

A----------........................................................................................................................................................ 7
• ALLOWANCE ................................................................................................................................ 7
¾ Dearness Allowance .................................................................................................................... 7
¾ HRA (House Rent Allowance): .................................................................................................... 7
¾ City compensatory allowance: .................................................................................................... 7
¾ Compensatory Allowance............................................................................................................ 8
¾ Foreign Allowance ...................................................................................................................... 8
¾ Medical Allowance ...................................................................................................................... 8
¾ Project Allowance ....................................................................................................................... 8
¾ Transport Allowance ................................................................................................................... 8
¾ Relocation / moving Allowance ................................................................................................... 9
¾ Conveyance allowance ................................................................................................................ 9
¾ Uniform ALLOWANCE: (Covered under Section “C”).............................................................. 9
¾ Children Education allowance .................................................................................................... 9
¾ Children hostel allowance........................................................................................................... 9
¾ Educational Allowance................................................................................................................ 9
¾ Entertainment Allowance ............................................................................................................ 9
¾ Special Allowance ..................................................................................................................... 10
¾ Training Allowance ................................................................................................................... 11
• ACROSS-THE-BOARD INCREASE............................................................................................ 11
• ANNUITY ..................................................................................................................................... 11
• AT RISK PAY................................................................................................................................ 12
• ATTENDANCE BONUS............................................................................................................... 12
B-----------..................................................................................................................................................... 12
• BASE PAY RATE/BASE RATE/ BASE WAGE RATE ............................................................... 12
• BACK PAY.................................................................................................................................... 12
• BENCHMARK JOB ...................................................................................................................... 13
• BROADBANDING ....................................................................................................................... 13
• BENEFITS ..................................................................................................................................... 13
• BFOQ............................................................................................................................................. 13
• BONUS (PRODUCTION AND NONPRODUCTION)................................................................. 14
¾ Production Bonus ...................................................................................................................... 14
¾ Nonproduction Bonus................................................................................................................ 14
• BENEFICIARY ............................................................................................................................. 14
• BLUE CIRCLE RATE (GREEN CIRCLE RATE) ........................................................................ 14
C------------ ................................................................................................................................................... 14
• CLASSIFICATION ....................................................................................................................... 14
• COMPENSATION ........................................................................................................................ 15
• COMPENSATION PHILOSOPHY ............................................................................................... 15
• COMPA-RATIO ............................................................................................................................ 15
• COMPENSABLE FACTORS........................................................................................................ 15
• COMPRESSION (PAY/SALARY COMPRESSION)................................................................... 16
• CONTROL POINT ........................................................................................................................ 16
• CALL-IN PAY (CALLBACK PAY) ............................................................................................. 16
• CHILD CARE BENEFIT............................................................................................................... 16
• CLOTHING ALLOWANCE (UNIFORM ALLOWANCE).......................................................... 16
• COMMISSION EARNINGS ......................................................................................................... 17
• COMPRESSED WORKWEEK ..................................................................................................... 17
• CONTINGENT COMPENSATION .............................................................................................. 17
• CONTRACT SIGNING BONUS................................................................................................... 17
• CONTRIBUTORY PLAN ............................................................................................................. 17
 • CONSUMER PRICE INDEX ................................................................................................................ 18
D----------...................................................................................................................................................... 18
• DOWNGRADING: ............................................................................................................................. 18
• DEFERRED EARNINGS .............................................................................................................. 18
• DEFERRED WAGE CHANGE ..................................................................................................... 18
• DIFFERENTIAL PIECE RATES .................................................................................................. 18
• DOUBLE TIME ............................................................................................................................. 19
• DRAW ACCOUNT ....................................................................................................................... 19
E---------- ...................................................................................................................................................... 19
• EQUITY ........................................................................................................................................... 19
• EXCHANGE RATE ............................................................................................................................ 19
• EXTRINSIC REWARDS ...................................................................................................................... 19
• EARNINGS (HOURLY; DAILY; WEEKLY; ANNUAL COMPENSATION) ............................ 20
• EDUCATION LEAVE................................................................................................................... 20
• EDUCATIONAL ASSISTANCE (TUITION AID; TUITIONPAYMENT PLAN)....................... 20
• EDUCATIONAL PAY DIFFERENTIAL...................................................................................... 20
• ELDER CARE ............................................................................................................................... 20
• EMPLOYEE BENEFIT PLAN ...................................................................................................... 20
• ENTRANCE/ HIRING RATE.......................................................................................................... 21
• EX-GRATIA PAYMENT ..................................................................................................................... 21
• EXTERNAL EQUITY ......................................................................................................................... 21
F---------- ...................................................................................................................................................... 21
• FIXED PAY....................................................................................................................................... 21
• FACTOR COMPARISON METHOD....................................................................................................... 22
• FIXED INCREASE AMOUNT .............................................................................................................. 22
• FLEXIBLE BENEFIT PLAN (CAFETERIA PLAN) .................................................................... 22
• FLEXIBLE WORK SCHEDULE PLAN (FLEXITIME)............................................................... 22
• FRINGE BENEFIT ............................................................................................................................. 22
• FRINGE BENEFIT TAX ..................................................................................................................... 23
• FLOATING HOLIDAY................................................................................................................. 23
• FUNERAL LEAVE (BEREAVEMENT LEAVE)......................................................................... 23
G---------- ..................................................................................................................................................... 23
• GAIN SHARING ................................................................................................................................ 23
• GROUP HEALTH PLAN .............................................................................................................. 24
• GROUP INCENTIVE PLAN ......................................................................................................... 24
• GEOGRAPHIC DIFFERENTIALS.......................................................................................................... 24
H---------- ..................................................................................................................................................... 24
• HAZARD PAY .............................................................................................................................. 24
I---------- ....................................................................................................................................................... 24
• IN-RANGE ADJUSTMENT .................................................................................................................. 24
• INTERNAL EQUITY ........................................................................................................................... 25
• INCENTIVE (PAY PLANS).................................................................................................................. 25
• INDIRECT PAY ................................................................................................................................. 25
• INTRINSIC REWARDS ....................................................................................................................... 25
• INSURANCE................................................................................................................................. 25
• INSURANCE CARRIER............................................................................................................... 26
• INSURANCE POLICY.................................................................................................................. 26
J----------....................................................................................................................................................... 26
• JOB.................................................................................................................................................. 26
• JOB ANALYSIS ................................................................................................................................ 26
• JOB DESCRIPTION............................................................................................................................ 26
• JOB EVALUATION ............................................................................................................................ 27
• JOB FAMILY .................................................................................................................................... 27
• JOB GRADE ..................................................................................................................................... 27
• JOB SPECIFICATIONS ....................................................................................................................... 27
• JOB WORTH HIERARCHY ................................................................................................................ 28
K---------- ..................................................................................................................................................... 28
• KNOWLEDGE-BASED PAY ................................................................................................................ 28
• KSA (KNOWLEDGE, SKILLS, AND ABILITIES) .................................................................................. 28
L---------- ...................................................................................................................................................... 28
• LABOR DEMAND ............................................................................................................................. 28
• LIVING WAGE ............................................................................................................................. 29
• LONGEVITY PAY........................................................................................................................ 29
• LUMP-SUM PAYMENTS ............................................................................................................ 29
• LABOR MARKET ............................................................................................................................. 29
• LEAD OR LAG POLICY ..................................................................................................................... 29
• LEAVE TRAVEL ASSISTANCE .......................................................................................................... 29
• LOWER QUARTILE OR 25TH PERCENTILE ........................................................................................ 30
M----------..................................................................................................................................................... 30
• MERIT INCREASE ....................................................................................................................... 30
• MERIT PAY ..................................................................................................................................... 30
• MERIT INCREASE ............................................................................................................................ 30
• MERIT RATING................................................................................................................................ 30
• MIDPOINT ....................................................................................................................................... 31
• MINIMUM WAGE........................................................................................................................ 31
• MAXIMUM RATE ............................................................................................................................. 31
• MARKET ADJUSTMENT .................................................................................................................... 31
• MEDIAN .......................................................................................................................................... 31
N----------...................................................................................................................................................... 31
• NONCONTRIBUTORY PLAN..................................................................................................... 31
• NONWAGE CASH PAYMENTS ................................................................................................. 32
O---------- ..................................................................................................................................................... 32
• OCCUPATION .................................................................................................................................. 32
• OCCUPATIONAL RATES ........................................................................................................... 32
• ON CALL PAY.............................................................................................................................. 32
• OUT OF WORK BENEFITS ......................................................................................................... 32
• OVERTIME ................................................................................................................................... 32
P---------- ...................................................................................................................................................... 33
• PAY ................................................................................................................................................. 33
• PAIRED COMPARISON ...................................................................................................................... 33
• PROFIT SHARING ............................................................................................................................. 33
• PAY ADJUSTMENT........................................................................................................................... 33
• PAY PLAN ....................................................................................................................................... 34
 • PAY POLICY .................................................................................................................................... 34
• PAY GRADE/RANGE ........................................................................................................................ 34
• PAY RANGE WIDTH ........................................................................................................................ 34
• PAY STEPS ...................................................................................................................................... 34
• PERSON-BASED PAY........................................................................................................................ 34
• PAY LEVEL STATISTICS................................................................................................................... 35
• PERQUISITE/PERKS ......................................................................................................................... 35
• PAY PERIOD .................................................................................................................................... 35
• PAY SCALE ..................................................................................................................................... 36
• PAY ROLL ........................................................................................................................................ 36
• PAID LUNCH (MEALTIME) ....................................................................................................... 36
• PAID VACATIONS....................................................................................................................... 36
• PAYROLL DEDUCTIONS ........................................................................................................... 37
• PAYROLL PERIOD ...................................................................................................................... 37
• PIECEWORK ................................................................................................................................ 37
• PIECE RATE ................................................................................................................................. 37
• PREMIUM PAY ............................................................................................................................ 37
• PREVAILING RATE (GOING RATE) ......................................................................................... 37
• PROBATIONARY RATE ............................................................................................................. 38
• PUSH MONEY .............................................................................................................................. 38
R----------...................................................................................................................................................... 38
• REMUNERATION.............................................................................................................................. 38
• REIMBURSEMENT ............................................................................................................................ 38
• RECOGNITION: ................................................................................................................................ 39
• REWARDS ....................................................................................................................................... 39
• RANGE PENETRATION ..................................................................................................................... 39
• RATE RANGE............................................................................................................................... 39
• RATE SETTING............................................................................................................................ 39
• RATE ARRANGED ............................................................................................................................ 40
• RECLASSIFICATION ......................................................................................................................... 40
• REWARD SYSTEM ........................................................................................................................... 40
• REAL WAGES .............................................................................................................................. 40
• RED CIRCLE RATE (OUT OF LINE RATE; FLAGGED RATE)................................................ 40
• REFERRAL BONUS ..................................................................................................................... 40
• RELOCATION ALLOWANCE (MOVING ALLOWANCE)....................................................... 40
• ROLL UP ....................................................................................................................................... 41
S---------- ...................................................................................................................................................... 41
• SALARY .......................................................................................................................................... 41
• SALARY STRUCTURE....................................................................................................................... 41
• SALARY RANGE WIDTH .................................................................................................................. 41
• SALARY SURVEY ............................................................................................................................ 42
• SKILL-BASED PAY ........................................................................................................................... 42
• SAFETY BONUS .......................................................................................................................... 42
• SEVERANCE PAY (DISMISSAL PAY OR ALLOWANCE; TERMINATION PAY;
SEPARATION PAY; LAYOFF ALLOWANCE) ................................................................................... 42
• SHIFT DIFFERENTIAL (SHIFT PREMIUM) .............................................................................. 42
• SIGNING BONUS ......................................................................................................................... 43
• STANDARD RATE....................................................................................................................... 43
• STEP RATES................................................................................................................................. 43
• SINGLE-RATE SYSTEM .................................................................................................................... 43
• STOCK OPTION PLAN ................................................................................................................ 43
 • STOCK PURCHASE PLAN.......................................................................................................... 44
• SUBSIDIZED COMMUTING....................................................................................................... 44
• SUPPLEMENTAL PAY................................................................................................................ 44
• STATISTICAL TERMS........................................................................................................................ 44
T---------- ...................................................................................................................................................... 45
• TIERED PAY PLAN ........................................................................................................................... 45
• TAKE HOME PAY........................................................................................................................ 45
• TELECOMMUTING..................................................................................................................... 45
• TEMPORARY RATES.................................................................................................................. 45
• TONNAGE RATE ......................................................................................................................... 46
• TOOL ALLOWANCE ................................................................................................................... 46
• TOTAL CASH COMPENSATION ......................................................................................................... 46
• TOTAL REMUNERATION .................................................................................................................. 46
U----------...................................................................................................................................................... 46
• UNION DUES................................................................................................................................ 46
• UNION RATE (SCALE)................................................................................................................ 47
• UPGRADING ................................................................................................................................ 47
• UPPER QUARTILE OR 75THPERCENTILE LEVEL ............................................................................... 47
V----------...................................................................................................................................................... 47
• VARIABLE PAY ............................................................................................................................... 47
W----------..................................................................................................................................................... 48
• WAGE RATE ................................................................................................................................ 48
• WAGE DETERMINATION .......................................................................................................... 48
• WAGE DIFFERENTIALS............................................................................................................. 48
• WAGE FREEZE ............................................................................................................................ 48
• WAGE PROGRESSION................................................................................................................ 48
• WAGE SURVEY ............................................................................................................................... 49
• WAITING PERIOD ....................................................................................................................... 49
• WELLNESS BENEFITS ............................................................................................................... 49
• WORKING TITLE ............................................................................................................................. 49
• WAGE GARNISHMENT ..................................................................................................................... 49
• WEIGHTED AVERAGE ..................................................................................................................... 49
A----------

• ALLOWANCE

Allowances are fixed sums of money paid, allowed or granted regularly during a given
period in addition to the salary for the purpose of meeting some particular
requirement.

Different types of allowances are as under:

¾ Dearness Allowance

It is a payment towards the rise in cost of living, which is calculated based on cost of
living index Dearness allowance (D.A.) is part of a person's salary. D.A. is calculated as
a percent of the basic salary. This amount is then added to the basic salary. Rates vary
as per rural/urban areas. It is usually amounts to 40% of the basic salary.

¾ HRA (House Rent Allowance):

House Rent Allowance is an allowance given by an employer to an employee for the

sole purpose of meeting the cost of renting a home. An employee having HRA as a part
of the salary package, staying in a rented accommodation by paying rent for it and if
the rent exceeds 10% of the salary is entitled for HRA Allowance. The actual amount
paid as HRA is 40% of the total salary and it is 50% of the total salary if the house is
rented out in Delhi, Mumbai, Chennai or Kolkata.

¾ City compensatory allowance:

City Compensatory Allowance is paid to compensate or enable to bear the high cost of
living prevailing in an urban area or a city. (The limit is upto Rs. 850 per month
depending upon the city.
 ¾ Compensatory Allowance

It is an allowance to meet personal expenditure necessitated by the special

circumstances in which the duty is performed. This is similar to Risk Allowance
sanctioned by Government. The specifiable difference between the two is that Risk
Allowance is mainly connected with factors that affect health, but Compensatory
Allowance can be a compensation for any extra effort while discharging official duties
(like extra office hours, carrying valuable things etc).

¾ Foreign Allowance

It is allowance paid by the government to the Indian citizen for rendering services
outside India.

¾ Medical Allowance

If any sum is paid by the employer for expenditure actually incurred by the employee
for medical treatment in an approved/unapproved hospital upto the limit of Rs. 15,000
per annum then it’s classified as Medical Allowance. If the actual bill exceeds Rs.
15,000 then the extra portion is taxable at the hands of employee.

¾ Project Allowance

Project Allowance is classified as compensatory allowance paid to the staff engaged in

the execution of projects or other specified work located within the area specially
demarcated for project purposes.

The very basis of providing a Project Allowance is to motivate an employee to take up

an assignment in a project area which is generally inhospitable and not having the
usual comforts or facilities of a town. Further the nature of work could be arduous.

¾ Transport Allowance

It means allowance to meet expenses incurred for office to home and home to office.
It is exempted up to 800 per month maximum.

Tiffin Allowance
 ¾ Relocation / moving Allowance

Allowance to meet the cost of travel on tour or on transfer (including amount paid for
packing and transportation of personal effects on such transfer): exempted to the
extent allowances used for said purpose.

¾ Conveyance allowance

It is the allowance to meet the expenditure on conveyance in performance of duties of

an official nature. It is exempted to extent allowance used for said purpose.

¾ Uniform ALLOWANCE: (Covered under Section “C”)

¾ Children Education allowance

Under this scheme Rs 100 per month per child up to maximum of two children are
given as Children Education Allowance and is exempted if the expenses are made in
India. For the children of Government employees school education allowance and
reimbursement of tuition fees has been merged together into scheme known as
Children Education Allowance and under this scheme an annual amount of Rs.12,000 is
payable, which can be availed quarterly @ Rs. 3000 for children from nursery to 12th
Std.

¾ Children hostel allowance

300 per month per child up to maximum of two children is given under this scheme
and is exempted if the expenses are made in India.

¾ Educational Allowance

It is granted for encouraging the academic, research and other professional pursuits
and is exempted to the extent used for the said purpose.

¾ Entertainment Allowance

It is the amount paid by employer for availing entertainment services

The amount of deduction available is restricted to least of the following:
# In case of government employees: Rs. 5,000; 20% of salary; or amount of
entertainment allowance granted during the previous year.

# In case of non-Government employees: Rs. 7,500; 20% of salary; amount of

entertainment allowance granted during the previous year.

¾ Special Allowance

This includes allowances which are position and area specific, dependent on the
nature of job. These allowances are as follows:

ƒ Any Special compensatory Allowance in the nature of hilly area allowance, High
Altitude Allowance, Uncongenial Climate Allowance or Snow Bound Area
Allowance or Avalanche Allowance

ƒ Any Special Compensatory Allowance in the nature of Border Area Allowance,

Remote Locality Allowance or Difficult Area Allowance or Disturbed Area

ƒ Special Compensatory (Tribal Areas/ Schedule Areas/ Agency Areas) Allowance

ƒ Any allowance granted to an employee working in any transport system to meet

his personal expenditure during his duty performed in the course of running of
such transport from one place to another place, provided that such employees
is not in receipt of daily Allowance

ƒ Children Education Allowance

ƒ Any Allowance granted to an employee to meet the Hostel expenditure on his

Child

ƒ Underground Allowance granted to an employee who is working in uncongenial,

unnatural climate in underground coal mines

ƒ Any special allowance granted to the members of the armed forces in the
nature of special compensatory highly active field area allowance
 ƒ Any special allowance granted to the member of the armed forces in the nature
of Island (duty) allowance

ƒ Allowances to Govt. Employee outside India

ƒ Allowance to High Court and Supreme Court Judge

ƒ Foreign Allowance

ƒ Transfer Allowance

ƒ Allowance Received from a United Nation Organization

ƒ Helper allowance (Expenditure on a helper where such helper is engaged for

the performance of the duties of office)

ƒ Academic allowance

¾ Training Allowance

It is allowance given to employees for attending a specific training session/seminar or

taking up certain educational/academic/research course. Usually, part of the
allowance is paid before the start of course for admission; the rest is made when the
person achieves a qualification/completes the course and remains in the service for a
particular period of time.

• ACROSS-THE-BOARD INCREASE

It is a wage or salary increase where either a flat rate (common number of

Rupees/hour) or a common percentage of salary is used. It is also called a General
Increase.

• ANNUITY

Annuity is a form of distribution from a retirement plan providing periodic payments.

Straight-life annuities provide payments, usually monthly, for the lifetime of a retiree.
Joint-and-survivor annuities provide payments to a retiree, and upon the retiree’s
death, payments to a surviving spouse.

• AT RISK PAY

Pay that an employee is not guaranteed to receive but may receive under certain
circumstances. Examples include commissions, piece rates, and various kinds of
bonuses such as safety or attendance awards.

• ATTENDANCE BONUS

Payment or other type of reward (e.g., a day off) for employees whose work
attendance record meets certain standards.

B-----------

• BASE PAY RATE/BASE RATE/ BASE WAGE RATE

The fixed compensation paid to an employee for performing specific job

responsibilities; which is exclusive of additional payments or allowances. It is the
Wage rate for work performed during a unit of time, most commonly expressed as a
rate per hour. It may, however, be expressed as an amount per day, week, month, or
year. It does not include overtime or incentive rates.

• BACK PAY

Payment of part or all of an employee’s wages for a particular prior period of time,
arising from arbitration, court, or board awards, grievance settlements, errors in
computation of pay, misinterpretation of wage legislation, etc.
 • BENCHMARK JOB

A job that is commonly found and defined, used to make pay comparisons, either
within the organization or to comparable jobs outside the organization to develop or
validate a job-worth hierarchy. Pay data for these jobs are readily available in
published surveys.

• BROADBANDING

Pay structure that consolidates a large number of pay grades and salary ranges into
much fewer broad bands with relatively wide salary ranges. These ranges typically
have 100 percent or more differences between minimum and maximum (e.g. $25,000
to $50,000).

NOTE: These are similar to pay grades but are usually much wider and encompass
more jobs. The philosophy behind utilizing a pay band vs. a pay grade pay structure
usually is one that provides managers with more flexibility for rewarding employees
for taking on additional tasks or for working at a higher level. Some organizations will
also adopt this kind of structure to help emphasize a policy of promotion within.

• BENEFITS

Non wage compensation provided to employees. The National Compensation Survey

groups benefits into five categories: Paid leave (vacations, holidays, sick leave);
supplementary pay (premium pay for overtime and work on holidays and weekends,
shift differentials, non production bonuses); retirement (defined benefit and defined
contribution plans); insurance (life insurance, health benefits, short-term disability,
and long-term disability insurance) and legally required benefits (Social Security and
Medicare, Federal and State unemployment insurance taxes, and workers’
compensation).

• BFOQ

Bona Fide Occupational Qualifications – It is legally defensible minimum qualifications

to perform the job.
 • BONUS (PRODUCTION AND NONPRODUCTION)

¾ Production Bonus

Extra payment based on production in excess of a quota or on completion of a job in

less than standard time.

¾ Nonproduction Bonus

A cash payment that is not directly related to the output of either the employee or a
group of employees is termed as non production bonus. Examples include attendance,
Diwali, profit sharing, safety, and year-end bonuses.

• BENEFICIARY

The person designated by an employee or retiree to receive benefit payments in the

event of the employee’s or retiree’s death.

• BLUE CIRCLE RATE (GREEN CIRCLE RATE)

Pay rate of a non-probationary worker that falls below the established rate ranges for
workers performing the same duties

C------------

• CLASSIFICATION

Systematic arrangement in groups or categories according to established criteria

Hierarchical structure of jobs arranged into classes or pay grades. Predefined class
descriptions are established for each job and jobs are placed in whichever
classification best describes them.
 • COMPENSATION

A methodical approach to assigning a monetary value to employees in return for work

performed. Compensation may include any or all of the following: base pay, overtime
pay, commissions, stock option plans, merit pay, profit sharing, bonuses, housing
allowance, vacations and all benefits. This is referred to as remuneration in some
foreign countries.

• COMPENSATION PHILOSOPHY

A set of guiding principles that are based on values that drive compensation decision-
making.

• COMPA-RATIO

The ratio of an actual pay rate (numerator) to the midpoint or some other control
point for the respective pay range (denominator) is known as Compa-ratio. Compa-
ratios are used primarily to compare an individual's rate of pay to the mid-point or
control point of the range. A compa-ratio may be calculated for an individual, a group
of people, a department, or an entire organization.

Compa Ratio = Individual Salary * 100

------------------------------

Salary Median

• COMPENSABLE FACTORS

Elements of a job for which the organization is willing to pay constitute the
compensable factors. These are used to provide a basis for judging job value to create
a job worth hierarchy (job evaluation). Factors are usually measured in degrees and
are weighted, based on their pre-determined value to the organization. Typical
factors include skills, effort, responsibility, scope of authority, and working
conditions.
 • COMPRESSION (PAY/SALARY COMPRESSION)

Pay compression is the situation that occurs when there is only a small difference in
pay between employees regardless of their skills or experience. It is also referred to as
salary compression. Pay compression is the result of the market-rate for a given job
outpacing the increases historically given by the organization to high tenure
employees. Therefore, newcomers can only be recruited by offering them as much or
more than senior professionals. A prime example is new hire pay rates higher than
those of current incumbents and subordinates paid higher than supervisors due to
overtime.

• CONTROL POINT

The point within a salary range representing the desired pay for a fully qualified,
satisfactory (average) performer in a job or group of jobs at a given time (usually the
midpoint of a salary range).

• CALL-IN PAY (CALLBACK PAY)

Pay guaranteed to a worker recalled to work after completing the regular work shift.
Call-in pay is a synonym for reporting pay

• CHILD CARE BENEFIT

Employers’ full or partial payment for the cost of caring for an employee’s children in
a nursery, day care center, or by a baby-sitter, on or off the employer’s premises,
while the employee is at work

• CLOTHING ALLOWANCE (UNIFORM ALLOWANCE)

It is the monetary allowance for clothing or its upkeep or both, granted by an

employer to employees who are required to wear special clothing, such as uniforms or
safety garments, in the performance of their work.
 • COMMISSION EARNINGS

Compensation to salespeople based on a predetermined formula, for example, a

percentage of the value of sales or the gross margin of goods or services sold. May be
in addition to a guaranteed salary rate or may constitute total pay.

• COMPRESSED WORKWEEK

It refers to completing standard weekly hours (e.g., 36, 37 1/2, 40 hours) in fewer
days than the traditional 5-day workweek by increasing daily hours worked. Usually,
the 40-hour workweek is scheduled over 4 days of 10 hours.

• CONTINGENT COMPENSATION

It is the linking of a portion of employees’ pay or benefits to changes in some other

measure, such as company profits, plant output, the Consumer Price Index, or the
market price of a commodity. Contingent compensation payments may take the form,
for example, of a lump sum payment in cash or company stock, or a wage rate
increase.

• CONTRACT SIGNING BONUS

A non production bonus given to unionized employees upon signing of a new labor-
management agreement.

• CONTRIBUTORY PLAN

Employee benefit plan, which is not 100 percent, paid for by the employer. To receive
plan benefits, an employee must contribute (pay) a specified amount towards the full
cost of the plan. For example, employer pays 100 percent of the cost of health
insurance for the employee but pays only 40 percent of the cost of health care
services for employee’s dependents.
 • CONSUMER PRICE INDEX

An economic indicator used to gauge the cost of living published by The Indian Bureau
of Labor Statistics. It measures price changes for a fixed market basket of goods and
services typically purchased.

D----------

• DOWNGRADING:

The movement of a job to a lower level in a job-evaluation system (i.e., to a lower job
grade and/or pay range within a pay structure).

• DEFERRED EARNINGS

These are the earnings that an employee voluntarily places in a retirement account.
Deferred earnings are not taxed as income at the time the money is earned—income
taxes are deferred until benefits are distributed from the retirement account.

• DEFERRED WAGE CHANGE

A negotiated wage change (almost always an increase) that will become effective at a
specified date beyond the effective date of the contract. Usually found in multi-year
contracts

• DIFFERENTIAL PIECE RATES

Plan under which piece rates vary at different levels of output talks refers to
differential piece rates.
 • DOUBLE TIME

Penalty or premium rate (e.g., for overtime work, for work on Sundays and holidays)
amounting to twice the employee’s regular rate of pay for each hour worked.

• DRAW ACCOUNT

Usually, an allowance given to sales people working on a straight commission as an

advance against commission payments

E----------

• EQUITY

When used in reference to direct pay this concept refers to a criterion of pay based on
similar responsibilities and contribution to the organization. It may focus on the
"fairness" of pay between employees within or outside the organization.

• EXCHANGE RATE

It is economically defined as intersect of the labor demand and the labor supply
functions in an external market. It constitutes the wage rate that employers are
willing to pay and labor is willing to accept. From a compensation viewpoint, the
exchange rate defines the criterion of external equity.

• EXTRINSIC REWARDS

Work-related rewards that have value measurable in monetary terms, as opposed to

intrinsic rewards, such as satisfaction in a job well done.
 • EARNINGS (HOURLY; DAILY; WEEKLY; ANNUAL COMPENSATION)

Remuneration (pay, wages) of a worker or group of workers for services performed

during a specific period of time.

• EDUCATION LEAVE

Leave, typically without pay, to employees wishing to attend an accredited college or

university or recognized trade, vocational or technical school to take a course of study
or training related to their jobs or employment opportunities at the company.

• EDUCATIONAL ASSISTANCE (TUITION AID; TUITIONPAYMENT PLAN)

It is a program that provides full or partial payment for tuition or books or both for
training or educational courses.

• EDUCATIONAL PAY DIFFERENTIAL

Usually for professional occupations such as teachers, educational pay differentials

provide for progressively higher salary rates based upon the employee’s completion of
specified academic requirements. For example, a person having a Ph.D. would receive
higher pay than another having a master’s degree, or an employee with a master’s
degree would receive a higher salary than another having a bachelor’s degree.

• ELDER CARE

A program that provides paid or unpaid time off for the purpose of caring for sick or
elderly parents, and employer sponsored or subsidized adult day care.

• EMPLOYEE BENEFIT PLAN

A plan established or maintained by an employer, employee organization or both

(through negotiated agreement or unilaterally) to provide employees with welfare or
retirement benefits or both.
 • ENTRANCE/ HIRING RATE

Wage rate at which an employee starts a job. The rate may apply to a new hire or to a
worker who changes jobs within the establishment.

• EX-GRATIA PAYMENT

An ex gratia payment is a payment made without the giver recognizing any liability or
legal obligation. When something has been done ex gratia, it has been done
voluntarily, out of kindness or grace. Most commonly such payments are made to
employees in respect of personal property (including clothing or personal items such as
spectacles) damaged or lost accidentally. Ex gratia payments are not made in
situations where the loss is fully insured, either by the individual or the County
Council. It may be given for other purposes as well. For example, a lump sum payment
over and above the pension benefits of a retiring employee.

• EXTERNAL EQUITY

It is a measure of an organization’s pay levels or salary ranges compared to that of its

labor market competitors. External equity implies that the employer pays wages that
are competitive with prevailing external market pay rates, as determined by market
pricing.

F----------

• FIXED PAY

It is nondiscretionary compensation that does not regularly vary according to

performance or results achieved. The persons getting fixed pay can expect a fixed
amount at the end of the month as long as they meet the minimum quota.
 • FACTOR COMPARISON METHOD

A job evaluation method in which a series of rankings are performed to assess which
jobs contain more of each specific compensable factor than other jobs being
evaluated The factor rankings of each job are assigned numerical values, weighted
and then added together to determine the total job score.

• FIXED INCREASE AMOUNT

Specified amount of increase based on performance level determined in advance and

unchanging from employee to employee.

• FLEXIBLE BENEFIT PLAN (CAFETERIA PLAN)

It is a plan that provides employees with options to choose among a number of plans
covering several different benefits. They often consist of a “core” package of benefits
(vacations, low option health insurance, etc.) that employees must take. In addition,
an optional package may be offered from which employees can select specific benefits
(high option health, life and long-term disability insurance, extra vacation days, child
care expenses, etc.) that they desire.

• FLEXIBLE WORK SCHEDULE PLAN (FLEXITIME)

It is a work schedule plan that allows employees to determine their own work hours
within generally set parameters. Typically, employees are required to be at work a
minimum number of “core” hours each day (e.g., from 10 a.m. to 3 p.m.), but the
start and end time or total hours worked varies according to employee preference.

• FRINGE BENEFIT

Anything in addition to Guaranteed Cash Compensation i.e. beyond the regular benefit
of being paid for work is Fringe Benefit. 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 rarer. It means compensation due to an employee pursuant to a written
contract or written policy for holidays, time off for sickness or injury, time off for
personal reasons or vacation, bonuses, authorized expenses incurred during the course
of employment, and contributions made on behalf of an employee. In simple terms, it
includes all the monetary and non-monetary benefits beyond salary.

• FRINGE BENEFIT TAX

A tax on benefits that employees receive or enjoy as a result of their employment is

called fringe benefit tax. Fringe Benefit Tax (FBT) is a tax levied on perquisites-or
fringe benefits -provided by an employer to his employees, in addition to the cash
salary or wages paid. Fringe Benefit Tax was introduced in India in the year 2005-2006.

NOTE: Budget 2009-10. Fringe Benefit Tax Abolished

• FLOATING HOLIDAY

A holiday that can vary from year to year, the day on which the holiday is observed
being selected by the employer or the employee

• FUNERAL LEAVE (BEREAVEMENT LEAVE)

It is the Paid time off due to a death in the family.

G----------

• GAIN SHARING

It rewards employees for exceeding a predetermined goal by sharing the extra profits.
If profits exceed the goal, employees share in the extra profits. The focus here is on
the productivity gain rather than on profits of company, meaning that employees in a
gain sharing plan can receive incentive awards even when the organization isn’t
profitable
 • GROUP HEALTH PLAN

A plan that provides medical benefits for the employer’s own employees and their
dependents through insurance or otherwise (such as a trust, health maintenance
organization, etc.)

• GROUP INCENTIVE PLAN

Payment of incentive earnings based on the output of a group of workers (team,

department, etc.) rather than the output of the individual worker.

• GEOGRAPHIC DIFFERENTIALS

These are the Pay differences established for the same job based on variations in costs
of living or costs of labor among two or more geographical areas.

H----------

• HAZARD PAY

Extra pay to an individual worker or a group of workers working under dangerous or

undesirable conditions is termed as Hazard Pay.

I----------

• IN-RANGE ADJUSTMENT

It is to adjust pay within the existing salary range.

 • INTERNAL EQUITY

It refers to the pay relationships among jobs internal to the organization. It is a

standard that fairly establishes a pay level that corresponds to each job's relative
value to the organization

• INCENTIVE (PAY PLANS)

Pay plans designed to reward the accomplishment of specific results and achievement
beyond and above the defined normal job requirements. Awards are usually tied to
expected results identified at the beginning of the performance cycle. The plans can
be individual, group, companywide, or a combination of any. Incentive plans are
"forward" looking; bonus plans look "backward."

• INDIRECT PAY

It includes all forms of nondirect (i.e., noncash) compensation made to employees in

exchange for their contribution to an organization.

• INTRINSIC REWARDS

Rewards those are associated with the job itself, such as the opportunity to perform
meaningful work, complete cycles of work, see finished products, experience variety,
and receive feedback on work results.

• INSURANCE

A method of providing or purchasing protection against some or all of the economic

consequence of a loss is known as insurance. For employee benefits purposes, it is full
or partial coverage for the financial losses and expenses that can result from employee
injury, illness, disability, or death
 • INSURANCE CARRIER

A commercial insurer that underwrites or administers insurance policies or does both

for such programs as life insurance, health care, short-term disability, and long-term
disability benefits.

• INSURANCE POLICY

The contract between an insurance carrier and an insured employer under which the
carrier agrees to pay the policy benefits when specific losses occur, providing the
carrier receives the required premiums. The policy presents in detail the benefit plan
provisions.

J----------

• JOB

The total collection of tasks, duties, and responsibilities assigned to one or more
positions which require work of the same nature and level.

• JOB ANALYSIS

It is the systematic, formal study of the duties and responsibilities that comprise job
content. The process seeks to obtain important and relevant information about the
nature and level of the work performed and the specifications required for an
incumbent to perform the job at a competent level.

• JOB DESCRIPTION

A summary of the most important features of a job, including the general nature of
the work performed (duties and responsibilities) and level (i.e., skill, effort,
responsibility and working conditions) of the work performed. It typically includes job
specifications that include employee characteristics required for competent
performance of the job. A job description should describe and focus on the job itself
and not on any specific individual who might fill the job.

• JOB EVALUATION

It is a formal process by which management creates a job worth hierarchy within an

organization. The two basic approaches are the market data approach and the job
content approach.

• JOB FAMILY

A group of jobs having the same nature of work (e.g., engineering) but requiring
different levels of skill, effort, responsibility, or working conditions (e.g., entry-level
vs. senior engineer).

• JOB GRADE

One of the classes, levels or groups into which jobs of the same or similar value are
grouped for compensation purposes. Usually, all jobs in a grade have the same pay
range. However, sometimes different jobs in the same pay grade have different pay
ranges, due to market conditions for some of the jobs.

• JOB SPECIFICATIONS

A section of the job description that defines what worker characteristics (i.e., the
knowledge, skills and abilities) are required to perform the job for it to be carried out
competently. These characteristics must be bona fide occupational qualifications
(BFOQs).
 • JOB WORTH HIERARCHY

It is the perceived value of jobs in relationship to each other within an organization.

The job worth hierarchy forms the basis for grouping similar jobs together and
establishing salary ranges.

K----------

• KNOWLEDGE-BASED PAY

A system of salary differentiation based on the formal education, related experience

or specialized training a professional employee has that qualifies the individual to deal
with specific subject matter, or work effectively in a specific field. Salary level may
not be dependent on whether the incumbent utilizes the knowledge.

• KSA (KNOWLEDGE, SKILLS, AND ABILITIES)

These include the Common job specifications. Knowledge refers to acquired

information necessary to do the job (e.g., principles of nuclear physics). Skills refer to
acquired measurable behaviors (e.g., autoclave operation). Abilities refer to natural
talents or acquired dexterity (e.g., capacity to lift 200 pounds).

L----------

• LABOR DEMAND

The highest wage an employer is willing to pay for a given level of employment or
number of employees.
 • LIVING WAGE

A wage sufficiently high to permit a worker to keep a given standard of living is

termed as living wage.

• LONGEVITY PAY

A specified increase in hourly pay rate, a lump sum payment, or a form of bonus (e.g.,
government savings bond, add-on to severance pay, etc.) paid to employees based
upon their length of service

• LUMP-SUM PAYMENTS

Complete non-recurring payments consisting of a single sum of money are the lump-
sum payments. These are made to employees in lieu of a general wage rate increases.
The payment may be a fixed amount as set forth in a labor agreement or an amount
determined by a formula. Lump-sum payments are not incorporated into an
employee’s base pay rate or salary.

• LABOR MARKET

It is a place where labor is exchanged for wages. These places are identified and
defined by a combination of the following factors: (1) geography (i.e., local, regional,
national, international), (2) industry, (3) education, licensing or certification and (4)
function or occupation.

• LEAD OR LAG POLICY

It is to match, follow or exceed the market when adjusting pay structures

• LEAVE TRAVEL ASSISTANCE

LTA is paid for meeting travelling expenses incurred by an individual as also family
members (this includes only the spouse, two children and dependent parents, brothers
and sisters) while on holiday in India. The amount of exemption depends upon the
mode of journey. This exemption is available in respect of 2 journeys undertaken in a
block of four calendar years.

• LOWER QUARTILE OR 25TH PERCENTILE

In the case of private sector pay, the term refers to the level that separates the top
75% paying organizations from the 25% lower paying organizations or individuals as the
case may be.

M----------

• MERIT INCREASE

An increase in the wage rate of a worker, usually given on the basis of certain criteria
of worth (e.g., efficiency and performance) is termed as merit increase.

• MERIT PAY

It is a compensation system whereby base pay increases are determined by individual

performance.

• MERIT INCREASE

An increase to an individual's base pay rate based on performance is termed as merit

increase.

• MERIT RATING

A method for appraising the performance of an employee with respect to his or her
job is merit rating. It frequently serves as a basis for making pay adjustments,
promotion decisions, or work reassignments.
 • MIDPOINT

The middle value of the reported salary range or pay grade is the midpoint

• MINIMUM WAGE

Rate of pay, established by law or through collective bargaining, below which workers
cannot be employed, is the minimum wage. It is usually expressed as a daily rate.

• MAXIMUM RATE

The highest rate reported for the salary range.

• MARKET ADJUSTMENT

The adjustment that is necessary for an individual or an organization to bring the

individual or organization to approximate market values.

• MEDIAN

In the case of private sector pay, the term refers to the level that separates the top
50% paying organizations from the remaining organizations or individuals as the case
may be

N----------

• NONCONTRIBUTORY PLAN

An employee benefit plan that is completely paid for by the employer.

 • NONWAGE CASH PAYMENTS

It includes the Nonproduction bonuses and lump sum payments given in lieu of wage
rate increases.

O----------

• OCCUPATION

It is generalized job or family of jobs.

• OCCUPATIONAL RATES

Wage rates (single or rate ranges) for particular occupations in an establishment,

industry, or area.

• ON CALL PAY

Pay received by employees for being ready to report to work if necessary. Employees
receiving on call pay usually are required to be readily available by phone or pager,
within a reasonable distance from the workplace, and able to report promptly to work.

• OUT OF WORK BENEFITS

Payments made by a union to unemployed members.

• OVERTIME

Work performed in excess of basic workday or workweek, as defined by law, collective

bargaining agreement, or company policy.
P----------

• PAY

To remunerate for the effort/work/services done/rendered by a person is termed as

pay.

Also it is defined Compensation made for services or competencies brought to

workplace (usually cash compensation)

• PAIRED COMPARISON

A ranking technique that compares each job being evaluated individually to every
other job in a pair-wise fashion to determine which job has a higher value. Ranks of
jobs are created which can than be pegged to the market via benchmark jobs.

• PROFIT SHARING

It gives the employee a portion of the company profits. Profit sharing is often done
through making shares of company stock part of the employee benefit package. This
type of reward distributes compensation based on some established formula designed
around a company’s profitability. Employees receive a certain number of shares of
stock each year, which provides employees an incentive to help the company succeed.
This might also be accomplished through a yearly profit-sharing bonus.

• PAY ADJUSTMENT

A general revision of pay rises. The adjustment may be either across-the-board, such
as cost-of-living adjustments (COLA), or spot adjustments for increases in prevailing
wage rates.
 • PAY PLAN

A schedule of pay rates or ranges for each job in the classification plan is called a pay
plan. It may include rules of administration and the benefit package.

• PAY POLICY

An organization’s guidelines on how to determine the level of a job-holder’s

compensation; may include a reference to a position in the pay market (e.g., median),
a target pay level, a range of a minimum to a maximum, a defined level of cash
allowances, and eligibility for variable pay.

• PAY GRADE/RANGE

Usually established within an organization, this refers to the levels or hierarchy of job
and pay ranges i.e. range of pay from minimum to maximum. It is also referred to as
the salary structure, job grades, job-evaluation points and or policy lines.

• PAY RANGE WIDTH

The width or spread of a pay range, measured by the ratio: Width = (maximum pay -
minimum pay)/minimum pay.

• PAY STEPS

Specified levels within a pay range. Employees may progress from step to step on the
basis of time-in-grade.

• PERSON-BASED PAY

Compensation programs that base an employee's salary on that individual's skills or

knowledge rather than on the nature of a rigidly defined job. Types include skill-,
knowledge-, and competency-based pay.
 • PAY LEVEL STATISTICS

Any group of statistics that indicate the levels and prevalence of pay practices in a pay
market, including upper quartile, median, lower quartile, average and weighted
average is termed as pay level statistics.

• PERQUISITE/PERKS

Perquisites or 'perks' as they are popularly known is the monetary content of fringe
benefits. Perks are taxable according to Indian tax laws.

A perquisite is any casual emolument, fee or profit attached to an office or position in

addition to the salary or wages. In other words, perquisites are the benefits usually in
kind in addition to normal salary to which the employee has a right by virtue of his
employment/position in an organization. Perquisites are those facilities which the
position carries.

To be considered non-taxable, a perquisite must be a requirement or condition of

employment

Taxable perquisites are defined as any non-cash item of real income provided to an
employee that is not classified as a non-taxable perquisite.

Note: The basic difference between fringe benefits & perquisite is that while fringe
benefits are not clubbed with salary & the tax on the same is paid by the employer,
the perquisites are clubbed under the head "income from salary" & tax accordingly to
employee. Thus while fringe benefits are taxed in the hands of employer, the
perquisite are taxed in the hand of employee himself.

• PAY PERIOD

A pay period is the number of days for which a regular, usually non-salaried employee
gets paid. Salaried employees tend to expect and receive the same pay no matter the
length of the pay period, while workers paid by the hour can have variance in pay
depending upon hours and days worked. Pay periods vary widely and usually are one of
several common systems. You may be paid weekly, bi-weekly, monthly, yearly, or paid
twice a month on specific dates, usually the 1st and 15th of each month.

• PAY SCALE

A pay scale is a document or table designed to determine how much an employee will
earn in his or her job. Many companies have a pay scale set up before hiring new
employees, which they show to prospective employees before hiring them. In this way,
the job seeker can get a good idea of how much he or she can expect to earn while
working for the company or business.

• PAY ROLL

The term 'payroll' encompasses every employee of a company who receives a regular
compensation. Some employees may be paid a steady salary while others are paid for
hours worked or the number of items produced. All of these different payment
methods are calculated by a payroll specialist and the appropriate paychecks are
issued. Companies often use objective measuring tools such as timecards or
timesheets completed by supervisors to determine the total amount of payroll due
each pay period.

• PAID LUNCH (MEALTIME)

It is period of time, normally 30 minutes to one hour, for employees to eat and rest.

• PAID VACATIONS

Time-off from work normally taken in days or weeks that provide employees with a
rest or break from work. The amount of time-off may vary based on an employee’s
length-of-service with the employer or it may be a fixed number of days or weeks. The
time-off is normally paid for at an employee’s normal hourly rate or salary.
 • PAYROLL DEDUCTIONS

Amounts withheld from employees’ earnings by the employer for Social Security, State
income taxes, and other governmental levies, union dues, group insurance premiums,
and other authorized wage assignments.

• PAYROLL PERIOD

Frequency with which workers’ wages are calculated and paid, usually weekly,
biweekly, semimonthly or monthly

• PIECEWORK

Method of wage payment based on the number of units produced, or any work for
which piece rates are paid

• PIECE RATE

Predetermined amount paid per unit of output to worker under a piecework incentive
plan Piece Rate: A direct performance payment based on production by an individual
worker. A payment is made for each piece or other quantity unit of work produced by
an employee.

• PREMIUM PAY

Compensation at greater than regular rate is Premium Pay, i.e. It is the Extra pay,
beyond the base wage rate, for work performed outside or beyond regularly scheduled
work periods.

• PREVAILING RATE (GOING RATE)

Term may be used in varying contexts. It may refer to average level of wages paid by
employers for specific occupations in a community or area; or rate most commonly
paid; or rate paid to most workers; or rate established by union contracts.
 • PROBATIONARY RATE

Trial rate of pay for an experienced and otherwise qualified worker during the initial
period of his employment on a new job in a new plant is the probationary rate.

• PUSH MONEY

Money paid by a supplier of goods or services, directly or indirectly through the

employer, to retail salespeople as an incentive to increase sales of the goods or
services. Department store cosmetics sales persons often receive push money
payments.

R----------

• REMUNERATION

Payment or compensation received for services or employment. This includes the base
salary and any bonuses or other economic benefits that an employee or executive
receives during employment. This term often refers to the total compensation
received by an executive, which includes not only the base salary but options,
bonuses, expense accounts and other forms of compensation.

The term remuneration and compensation are used interchangeably and mean one and
the same.

• REIMBURSEMENT

It is the act of compensating someone for an expense. Often, a person is reimbursed

for out-of-pocket expenses when the person incurs those expenses through
employment or in carrying out duties for another party.
 • RECOGNITION:

Recognition is non-financial and, most significantly, it is the responding to a

psychological need of every individual. In addition to wanting to contribute, we all
need to know our contributions and accomplishments are noticed and appreciated. It
can be viewed as Emotional Income.

An effective recognition process includes specific actions designed to reinforce and

encourage desired behaviors and contributions. These are then acknowledged and
celebrated. Since we are responding to a need, recognition gestures have a high
intrinsic value.

• REWARDS

Rewards are financial incentives intended to direct employee activity towards a

particular outcome. Financial incentives by themselves do not act as motivators. They
work to stimulate and satisfy an employee’s desire for monetary gain. Reward systems
typically allow employees to share in the financial impact of their contribution.
Exclusive financial aspect of Rewards differentiates it from term Compensation which
includes both financial as well as non financial aspects.

• RANGE PENETRATION

The level of an individual's pay compared to the total pay range (rather than compared
with midpoint, as in compa-ratio). Range penetration is calculated as:

RP = (Pay - Range Minimum) / (Range Maximum - Range Minimum).

• RATE RANGE

The lower and upper limits of wage rates paid to workers in an occupation.

• RATE SETTING

Process of establishing wage or piece rates for a job or operation

 • RATE ARRANGED

Where a position has no formal salary range assigned but is assigned a working range
based on it's comparability with other like positions.

• RECLASSIFICATION

It is moving a job to a higher or lower range in the hierarchy of classifications because

of a change in the job duties of the position.

• REWARD SYSTEM

A formal or informal program used to recognize individual employee achievements,

such as accomplishment of goals or projects or submission of creative ideas.

• REAL WAGES

Purchasing power of money wages, or the amount of good and services that can be
acquired with money wages

• RED CIRCLE RATE (OUT OF LINE RATE; FLAGGED RATE)

A wage rate exceeding the formal pay rate or range of rates for a job due to such
factors as the employee’s long service with the company, superior skills, or other
factors.

• REFERRAL BONUS

Money payment made to an employee as a bonus for aiding in the recruitment of

another person hired by the company.

• RELOCATION ALLOWANCE (MOVING ALLOWANCE)

Money paid to an employee to cover the cost of moving from one locality to another as
a result of a permanent change in duty station. Payment may cover costs of moving
personal items, real estate brokerage fees, the loss of money on the sale of the
employee’s residence, or the living costs for a period of time spent looking for a
residence in the new locality

• ROLL UP

Incorporation of cost-of-living allowances or longevity pay into an employee’s regular

base pay rate or salary.

S----------

• SALARY

A salary is an agreed upon amount of pay that is to be extended at regular intervals, in

exchange for the competent performance of specific tasks within the workplace.

Being on salary usually also includes some perks that may or may not be applicable to
wage related work. For instance, salaried positions usually accrue sick days and
vacation days that may be used when needed. Not all hourly positions provide those
types of benefits. Second, being on a salary means that you always know what amount
of money is coming into the household. With a wage, the amount may vary from one
pay period to another.

• SALARY STRUCTURE

The structure of job grades and pay ranges established within an organization refers to
salary structure. The salary structure may be expressed in terms of job grades, job
evaluation points or policy lines

• SALARY RANGE WIDTH

The width or spread of a pay grade range, measured by the ratio:

Width = Maximum pay - Minimum pay

------------------------------------

Minimum pay

• SALARY SURVEY

The gathering of data on wages and salaries paid by other employers for

Benchmark jobs

• SKILL-BASED PAY

A person-based remuneration system based on the repertoire of jobs an employee can

perform rather than the specific job that the employee may be doing at a particular
time. Pay increases generally are associated with the addition and/or improvement of
the skills of an individual employee, as opposed to better performance or seniority
within the system.

• SAFETY BONUS

A Nonproduction bonus paid to employees for maintaining a high level of safety in the
workplace.

• SEVERANCE PAY (DISMISSAL PAY OR ALLOWANCE; TERMINATION PAY;

SEPARATION PAY; LAYOFF ALLOWANCE)

Monetary allowance paid by employer to displaced employees, generally upon

permanent termination of employment with no chance of recall, but often upon
indefinite layoff with recall rights intact. Plans usually graduate payments by length of
service.

• SHIFT DIFFERENTIAL (SHIFT PREMIUM)

Additional compensation (rupees per hour or percentage of day rate) paid to workers
employed at other than regular daytime hours.
 • SIGNING BONUS

A form of lump sum payment provided to employees upon ratification and signing of
the agreement. May also refer to a bonus paid when an employee signs an employment
contract.

• STANDARD RATE

Usually, a uniform rate of pay established for an occupation or craft in an area or

industry through collective bargaining or by law.

• STEP RATES

Fixed levels between the minimum and maximum rates for an occupation in a wage
progression system are referred as step rates. Standard progression pay rates that are
established within a pay range. Step rates usually are a function of time in grade and
are often referred to as "automatic". However, they can be variable or can be used in
conjunction with merit programs.

• SINGLE-RATE SYSTEM

A remuneration policy under which all employees in a given job are paid at the same
rate instead of being placed in a pay range is called Single Rate System. Generally
applies in situations where there is little room for variation in job performance or skill
level.

• STOCK OPTION PLAN

Plan allowing employees or officers the privilege of purchasing company stock (shares)
at a certain price at a time of their own hiring, usually within time limits set by the
employer is stock option plan.
 • STOCK PURCHASE PLAN

Plan enabling employees to purchase stock (shares) in the company, with or without
employer contributions, usually under more favorable terms than are available on the
open market is stock purchase plan.

• SUBSIDIZED COMMUTING

Program where employers subsidize employees’ cost of commuting to and from work
via public transportation, a company sponsored van pool, discounted subway or bus
fares, etc.

• SUPPLEMENTAL PAY

Premium pay for overtime and work on weekends and holidays; shift differential pay;
and non wage cash payments.

• STATISTICAL TERMS

Minimum: The Lowest value in the group when hierarchically arranged

Maximum: The Highest value in the group when hierarchically arranged

Range: The difference between the minimum and the maximum value

Median: The middle value in the group when hierarchically arranged

Arrange the values in an ascending order

In case of Odd number of values- The median is the middle value in the series

In case of Even number of values- The median is the average of the middle two
numbers
Average: The summation of all the values divided by the number of values

Sum of All Values

-----------------------

Number of Values

T----------

• TIERED PAY PLAN

A remuneration system that differentiates salary based on time of hire (i.e., new
employees are paid less than current employees for performing the same or similar
jobs) as well as on nature of work performed.

• TAKE HOME PAY

It includes usually, earnings for a payroll period, less deductions (legal and
authorized); the amount of cash the worker “takes home.”

• TELECOMMUTING

Work at satellite offices or at home using a computer and related equipment that links
the telecommuter to the employer’s main office. The telecommuter may be required
to spend some time (e.g., 1 or 2 days each week) in the main office.

• TEMPORARY RATES

Wage or piece rates set tentatively on new job tasks performed by workers in an
occupation; sometimes called experimental or trial rates.
 • TONNAGE RATE

Pay on the basis of tons of material handled, common in basic iron and steel and coal
mining.

• TOOL ALLOWANCE

Allowance to an employee, paid by the employer, as reimbursement for the cost of

tools and their upkeep, where the employee furnishes his own tools or is responsible
for their maintenance.

• TOTAL CASH COMPENSATION

The sum of all monetary payments made to an individual for services (i.e.,
employment) during a given year.

• TOTAL REMUNERATION

The sum of the financial and nonfinancial value to the employee of all the elements in
the employment package (i.e., salary, incentives, benefits, perquisites, job
satisfaction, organizational affiliation, status, etc.) and any other intrinsic or extrinsic
rewards of the employment exchange that the employee values.

U----------

• UNION DUES

Fee paid periodically, usually monthly, by members of a union, typically as a condition

of continued membership. Each union sets its own dues requirements. Under some
collective bargaining agreements, nonmembers may be required to pay the equivalent
of union dues or a portion as a condition of continued employment.
 • UNION RATE (SCALE)

Minimum rate (hourly or weekly) paid to qualified workers in a specific occupation or

trade under the terms of a union agreement.

• UPGRADING

It is a process of raising the pay level of a job relative to other jobs or of advancing
workers to jobs with higher skills and rates of pay.

• UPPER QUARTILE OR 75THPERCENTILE LEVEL

In the case of private sector pay, the term refers to the level that separates the top
25% paying organizations from the 75% lower paying organizations or individuals as the
case may be.

V----------

• VARIABLE PAY

Variable pay is compensation that is contingent on discretion, performance or results.

Variable pay links employees' earnings to the performance, good or bad, of an
organization, department or unit / section. In a successful period the potential to earn
more could be substantive. However, if performance is poor the workforce has to take
some responsibility for this and ultimately be prepared to face a financial penalty.

Variable pay is used generally to recognize and reward employee contribution toward
company productivity, profitability, team work, safety, quality, or some other metric
deemed important. Some companies will reward the employee even if company is not
performing but if the employee is performing.
W----------

• WAGE RATE

Payment for labor or services to a worker, for a given unit of worktime normally on an
hourly, daily, or weekly basis or by the piece is the wage rate. It is exclusive of
premium payments for overtime, shift differentials, cost-of-living allowances, etc. It is
usually given to employees performing physical work and are generally at low levels of
the job hierarchy

• WAGE DETERMINATION

It is a process of establishing wage rates and wage structures through collective

bargaining, employer determination, arbitration, or other methods.

• WAGE DIFFERENTIALS

Differences in wages among occupations, plants, areas, industries, type of worker,

• WAGE FREEZE

Action taken to freeze all employees at their current wage or salary rate, nullifying
anticipated increases due to longevity pay, merit increases, cost-of-living
adjustments, within-grade pay increases, etc. It is normally taken as a temporary
measure in response to poor sales or a decrease in company profits.

• WAGE PROGRESSION

Plan providing within grade pay increases, generally at specified time intervals or on a
merit basis, for workers in occupations having established minimum and maximum
wage rates
 • WAGE SURVEY

A survey of a labor market to determine the going rates for benchmark jobs

• WAITING PERIOD

It is duration of time between beginning of a benefit qualifying event and the start of
actual benefit receipt. For example, a short-term disability plan may have a 5-day
waiting period before benefits will be paid.

• WELLNESS BENEFITS

Preventive insurance benefits such as payments for annual physical examinations,

health check ups, and children’s vaccinations

• WORKING TITLE

Unofficial job titles that can be used to more appropriately provide clarity for job
postings or convey a message to the outside world of the work performed. Working
titles are permitted if needed for purposes stated above, and as long as the working
title does not misrepresent the authority or the function of the position.

• WAGE GARNISHMENT

When an employer withholds the earnings of the individual in order to pay off some
loans or debts is known as wage garnishing.

• WEIGHTED AVERAGE

An average in which each quantity to be averaged is assigned a weight. These

weightings determine the relative importance of each quantity on the average.