UNIT-IV Wage & Salary Administration

May. 6

Unit-4 Wage and Salary Administration

4.1 Concept of Wage:
Wage and Salary Administration’ refers to the establishment and implementation of sound
policies and practices of employee compensation. The basic purpose of wage and salary
administration is to establish and maintain an equitable wage and salary structure. Wages and
salaries are often one of the largest components of cost of production and such have serious
implications for growth and profitability of the company. On the other hand, they are the only
source of workers’ income.

After the independence and particularly after 1948, some new terms relating to wages began
to be used. These are:

1. Statutory Minimum Wages

2. Basic Minimum Wages
3. Minimum Wages
4. Fair Wages
5. Living Wages

1. Statutory Minimum Wages: It means the minimum amount of wages which

should essentially be given to the workers as per provisions of the Minimum
Wages Act, 1948.
2. Basic Minimum Wages: This minimum wage is fixed through judicial
pronouncement, awards, industrial tribunals and labour. The employers are
essentially to give this minimum wage to the workers.
3. Minimum Wages: Minimum wage means the minimum amount which an
employer thinks necessary for the sustenance of life and preservation of the
efficiency of the worker. According to Fair Wage Committee, the minimum
wages must also provide for some measures of education- medical requirements
and amenities.
4. Fair Wages: Fair Wages is that wages which the labourer gets for his work just
near to minimum wages and living wages. Generally, the current rates of wages
being paid in the enterprise are known as fair wages.
5. Living Wages: According to Fair Wage Committee Report, “The living wage
should enable the male earner to provide for himself and his family not merely the
bare essentials of food, clothing and shelter, but also a measure of frugal comfort
including education for children, protection against ill health, requirements of
essential social needs and a measure of insurance against the more important
misfortunes including old age.”

4.2 Objectives of Wage and Salary Administration:

The main objective of wage and salary administration is to establish and maintain an
equitable wage and salary system. These objectives can be seen in more orderly manner from

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the point of view of the organisation, its individual employees and collectively. There are
outlined and discussed subsequently:

Organisational Objectives:
The compensation system should be duly aligned with the organisational need and should
also be flexible enough to modification in response to change.

Accordingly, the objectives of system should be to:

1. Enable an organisation to have the quantity and quality of staff it requires.

2. Retain the employees in the organisation.

3. Motivate employees for good performance for further improvement in performance.

4. Maintain equity and fairness in compensation for similar jobs.

5. Achieve flexibility in the system to accommodate organisational changes as and when

these take place.

6. Make the system cost-effective.

Individual Objectives:
From individual employee’s point of view, the compensation system should have the
following objectives:
1. Ensures a fair compensation.

2. Provides compensation according to employee’s worth.

3. Avoids the chances of favouritism from creeping in when wage rates are assigned.

4. Enhances employee morale and motivation.

Collective Objectives:
These objectives include:
1. Compensation in ahead of inflation.

2. Matching with market rates.

3. Increase in compensation reflecting increase in the prosperity of the company.

4. Compensation system free from management discretion.

Beach has listed the five objectives of wage and salary administration:
1. To recruit persons for a firm

2. To control pay-rolls

3. To satisfy people, reduce the incidence of turnover, grievances, and frictions.

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4. To motivate people to perform better

5. To maintain a good public image.

4.3 Principles of wage and salary administration:

The main principles that govern wage and salary fixation are three:
1. External Equity

2. Internal Equity

3. Individual Worth.

1. External Equity:
This principle acknowledges that factors/variables external to organisation influence levels of
compensation in an organisation. These variables are such as demand and supply of labour,
the market rate, etc. If these variables are not kept into consideration while fixing wage and
salary levels, these may be insufficient to attract and retain employees in the organisation.
The principles of external equity ensure that jobs are fairly compensated in comparison to
similar jobs in the labour market.

2. Internal Equity:
Organisations have various jobs which are relative in value term. In other words, the values
of various jobs in an organisation are comparative. This relative worth of jobs is ascertained
by job evaluation. Thus, an ideal compensation system should establish and maintain
appropriate differentials based on relative values of jobs. In other words, the compensation
system should ensure that more difficult jobs should be paid more.

3. Individual Worth:
According to this principle, an individual should be paid as per his/her performance. Thus,
the compensation system, as far as possible, enables the individual to be rewarded according
to his contribution to organisation.

Alternatively speaking, this principle ensures that each individual’s pay is fair in comparison
to others doing the same/similar jobs, i.e., ‘equal pay for equal work’.

4.4Theories of Wages:

1. Subsistence Theory: This theory was propounded by David Richardo. Richardo states
that “The labourers are paid to enable them to subsist and perpetuate the race without
increase or diminution.” This theory is also known as “Iron Law of Wages”. According to
this theory, if the wages fall below the subsistence level, the number of workers would
decrease as many of them would die of hunger, disease, malnutrition etc.. This would make
the wage rates go up as labour will become scarce.
2. Wage Fund Theory: This was propounded by Adam Smith. He assumed that wealthy
persons have funds of surplus wealth, as a result of their savings wages are paid out of these
funds. This fund could be utilised for employing labourers for work. If the fund was large,
wages would be high if it was small, wages would be low.

3. Residual Claimant Theory: This theory was propounded by Francis A Walker.

According to Walker, there are four factors of production namely, land, labour, capital and
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organisation. Wages represent the amount of value created in the production which remains
after payment of the other three factors of production namely land, capital and organisation.

4. Surplus Value Theory of Money: This theory was propounded by Karl Marx. According
to Marx, Labour was to be treated as an article of commerce, which could be purchased on
payment of subsistence price. The price of any product was determined by the labour time
needed for producing it. The labourers were not paid in proportion to the time spent on job,
but much less. The surplus, thus created, was utilized for paying other expenses.

5. Marginal Productivity Theory: This theory was propounded by Wicksteed and Clark.
According to this theory wages depend upon the demand for and supply of labour. Wages are
based upon the entrepreneur’s estimate of the value that will probably be produced by the last
or marginal worker. Workers are paid only what they are economically worth.

6. Bargaining Theory of Wages: This theory was propounded by John Davidson.

According to him, wages are determined by the relative bargaining power of workers or trade
unions and of employers. When a trade union is involved, monetary benefits, incentives, job
differentials etc. tend to be determined by the relative strength of the organisation and the
trade union.

4.5 Wage Determination Process:

Wage determination is a complex process. However, wage determination process consists of

the following steps:

1. Job Analysis: Job analysis describes the duties, responsibilities, working conditions and
inter-relationships between the job as it is and the other jobs with which it is associated. It
attempts to record and analyse details concerning the training, skills, required efforts,
qualifications, abilities, experience, and responsibilities expected of an employee. After
determining the job specifications, the actual process of grading, rating or evaluating the job
occurs. The next step is that of providing the job with a price. This involves converting the
relative job values into specific monetary values or translating the job classes into rate
ranges.

2. Wage Survey: In determining the wages for a specific job it is very necessary to work as
to what wages are being given for the same job in other enterprises. Wages for a specific job
are determined below the wages for the same job on other enterprises, following will be its
disadvantages:

1. Good persons and persons of merit will not be available.

2. If such people are not satisfied, they will shift to another enterprise after some time.
It is, therefore, necessary to keep in mind the following in wage-survey:
i) Term of survey, (weekly or monthly)
ii) The whole wage-payment-knowledge of daily working hours or monthly payment.
iii) Definition of jobs.
iv) Appropriate questionnaire for collecting information.
v) Scientific technique of collecting the data.

3. Group Similar Jobs into Pay Grades: After the results of job analysis and salary surveys

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have been received, the committee can turn to the task of assigning pay rates to each job and
jobs are divided into pay rades. A pay grade is comprises the jobs of approximately equal
difficulty or importance as determined by job evaluation and it is essential for the payment.

4. Price Each Pay Grade: The next step is to assign pay rates to pay grades. Assigning pay
rates to each pay grade is usually accomplished with a wage curve. The wage curve depicts
graphically the pay rates currently being paid for jobs in each pay grade, relative to the points
or ranking assigned to each job or grade by the job evaluation. The purpose of wage curve is
to show the relationship between (i) the value of the job as determined by one of the job
evaluation methods and (ii) the current average pay rates for the grades.

5. Fine-Tune Pay Rates: Fine tuning involves correcting out of line rates and developing
rate ranges.
(i) Correcting out of Line Rates: The average current pay for a job may be too high or too
low, relative to other jobs in the firm. If a rate falls well below the line, a pay rise for that job
may be required. If the rate falls well above the wage line, pay cuts or a pay freeze may be
required.

(ii) Developing Rate Ranges: Most employers do not pay just one rate for all jobs in a
particular pay grade. Instead, they develop rate ranges for each grade so that there might be
different levels and corresponding pay rates within each pay grade. The rate is usually built
around the wage line or curve.
6. Wage Administration Rules: The development of rules of wage administration has to be
done in the next step. Finally, the employee is appraised and the wage is fixed for the grade
he is found fit.

4.6 Methods of Wage Payment:

Determination of reasonable wages is a difficult task for the management and so they should
give adequate attention to this area. However, different types of wage payment can be divided
into three parts:
1. Time wage
2. Piece wage
3. Wage incentive plan

1. Time wage: In this type the worker is given remuneration according to time. This type of
remuneration may be per hour, per day or fortnightly per month or per year. There exists no
relationship between the quantum of work and the wage. This type is in operation in all
industries in India. This plan is very simple to understand. Moreover, it is very difficult to
measure the productivity of the workers under this type of plan.

2. Piece Rate System: In this type of plan, a worker gets remuneration according to his
output irrespective of the time he takes in finishing his job. Here, the payment of
remuneration is related to work and not to time. Under this type, the workers are encouraged
to earn more and more. The more the output is, the more the remuneration is. However, this
type of wage payment is not suitable for commodities of artistic taste. Moreover, the quality
of goods goes down.

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4.7 Incentive Payment Systems:

Wage incentive Plan: This type of wage payment is the combination of two types i.e., Time
and Piece wage system. Efforts have been made here to obtain the advantages of both these
types while avoiding their disadvantages. This includes:

a) Halsey Premium Scheme: Under this scheme if a worker gives an output more than the
fixed standard job, he is given about 33% to 50% of the remuneration for that job as bonus.
Here a standard of output is fixed and a standard of time is also fixed for the completion of
that job . If the job of fixed standard is completed with the standard time fixed for the
purpose, the worker gets his fixed wages. But, if he completes the job before the fixed
standard time and, thereby, saves some time, he gets a fixed percentage of his wages for the
time so saved as bonus.

b) Rowan Premium Scheme: This plan is an improvement upon Halsey Plan. Under this
plan, premium is that proportion of the wages for the time taken which the time saved bears
to the standard time. The worker is paid wages at normal rates for the duration he has worked
and is paid extra money in the form of premium on the basis of the time he has saved. Under
this scheme, the standard work and the standard time both are fixed. The wages for the time
saved will increase in the same percentage that is equal to the proportion the time saved bears
to standard time.

c) Taylor’s Plan: Taylor plan is based on wages per unit. In other words, a worker is paid
wages in accordance with his output. Higher price rate is fixed for the workers who give
production over and above the standard workload fixed. The lower rate is fixed for the
workers who give production below the standard workload fixed.

d) Merrick Plan: This plan is somewhat a modified form of Taylor’s plan. This plan offers
three grade piece rates than the two offered in the Taylor’s plan.

I. First limit is for new workers and is very low.

II. Second limit is for workers with average efficiency.
III. Third limit is for very efficient workers.

e) Gantt Plan: This is also a modified form of Taylor plan. In it, wages are fixed on the basis
of time. On the other hand, the efficient workers are given wages per unit. Thus, the workers
who give more output get their wages at enhanced rates.

f) Emerson Plan: This plan is a combination of Taylor, Merrick and Gantt plans. However, a
slight modification in these plans has been made and different rates of bonus have been fixed
under this plan. The amount of bonus increases with the increase in efficiency. These
percentages are as under:
1% bonus on 67.5 efficiency.
10% bonus on 90% efficiency.
20% bonus on 100% efficiency.
20% + 30% extra on bonus on efficiency more than 100%.

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g) Profit-Sharing Scheme: Under this scheme, workers are given a certain percentage of
profits as bonus. But it suffers from one defect. Suppose, there is no profit in a particular
year. Workers will also not be given the bonus for that year.

h) Scalan Plan: Under this scheme, the workers are paid bonus equal to the percentage of
profits earned more than the profits earned last year by the organisation. 15% of the bonus is
deducted and this deduction is deposited in the fund which is distributed among the workers
in the year to come.

4.8Determinants of payment of wages:

The following factors/determinants should be taken into consideration in determining

wage and salary structure of workers:
(i) Labour Unions:
The labour unions attempt to work and influence the wages primarily by regulating or
affecting the supply of labour. The unions exert their influence for a higher wage and
allowances through collective bargaining with the representatives of the management.

If they fail in their attempt to raise the wage and other allowances through collective
bargaining, they resort to strike and other methods where by the supply of labour is restricted.

(ii) Personal perception of wage:

Whether the wage is adequate and equitable depends not only upon the amount that is paid
but also upon the perceptions and the views of the recipients of the wage. Even though the
wage is above the going wage rate in the community if it is lower than that of fellow worker
deemed inferior, it will be regarded as inequitable in the eyes of the recipients of the wage. A
man’s perception of the equity of his wage will undoubtedly affect his behaviour in joining
and continuing in the organisation.

(iii) Cost of living:

Another important factor affecting the wage is the cost of living adjustments of wages. This
approach tends to vary money wage depending upon the variations in the cost of living index
following rise or fall in the general price level and consumer price index. It is an essential
ingredient of long term labour contracts unless provision is made to reopen the wage clause
periodically.

(iv) Government legislation:

The laws passed and the labour policies formed by the Government have an important
influence on wages and salaries paid by the employees. Wages and salaries can’t be fixed
below the level prescribed by the government. The laws on minimum wages, hours of work,
equal pay for equal work, payment of dearness and other allowances, payment of bonus, etc.
have been enacted and enforced to bring about a measure of fairness in compensating the
working class.

(v) Ability to pay:

Labour unions have often demanded an increase in wages on the basis that the firm is
prosperous and able to pay. However, the fundamental determinants of the wage rate for the
individual firm emanate for supply and demand. If the firm is highly successful, there is little
need to pay for more than the competitive rates to obtain personnel.

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(vi) Supply and demand:

As stated earlier, the wage is a price for the services rendered by a worker or employee. The
firm desires these services, and it must pay a price that will bring forth the supply, which is
controlled by the individual worker or by a group of workers acting together through their
unions. The practical result of the operation of this law of supply and demand is the creation
of “going- wage rate”.

(vii) Productivity:
Increasingly there is a trend towards gearing wage increases to productivity increases.
Productivity is the key factor in the operations of a company. High wages and low costs are
possible only when productivity increases appreciably.

4.9 Wage Differentials:

Wage differentials mean differences or disparities in wages. Wages differ in different

employments or occupations, industries and localities and also between persons in the same
employment or grade. One, therefore comes across such terms as occupational wage
differentials, inter-industry, inter-firm, inter-area or geographical differentials and personal
differentials. In other words, wage differentials may be as follows:

i) Occupational Differentials: The reasons for occupational wage differentials can be

varying requirements of skill, knowledge, demand supply situation, degree of responsibilities
etc. In countries adopting a course of planned economic development, skill differentials play
an important role in manpower and employment programmes.
ii) Inter-firm Differentials: Inter-firm differentials reflect the relative wage levels of
workers in different plants in the same area and occupation. Differences in technological
advancement, managerial efficiency, financial capability, age and size of them, relative
advantages and disadvantages of supply of raw materials, power and availability of transport
facilities- those are also accounted for considerable disparities in inter-firm wage rates. Lack
of co-ordination among adjudication authorities, too, are responsible for such anomalies.

iii) Inter-area or Regional Differentials: Such differentials arise when workers in the same
industry and the same occupational group, but living in different geographical areas, are paid
different wages. Regional wage differentials may be conceived in two senses. In the first
sense, they are merely a part of inter-industry differentials in a particular region. In the
second sense, they may represent real geographical differentials, resulting in the payment of
different rates for the same type of work. In both cases, regional differentials affect the
supply of manpower for various plants in different regions.

iv) Inter-industry Differentials: These differentials arise when workers in the same
occupation and the same area but in different industries are paid different wages. Inter-
industry differentials reflect skill differentials.

v) Inter-personal Wage Differentials: These differentials are between workers in the same
plant and the same occupation. These may be due to differentials in sex, skills, age,
knowledge or experience.

4.10 Job Design:

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Job design follows job analysis i.e. it is the next step after job analysis. It aims at outlining
and organising tasks, duties and responsibilities into a single unit of work for the achievement
of certain objectives. It also outlines the methods and relationships that are essential for the
success of a certain job. In simpler terms it refers to the what, how much, how many and the
order of the tasks for a job/s.

There are various steps involved in job design that follow a logical sequence, those that
were mentioned earlier on. The sequence is as follows:

1. What tasks are required to e done or what tasks is part of the job?
2. How are the tasks performed?
3. What amount are tasks are required to be done?
4. What is the sequence of performing these tasks?

The whole process of job design is aimed to address various problems within the
organisational setup, those that pertain to ones description of a job and the associated
relationships. More specifically the following areas are fine tuned:

 Checking the work overload.

 Checking upon the work under load.
 Ensuring tasks are not repetitive in nature.
 Ensuring that employees don not remain isolated.
 Defining working hours clearly.
 Defining the work processes clearly.

The above mentioned are factors that if not taken care of result into building stress within the
employees.

Benefits of Job Design

The following are the benefits of a good job design:

1. Employee Input: A good job design enables a good job feedback. Employees have
the option to vary tasks as per their personal and social needs, habits and
circumstances in the workplace.
2. Employee Training: Training is an integral part of job design. Contrary to the
philosophy of “leave them alone’ job design lays due emphasis on training people so
that are well aware of what their job demands and how it is to be done.
3. Work / Rest Schedules: Job design offers good work and rest schedule by clearly
defining the number of hours an individual has to spend in his/her job.
4. Adjustments: A good job designs allows for adjustments for physically demanding
jobs by minimising the energy spent doing the job and by aligning the manpower
requirements for the same.

Job design is a continuous and ever evolving process that is aimed at helping employees
make adjustments with the changes in the workplace. The end goal is reducing
dissatisfaction, enhancing motivation and employee engagement at the workplace.

Some of the most important methods/techniques of job design are as follows: 1. Work
Simplification 2. Job Rotation 3. Job Enrichment 4. Job Enlargement.

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 Some of the popular methods of job design used are

1. Work Simplification:
Under this method, the job is simplified by breaking it down into small sub-parts. Then, each
part of the job is assigned to a worker who does the same task over and over again. This
enables the worker to gain proficiency and fitness in doing the repetitive task. This increases
worker s productivity, on the one hand, and, in turn, profits, on the other.

2. Job Rotation:
Job rotation implies the moving of employees from job to job without any change in the job.
In case of job rotation, an employee performs different jobs, but of the same nature.

3. Job Enlargement:
Job enlargement involves adding more tasks to a job. This is a horizontal expansion in a job.
By adding more tasks to job, job enlargement expands job scope and gives variety of tasks to
the job holder. For example, a mail-sorter’s job could be enlarged to include physically
delivering the mail to the various departments in the organization.

4. Job Enrichment:
Job enrichment involves adding motivating factors to job. Thus, job enrichment is a vertical
expansion of a job by adding more responsibility and freedom to do it. Fredrick Herzberg
et.al describe job enrichment as that type of improvement in the context of the job which may
give a worker more of a challenge, more of a complete task, more responsibility, more
opportunity for growth, and more chance to contribute his ideas.

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Job enrichment increases job depth, which refers to the degree of control employees have
over their work. Job enrichment can improve the quality of work output, employee
motivation, and satisfaction.

4.11 Job Evaluation:

Job evaluation as evident from the word itself aims at evaluating the job and not the person. It
is a process of evaluating and determining the value of the job for an organisation.

Organisations use various ways to evaluate jobs for arriving upon a compensation scheme.
They vary with the size of the organisation and the kind of industry they operate in. Job
ranking, pair comparison and benchmarking are the various ways of evaluation.

The simpler or the easiest to perform is the job ranking method. In this method the jobs are
taken as a whole and ranked against each other. The jobs are ordered according to perceived
seniority. Such method is easier to apply in a small organisation but gets complicated once
used for large corporations.

The other method is the pair comparison method where jobs are compared in pairs. It is
more structured approach to comparing jobs. Yet another method is benchmarking where
certain jobs are slotted and then examined in detail. These are then used as benchmarks in
evaluating various jobs.

In addition Point Factor Analysis is also used to evaluate various jobs. The method is an old
and tested one. In this method jobs are broken down into various factors such as skills
required, experience, education required. A set of questions is framed against each factor and
the response determines the score. Each factor is allotted a certain weight.

Principles of Job Evaluation

 Definition: Jobs must be clearly defined such that they are identifiable and easily
distinguishable. These jobs must then be part of the job description.
 Evaluation: A job evaluation scheme must be arrived upon and used as a standard
and all jobs in the organisation must be evaluated as per that scheme only.
 Job Understanding: Job evaluators need to have deep insights into the job design
process. They must have a methodical understanding of various tasks involved.
 Concern: Job evaluation must be concerned with the job and not with the person. i.e.
it is the job that has to be evaluated and not the person
 Assessment: The assessment has to be carried out in an acceptable manner and by
competent people. Further, it is based on judgement and is not scientific but can
however be used to make objective judgements if used correctly.

4.12 TYPES OF SOCIAL SECURITY AND WELFARE MEASURES /Fringe

benefits:
Organisations provide a variety of fringe benefits. Dale Yoder and Paul D.Standohar
classified the fringe benefits under four heads as given hereunder:
1. For Employment Security

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2. For health protection

3. For old age and retirement
4. For personnel identification, participation and stimulation
 For Employment security

Benefits under this head include unemployment insurance, leave travel pay, overtime pay,
leave for maternity, holidays, cost of living bonus, lay off pay, retiring rooms, jobs to the
sons/daughters of the employees etc.
 For health Protection
Benefits under this head include accident insurance, disability insurance, health insurance,
hospitalization, life insurance, medical care, sick benefits, sick leave etc.,

 For old age and retirement

Benefits under this category include pension, gratuity, provident fund, old age assistance, old
age counseling, medical benefits for retired employees, travelling concession to retired
employees, jobs to sons/daughters of the deceased employee.
 For Personal Identification, participation and stimulation
Benefits cover under this are anniversary awards, attendance bonus, canteen, cooperative
credit societies, educational facilities, beauty parlor services, housing, income tax, quality
bonus, recreational programmes, stress counseling, safety measures etc.
Robert H.Hoge classified the fringe benefits as follows:
1. Payment for time not worked.

2. Extra pay for time worked.

 Payment for time not worked
Benefits under this category include sick leave with pay, vacation pay, paid rest and relief
time, paid lunch periods, travel time, grievance time , bargaining time etc.

 Extra pay for time worked

This category covers the benefits such as premium pay, incentive bonus, shift premium, old
age insurance, profit sharing and unemployment compensation, christmas bonus, Diwali or
pooja bonus, food cost subsidy, housing subsidy, recreation etc.
 Type of Fringe Benefits
1. Payment for time not worked
2. Employee security
3. Safety and health
4. Welfare recreational facilities

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5. Old age and retirement benefits.

1. Payment for time not worked

a. Hours of work
b. Paid holidays

c. Shift premium
d. Holiday pay
e. Paid vacation.

2.Employee Security
a. Retrenchment compensation: The industrial disputes Act, 1947 provides the payment of
compensation in case of lay off and retrenchment. Non seasonal industrial establishments
have to give one month’s notice or one month’s wages to all the workers who are retrenched
after one year’s continuous service.
b. Lay off Compensation: In case of lay-off, employees are entitled to lay off compensation
at the rate to 50% of the total of the basic wage and DA for the period of their layoff except
for weekly holidays. Lay off compensation can normally be paid up to 45 days in a year.

3.Safety and Health

a. Safety measures: employee safety and health should be taken care of in order to protect
the employee against accidents, unhealthy working conditions. These provisions relate to
cleanliness, disposal of waste, ventilation and temperature, dust and fume, over crowding,
lighting, drinking water, public utility and spittoons.
Provisions relating to safety measures include fencing of machinery, work on or near
machinery in motion, employment of young persons on dangerous machines, striking gear
and devices for cutting off power, easing of new machinery, probation of employment of
women and children near cotton openers, lifting machines, chains, ropes, pressure plant,
floors, excessive weights, protection of eyes, precautions against dangerous fumes, explosive
of inflammable dust, gas etc. precautions in case of fire

b. workmen’s compensation: In addition to safety and health measures, provision for the
payment the compensation has also been under workmen’s compensation Act, 1923. The act
is intended to meet the contingency of invalidity and death of a worker due to an employment
injury or an occupational disease.
c. Health benefits: Today, various medical services like hospital, clinical and dispensary
facilities are provided by organizations not only to employees but also to their family
members. In order to protect the employees’ health, the companies provide the facilities for
physical exercises, sports and games.
Employees state insurance act , 1948 deals comprehensively about the health benefits to be
provided. Benefits under this act are
1. Sickness benefit
2. Maternity benefit

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3. Disablement benefit
4. Dependent’s benefit
5. Medical benefit
6. Voluntary agreements.

 Welfare and Recreational Facilities

Benefits include
a. Canteens
b. Consumer and credit societies
c. Housing
d. Legal aid

e. Employee counseling
f. Welfare organizations and welfare officers
g. Holiday homes
h. Educational facilities
i. Transportation
j. Parties and picnics

k. miscellaneous
 Old age and Retirement benefits
 Benefits include
a. Provident fund
b. Pension
c. Deposit Linked insurance

d. Gratuity
e. Medical benefit
 Non monetary rewards
 In addition to fringe benefits , management provides non monetary rewards like
1. Treats cover free lunches, festival bashes, coffee breaks, picnics, dinner with boss,
dinner for the family, birthday treats.
2. Company watches,, tie pins, diaries/planners, calendars, wallets and T-shirts.
3. Recognition at office get together, suggestions

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4. Office environment covers redecoration, flexible hours, movie tickets, vacation trips,
early time offs etc.

Germany: Social Security was originally introduced in Germany, which includes sickness
insurance, accident insurance, old age pension insurance. These benefits are provided through
Wage Earner’s Sickness Insurance Act,1883, The Accident Insurance Act, 1884 and the
Invalidity and old Age Protection Act,1889.
New Zealand: The Social security benefits in New Zealand include medical care, sickness
benefits, injury benefit, family benefit, maternity benefit, survivor’s benefit.
UK: The Social security benefits in UK include accident benefits, insurance against
unemployment, sickness benefits, health benefits, housing benefits etc.,

USA: Social Security benefits include old age and survivor’s insurance, disablement benefits,
hospital and health care benefits, lay off compensation etc.,
Japan: Social Security measures in Japan include medical care, health insurance, pension,
old age survivor and disablement insurance etc.,

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