Wage and Salary

Administration
Definition and Concept
Wage and Salary administration is
essentially the application of a
systematic approach to the problem of
ensuring that employees are paid in a
logical, equitable, and fair manner and
the terms used are Wage, Salary,
Earnings, Nominal wage, Real wage,
Take home salary, Minimum wage,
Statutory minimum wage, The need-
based Minimum wage, The living wage,
The fair wage, Incentive, Wage rate,
Wage standards.
Definitions
According to ILO , wage is defined as the
remuneration paid by the employer for the services
of hourly, daily, weekly, fortnightly to the employees.
Salary is defined as the remuneration paid to the
clerical and managerial personnel employed on
monthly or annual basis.
TheMinimum Wages Act 1948is anAct of Parliament
concerningIndian labour lawthat sets the minimum
wages that must be paid to skilled and unskilled
labours.
The Indian Constitutionhas defined a 'living wage'
that is the level of income for a worker which will
ensure a basic standard of living including good
health, dignity, comfort, education and provide for
any contingency.
 Fair wage is that level of wage that not just maintains a level of
employment, but seeks to increase it keeping in perspective the
industrys capacity to pay.
Aminimum wageis such a wage that it not only guarantees bare
subsistence and preserves efficiency but also provides for
education, medical requirements and some level of comfort.India
introduced the Minimum Wages Act in 1948,giving both the
Central government and State government jurisdiction in fixing
wages
Statutory Minimum Wage is the amount of remuneration fixed
accordance to the provisions of the Minimum wages Act 1948.
The Need Based Minimum wage is the amount of remuneration
fixed on the basis of norms accepted at the 15 session of the ILC
held at New Delhi in July 1957 and recommended
The cost of three consumption units- husband, wife and two
children for one earner. Income from women and children should
be ignored
Satisfy the minimum food requirement of 2700 calories per
person
Clothing requirement of 72 yards for a family annually
Rent of the minimum area as specified by Governments
Industrial Housing Scheme
20% of minimum wage should be the cost of fuel and
miscellaneous items of expenditure
Nature of Compensation
Compensation is a tool used by management for
safeguarding the existence of the company. Compensa
tion can be of two typesdirect and indirect.
Base pay: It is the basic compensation an employee
gets, usually as a wage or salary.
Variable pay: It is the compensation that is linked
directly to performance accomplishments (bonuses,
incentives, stock options).
Benefits: these are indirect rewards given to an
employee or group of employees as a part of
organizational membership (health insurance,
vacation, pay, retirement pension etc.).
Objectives: Internal Equity, External Equity, Individual
equity
Attract talent, Retail talent, Ensure equity, New and
desired behaviour, Control costs, comply with legal
rules, Ease of operation.
Equity and Pay rates:
The need for equity is the most important
factor in determining pay rates. This is
achieved through the followings steps:
1) Find the worth of each job through job
evaluation.
2) Conduct a salary survey to find what
other employees are paying for comparable
jobs.
3) Group similar jobs in to pay grades.
4) Price each pay grade by using wage
curves.
5) Fine tune pay rates.
Components of Pay
structure in India
Wages
Basic wages
Dearness allowance
Factors influencing
compensation levels
Job needs
Ability to pay
Cost of living
Prevailing wage rates
Unions
Productivity
State Regulation
Demand and Supply
Wage Policy
Minimum Wages Act 1948
The payment of wages act 1936
Adjudication of wage disputes
Wage boards
Pay commissions

Bonus The payment of Bonus Act 1965

Wage differentials
Internal and External pay
Fixed Vs Variable pay
Performance Vs Membership
Job Vs Individual pay
Below Market Vs above market
compensation
Open Vs Secret pay