Wage and Salary

Wage
“It is the remuneration paid by the employer
for the services of hourly, daily, weekly and
fortnightly employees”.

- Paid to Blue-collar workers

- Paid for the jobs which can be measured in
terms of money’s worth.
 Salary

It is the remuneration paid to the clerical and

managerial personnel employed on monthly
basis.

- Paid to White-collar employees

- Paid to employees whose contribution
cannot be easily measured.
 Compensation
Compensation is what employees receive in
exchange for their contribution to the
organization.

Total Compensation =
Direct Compensation + Indirect Compensation

Basic Pay Incentives Benefits

 Objective of Wage and Salary Administration

• To acquire Qualified Competent personnel

• To retain the present employees
• To secure internal and external equity
• To keep the Labour and Administration costs in line
with the ability of the organization to pay
• To simplify Collective Bargaining procedures and
negotiations
• To promote organization feasibility
 Basic
Salary
Medical
Reimburse House
ment Rent
Allowance

DIRECT
Conveyance COMPENSATION

Special
Allowances

Leave
Travel
Allowance
Bonus
 Leave
Policy
Overtime
Allowance Flexible
Timings

INDIRECT
Hospitaliza
COMPENSATION Holiday
tion
Homes

Retirement
Benefits Insurance
Leave
Travel
Factors affecting Wage and Salary

• Remuneration in Comparable industries

• Firm’s ability to pay
• Productivity
• Cost of Living
• Union pressure and strategies
• Government Legislations
 Wage Legislations in India
Payment of Wages Act, 1936 – prohibits any delay or withholding of wages

Industrial Dispute Act, 1947 – Authorizes all state govt. to set up Industrial
Tribunes that would look into disputes relating to remuneration

Minimum Wages Act, 1948 – Fixation of minimum rate of wages for workers

Equal remuneration Act, 1976 – Prohibits discrimination in remuneration on

the basis of religion, gender etc.

Payment of Bonus Act, 1965 – Profit sharing with the workers

Wage Board
 System of Wage Payment
 Time Rate:-
Wages are paid as per the time spent by the employee
at the work-place. Efficiency, sincerity and ability is
not paid any attention. All employees are paid at one
and the same rate.

 Piece Rate:-
Wages are paid as per the output or production given
by the employee. Wage rate is fixed as per piece of
work or for certain quantity of production.
 Concepts of Wages
• Minimum Wages :- It must provide not only for sustenance
of life but for the preservation of the efficiency of the employees
by providing some measures of education, medical care, etc.

• Living Wages:- It is not only for the bare essentials for

employee and his family but also for comfort, protection against
illness, social needs and insurance for old age.

• Fair Wages:- It is in-between Minimum wages and Living

wages, but below living wages.
 Fringe Benefits

 Fringe Benefits are monetary and non

monetary benefits given to an employee
 it is given during and post employment
period
 It is connected with employment but not the
contribution of the employee.
 Main Features

 They are paid to all employees

 They are indirect compensation

 They help raise the living condition

 They may be voluntary

 Types of Fringe Benefits
 Payment for time not worked:
Sick leave with pay, paid vacation, paid
lunch period
 Statutory Fringe Benefits:
The Employee’s State Insurance Act, 1948
The Employee’s Provident Fund Act, 1952
The Maternity Benefit Act, 1961
The Payment of Gratuity Act, 1972
 Payment for Employee Service:
cafeteria subsidies, house financing, parking space
operations

 Payment for Special Duties:

working on grievance redressal procedures and
labour contract negotiations

 Payment for Health and Security benefits:

retirement plans, profit-sharing plans, medical and
hospital insurance, accident and sickness insurance,
old age and survivor insurance
 Objectives of Fringe Benefits

• To create and improve sound industrial

relations.
• To motivate the employees
• To provide security to the employees
• To promote employees’ welfare
• To protect the health of the employees