Session Two

Compensation & Benefits

Session 2 - Session Plan

Various acts

Motivation Theories and linkages to compensation

Wage Boards & Collective Bargaining

Various Acts

Minimum Wages Act, 1948 Payment of Wages Act , 1936 Employees Provident Fund Act , 1952 Employees State Insurance Act, 1948 Employees Pension Scheme, 1955 The Workmen’s Compensation Act, 1923 The Payment of Bonus Act , 1965 Payment of Gratuity Act,1972

Others related areas:

Collective Bargaining Wage Boards

Payment of Wages Act , 1936

Includes: All remuneration by way of salary or allowances

expressed in terms of money Payable under any award or settlement , on account

of holidays, leave , termination etc

Does not include: Bonus, Value of house accommodation, PF ,

Gratuity, Traveling allowance

To whom does it apply : (employers)

Every person employed in any factory or person employed in an industrial or other establishment.

Beneficiaries under the act: Every person who is employed in any of the

establishments and who is drawing less than Rs. 6, 500 per mth.

Benefits:

Regular and timely payment of wages per industry wise

Penalties :

They are from Rs 500 – 22, 500 . Repeat offences prisonment upto 1 – 6mths

Minimum Wages Act, 1948

Includes :

All remuneration expressed in terms of money including HRA , does not include:

Value of house accommodation, supply of light , water medical , attendance

Any traveling allowance Any gratuity payable on discharge

To whom does it apply: ( Employers)

Any person who directly or indirectly employs one or more employees in any scheduled employment in respect of which minimum rates of wages have been fixed under the Act.

Beneficiaries under the act (Employees): Any person who is employed for hire/ reward to do any

work in a scheduled employment and includes outdoor worker to whom any articles or materials are given for doing some work.

Benefits

The Act prescribes the minimum rates of wages payable to employees for different scheduled employment for difference class or work and for adults – hour, by the day , month.

Penalties : Imprisonment upto 6 mths and / or fine upto Rs. 500

Employees State Insurance Act, 1948 Employees Pension Scheme, 1955 Employees Provident Fund Act, 1952 The Workmen’s Compensation Act, 1923 The Payment of Bonus Act , 1965 Payment of Gratuity Act, 1972

Collective Bargaining

It is a process whereby standards are created to govern labour relations including wages and working conditions.

Level of Bargaining Sectoral Bargaining at National Level Banks, coal ,steel etc They negotiate long terms settlements with the all

India federations

Industry cum Region wide agreements These are common in cotton / jute textiles engineering

and tea.

Decentralised Firm / Plant Level agreements Amicable settlements Charter of demands

Wage Boards

First one was set up by the government in 1957 in the cotton textile industry.

They are set up to provide better climate for industrial relations to represent consumers / public interests.

To standardize wage structure.

To align wage settlements with the social and economic polices of the government

Constitution Tripartite in nature- chairperson, equal no. of

representatives of employees and employees and 2 independent members

Determine wages payable to employees

Behavioural Theories ( Motivation)

Maslow- Physiological, Safety and Security, Belonging, Esteem & Self Actualisation

Herzberg 2 factor theory- Hygiene & Motivation factors

Mc Clelland- n Ach, n Aff & n Pow Alderfer (ERG ) –Existence, Relatedness &

Growth

Vroom’s Expectancy Theory:

Efforts- Perceived probability of success , Valence-Perceived value of reward & Outcome – Probability of receipt of reward.

Equity Theory: When employees feel that what they give ( inputs )

and they receive (outcomes) is similar to what others are giving and receiving equity exists . Employees make comparisons to determine equity in various work situations.

Designing of Compensation Polices- Factors to be considered

Attraction & Retention Internal Consistency External Parity Capacity to pay Pay for performance

Labour cost and productivity

Cost of living ( DA& CCA)

Merit & Seniority Pay Motivation

Team assignment

Background and theory of compensation Compensation Manual / guidelines Compensation Philosophy and policies Compensation Model Compensation for different levels from

Trainees to senior levels

Salary structure and design Employee’s Payslip Reward Management Competency Based Pay Salary audits