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Components of Pay Structure in India 1. Wages Payment of Wages Act, 1936 Section 2 (vi) any reward of settlement and production bonus, if paid, constitutes wages. Minimum Wages Act, 1948, retrenchment compensation, payment in lieu of notice and gratuity payable on discharge constitute wages. Wages- The amount paid by the employer for the services of hourly, daily, weekly, fortnightly to employees
WAGES Contd
Remuneration of following kind do not constitute wages under any of the acts: (i) Bonus or other payments under a profitsharing scheme which do not form a part of contract of employment of a workman. (ii) Value of any house accommodation, supply of light, water, medical attendance, travelling allowance, or payment in lieu thereof or any other concession.
WAGES Contd
III.
IV.
V.
Any sum paid to defray special expenses entailed by the nature of the employment of a workman Any contribution to pension, provident fund, or a scheme of social security and social insurance benefits Any other amenity or service excluded from the computation of wages by general or special order of an appropriate governmental authority
Recommended by the Fair Wages Committee (1948) and the 15th Indian labour Conference (1957) Awards by wage tribunals, wage boards, pay commission report and job evaluations serve as guiding principles in determining basic wage.
(vi)
Basic wage is decided on the basis of following criteria: Skill needs of the job; Experience needed; Difficulty of work: mental as well as physical; Training needed; Responsibilities involved; Hazardous nature of job.
Objectives A sound plan of compensation administration seeks to achieve the following objectives: To establish a fair and equitable remuneration offering similar pay for similar work To attract qualified and competent personnel
Objectives To retain the present employees by keeping wage levels in tune with competing units To control labour and administrative costs in line with the ability of the organization to pay To improve motivation and morale of employees and to improve union-management relations To project a good image of the company and to comply with legal needs relating to wages and salaries
Principles 1. Should be sufficiently flexible 2. Job evaluation must be done scientifically 3. It must be always consistent with overall organizational plans and programs
WAGE DIFFERENTIALS
Differentials in wages are inevitable in any industry. Wage differentials perform important economic functions like labour productivity, attracting the people to different jobs. Since workers are mobile with a view to maximizing their earnings, wage differentials reflect the variations in productivity, efficiency of management, maximum utilisation of human force