COMPENSATION MANAGEMENT

“ALL ABOUT WAGES”

CONCEPT OF WAGE

MeaningImportanceHow its different from compensation, income and salaryTypes of wagesMethods of wage payment

PAYMENT OF WAGES ACT 1936

OBJECTIVES

• Regulating payment of wages

• Imposing fines/deduction from wages

• Laying down `Wage period`

• Time and Mode of payment of wages

• To prevent malpractices by employers.

ScopeThis acts applies to those persons employed

directly or indirectly in1. Factory 2. Railway3. Air Transport Services4. Mines or oil field5. Workshop in which articles are

manufactured or produced6. State / Central Government establishment

CoverageApplies to employees drawing wages upto

6500 Rs.This limit will be suitably increased by

central Government after every 5 years. “Wages means all remuneration expressed in

terms of money and includes remuneration payable under any award or settlement, overtime wages ,wages for holiday and any sum payable on termination of employment (bonus is not included).”

Employer’s Obligations

Fixation of wage period- Daily, Weekly, Fortnightly, Monthly

Time of payment- 7th day after wage period [working day]

10th day [employees more than 1,000]

Mode of payment-Coins and currency notesPayment in Case of Death of Employee – Nominee or

prescribed authority

Returns/Registers and Records-To file annual return by the 15th Feb. of following year.

Permissible Deductions Maximum deductions – 50% ; where

contribution to Cooperatives - 75% Grounds - Absence from duty • Fines• Damages/loss caused• Recovery of Advances• TDS• Employees` ESIC, PF Contributions, LIC• premium• Amenities provided• Court Orders [Recovery]  

THE MINIMUM WAGES ACT 1948

OBJECTIVES • To provide for Minimum wages for certain

employees • To stop exploitation of labour• The acts also provides for maximum daily

hours, weekly rest day and overtime

fixing minimum wages

By The Government-The no. of working hours in day with one or

more intervals.Provide for a paid rest day in every period of

7 daysThe minimum wages rates will be different

for different classes of employees- skilled, semi skilled, unskilled .

Territory of Delhi - Minimum wages

Obligations of EmployersPayment of minimum wages- The employer is

bound to pay to every employees minimum wages.

Wages in cash- wages should be paid in cash.

Overtime Wages-Twice the normal wages.

Payment of Undisbursed amount- On account of death of employee then same shall be deposited to prescribed authority.

Penalties

Payment of Wages less than fixed minimum wages –

Imprisonment upto 6 months or fine upto Rs. 5oo or both

Contravention of any Rule or order – Fine upto Rs. 500

Determinants of wages

Flaws In Indian Wage SystemWages are not decided by market forces

instead they are decided by institutions.

Implementation of laws is not proper.

Wages in organized sector are fix but in unorganized sector in Indian wages are not fixed.

contdPiece wage system should be introduced

instead fix wage system so that competitive prices of products can be introduced.

Organization should revised wage as per market conditions.