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Components of Pay Structure
Components of Pay Structure
1- Basic wage/salary
Hard variables
Salary
Augmented pay- overtime, extra pay, one time stuff
Indirect pay –things needed for work, uniform allowance, etc.
Parks pay – discount on company’s products, etc.
Soft variables
Opportunity for advancement
Opportunity for growth
Psychic income – doing personally meaningful work
Quality of life – workplace flexibility, work-life balance
The X-factor- special individual variables like bringing a dog to work.
1. Basic Wage
The basic wage provides the foundation of pay pocket. It is a price for
services renderd. It varies according to mental and physical requirements of
the job as measured through job evaluation. In India, basic wage has been
influences by statutory minimum wage, wage settlements, and awards of
wage boards tribunals pay commissions, etc.
A fair wage is something more than the minimum wage providing the bare
necessities of life. While the lower limit of the fair wage is sety by the
minimum wage, the upper limit shou7ld be the capacity of the industy to
pay. Between these two limits, fair wage should depend on several factors
like-
The productivity of labour.
The prevailing rates of wages in the same or similar occupations in the
same region or neighbouring regions,
Level of national income and its distribution,
The place of the industry in the economy of the country, and
The employer’s capacity to pay.
Thus , the fair wage should be determined on industry cum region basis.
Fair wage is a step toward the ideal of living wage. The objective should be
not merely to determine wages which are fair in abstract but also to ensure
that employment and efficiency of the industry is maintained and if
possible increased.
FLATE RATE:-
In this method a flat rate per point of index is prescribed so that all workers
determine the same amount of D.A. irrespective of their scale.For example, if
Rs. 1.50 is the rate Rs.15 will be paid as D.A. whenever all India Consumer
Price Index (AICPP) increases by 10 points. This method is in force in tt cotton
mills of Mumbai and Chennai and in many central GOV. undertakings.
Under this method, a higher rate of D.A. is prescribed for lower pay scales
and and a lower rate fore higher pay scale.This method is used to pay D.A. to
employees in Gov. offices and in many central public sector undertaking.
Acting
Bank Allowance
Education Allowance
Medical Allowance
Tiffin Allowance
3. Bonus
4. Fringe benefit
A brod range of benefit and services are provided by an employer to his employ
in addition to wage and salary. These are based on critical job factors and
performance. These represent indirect compentation. These are no longer fring
as these constitute a significant part of total comensation package and
substantial labour cost for employer.
Criteria