Chapter 3A

Pay and allowances

It is of utmost importance to develop a sound wage and salary

scheme to attract capable employees, motivate them toward
better performance and retain them. Fair and equitable
compensation for each hospital employee should be the objective
of the wage and salary administration programme. The way in
which this function is discharged varies depending upon policies,
size and other characteristics of the hospital. Hospital authorities,
particularly those of charitable hospitals, have recently realized
that the salaries paid to employees in hospitals are less than
those paid for similar occupations in industries. In an increasing
number of hospitals, this recognition has resulted in reconstitution
of pay scales and allowances, improvement of working conditions,
fringe benefits, etc. The bread-winning motivation need not
replace the service ideal in hospital employment; but in an
analysis of the motives which determine an individual’s choice of
a job, the wages paid is an important, if not the most important
involved. Its purpose is to establish within the hospital wage levels
comparable to that prevailing in the community for similar work
and to establish a periodic salary review system so that
adjustments may be effected whenever indicated.
 Meaning Of Wage and Salary Administration
To the hospital
To the hospital, wage and salary administration means:

1. Fair and equitable wages and salaries for all employees

2. A basis for establishing, developing and maintaining good
employee relations
3. Development and maintenance of good employee morale
4. A basis for facilitating control over expenditure on wages and
salaries.

To the patients
To the patients it means

1. Better service to patients and their families by hospital

employees, who enjoy their job and are happy with their work.
2. Lower hospitalization costs, resulting from a higher degree of
employee efficiency.

Payment made to compensate labor for the work done is

generally termed as wages. Money paid periodically to persons
whose output cannot easily be measured, such as clerical staff,
supervisory and managerial staff is termed as salaries.
 Hospital’s ability to pay

The ability of the hospital to pay the rates prevalent in comparable

hospitals is an important consideration. If a hospital pays less, it
will find it difficult to attract and hold employees. If a hospital can
pay more, it can attract, retain and motivate its employees.

Obligations of the management

1. The management must fix a time to pay wages and salaries.

2. This period must not be longer than one month.
3. The payment should be made on the working day and within
working hours.
4. The payment should be made in cash or by cheque if the
employee consents to it.
5. The payment should be made in full without any deductions
except those authorized by law.

The following deductions can be:

1. Fines
2. For absence from duty
3. For damage or loss of goods
4. For house accommodation
5. For amenities and services provided
6. For the recovery of advances and adjustment of overpayments
7. For the recovery of loans taken from provident fund
8. For income tax
9. By order of the Court
10. For life insurance scheme

These deductions can be made in the manner and to the extent

provided in the Act. No other deductions are permissible.

Wages And Salaries Paid For Similar Work In The

Community:
This is one of the most important factors influencing wages and
salaries policy formulation. The hospitals compete with other
employers for the available labor force. If the supply and demand
for labor is in balance and if a competent staff is to be retained, it
is necessary that hospitals pay wages which are comparable to
those being paid for work of a similar nature elsewhere in the
community. Paying adequate competitive wages can result in
actual monetary saving to the hospital, if an efficient worker who
is able to do more and better work in less time with less
supervision is employed. Payment of salaries that are lower than
those prevailing in the area might result in a higher total payroll,
since more employees and more supervisors will be required due
to low efficiency. The quality of work will also be sub-standard.
Regulations Established By Employees and Their
Unions/Associations through Negotiations:
Regulations established by the unions through negotiations with
the management affect the wage and salary bill of the
hospital. Subject such as leave, pay scales, allowances, fringe
benefits, working conditions, overtime rate etc. are frequently
included in the agreements with the unions and professional
associations.

The Hospital’s Financial Position:

The hospital’s financial position is a major factor in the
establishment of a wage and salary plan. It obviously imposes a
limit on the payroll costs which the institutions can incur. The
following factors should be considered in connection with this
problem:

1. One of the major objectives of a wage and salary study is to

create the proper relationships among the positions in the
hospital.
2. A study of duties performed in various positions may enable
the hospital to spend the money available for wages and
salaries more wisely.
3. If the wage and salary plan indicates a need for overall
increase in wage and salary, this fact should be clearly
 understood and a basis for budget revision be firmly
established.
4. In no case should the study of wage and salary be stopped
on account of non-availability of funds. In the absence of
such study, the hospital might start losing its most valuable.
asset-its personnel.

On the contrary, the completion of a study covering such matters

for the institution as a whole will provide the basis upon which
more consistent and intelligent decisions can be taken.

Availability of Qualified Hospital Personnel:

This is an important factor. A hospital may sometimes be forced
to pay to a person a salary which is above the market value. This
type of problem exists mainly in positions filled by highly skilled
employees. If the study indicates a pay rate for a give job
classification, and if this rate is not adequate to attract suitable
employees, it is advisable to make a temporary adjustment in the
rate which will enable the hospital to fill the necessary positions.
The rate can later be reduced to the level indicated by the study,
as and when a competitive situation arises.

Building the Wage and Salary Structure

It is very important to build a wage and salary structure for the
hospital. The matter of primary importance in developing such a
structure for a hospital is:
1. Establishing the jobs to be performed, describing their content
and the duties and responsibilities of employees assigned to
them.
2. Studying and analyzing each job to determine the standard of
performance necessary for its successful completion and the
qualities which the person should possess.
3. Evaluating each job to determine the relative value in relation to
all other jobs performed in the hospital.
4. Classifying the jobs into groups which possess similar

characteristics and establishing a wage level for each group.