HUMAN RESOURCE MANAGEMENT

EMPLOYEE COMPENSATION

ELEMENTS OF SALARY AND SALARY DEDUCTIONS

An employee is a person who is employed by an enterprise or another individual under a labor

contract or an oral agreement to perform work or offer a service for remuneration. The party
requesting the services of, or, who puts to work the employee is called the employer who
could either be an enterprise or another individual.
Workers receive pay either on a monthly basis called salary or paid wages based on
performance. The essential difference between salaries and wages is that salaries are paid as a
fixed amount per month while wages are usually calculated as a fraction of hours put in or out
put. Wages are calculated based on the pay rate per hour or per task multiplied by the number
of hours put in or task completed.
All expenses incurred by an enterprise in relation to payment of employees are referred to as
personnel expense. Personnel expense is composed of the following elements:
- Basic Salaries
- Overtime Pay
- Bonuses
- Indemnities
- Allowances
- Commissions
- Exceptional elements
- Benefits- in- kind
The sum of these expenses is what makes up the Gross salary of a personnel.

a) Basic Salary

Basic salary is the amount of remuneration agreed upon by the employer and the employee in
a labour contract to be paid for work done or to be done, or for services rendered or to be
rendered. The amount to be paid as basic salary could be determined by regulatory provisions
or mutual agreement whether documented or undocumented. Most often, legal provisions fix
the basic salary for each categories of workers. Workers according to legal provisions on the
salary sale differ in terms of category or echelon.
Legal regulations in Cameroon stipulate that monthly salary paid to a worker should not be
less than 36,270fcfa irrespective of the nature of job and allows private enterprises to enter
into free negotiations with their employees.
Salaries must be paid at regular intervals which should be 15days for hourly workers and a
month for monthly workers. Monthly salaries should be paid at most 8 days after the end of
the month and employers should mandatorily give a worker pay-slips which shows details
elements of the calculation made to arrive at the salary paid. Employers are also mandated to
provide at least 24 hours of rest to a worker per week, which could be weekend and must not
be replaced by money.
The legal duration of work in Cameroon is 8 hours a day and 40 hours a week for a normal
system. However, certain sectors due to their peculiarities have their normal weekly hours
fixed as in the table below:

1
Nature of Work Monthly hours
- Hospital personnel, 45
- sellers in petrol stations,
- Hair Dressers of beauty salon and
- Laundry services in hotel and restaurants

Agricultural sector 48
- Personnel bar, 50
- hotel reception and
- room
-Domestic servants, 54
- off- licence sellers
- snack bars and
-Coffee palours
-Night watch, day watch and fire brigade 56
The duration for work under the normal system is 173.333hours gotten as:
40 hours x 52
= 173.333hours
12
Legal provision also holds that, for all civil public holidays and religious public holidays
workers are entitled to:
- Be paid for those who are paid for the month and do not work on that day
- Be paid double for those who are paid for the and work that day.

b) Overtime pay.
Overtime hours is the hours a worker puts in a week or month in excess of the normal legal
working hours per week or month. Overtime hours are remunerated at a rate higher than the
normal hourly rate of the worker. In the normal system a worker cannot work more than 20
overtime hours per week. Therefore, as per the normal system, a worker can only work for a
maximum of 60 hours per week.
Overtime hours as per legal provisions are remunerated at an increasing rate over the normal
rate as follows:
Overtime Hours Increase rate by
From 41th – 48th hours 20%
From 49th – 56th hours 30%
From 57th – 60th hours 40%
Sunday work 40%
Religious public holiday 40%
Civil public holiday 40%
Night work starting from 10:00pm to 6:00am 50%

Note that overtime hours are not prolongation hours or recovery hours.
Prolongation hours are authorized hours in case of specific constraints or preparatory work
which cannot be executed during normal working hours. Examples emergency work
performed to avoid accidents, loss of product or technical piece of work which cannot be
stopped abruptly because of time limitation.
Recovery time is time worker need to put in so as to make up wasted hours due to
circumstances beyond control such as machine breakdown, unforeseen material shortage,
disaster etc. Recovery or wasted hours is normally performed during breaks or free periods.
The base of calculation of over time is basic salary plus efficiency allowance if any.
2
Exercise 1
Jude is a worker with Guinness, with hourly rate of 3000frs. In the month of April 2020, his
time sheet had the following information;
Week 1: 52 hours and 3 hours good Friday
Week 2: 47 hours and 2 hours night work
Week 3: 60 hours
Week 4: 38 hours and 6 hours on Sunday

Required:
a) Present Jude’s overtime computation table
b) Determine:
i) His basic salary
ii) His overtime pay
iii) His gross salary
iv) His overtime premium

Solution
a)
Week Normal overtime Total
Hours 20% 30% 40% 50% Hours
1 40 8 4 3 0 55
2 40 7 0 0 2 49
3 40 8 8 4 0 60
4 40 0 0 4 0 44
Total 160 23 12 11 2 208
Hourly 3000 3600 3900 4200 4500
Rate
b.) I)
Basic Salary = 160hours x 3000= 480,000frs
ii.) Overtime pay= (23x3600) + (12x3900) + (11x 4200) + (2x4500)
= 82,800+ 46,800 +46200+ 9000= 184,800
iii.) Gross Salary = Basic Salary + overtime
= 480,000 + 184,800 = 664,800frs
iv.) Overtime premium
Overtime premium is the difference between total overtime paid and overtime at
normal rate
Overtime at normal rate = total OT hours x 3000frs= 48hours x 3000 = 144,000
Overtime paid = 184,800frs
Overtime premium = 184,800frs – 144000frs = 40,800frs.

Assignment: what is the importance of OTP