This explains about wage and salary administration, methods of wage and salary payment and legal frame work of wage and salary administration

1. SEMINAR
WAGE AND SALARY
ADMINISTRATION
Lijin Mathew
MBA
MCMAT

2. Why wage and salary administration
in an organization
 Main objective is to have a scientific, rational and balanced
wage & salary structure
 In salary administration, the employer should not feel
employees are getting more money than they deserve and
employees should not feel they getting lower money than
they deserve
 Wage and salary administration includes allowances, leave
facilities, housing, travel, etc. and non-cost rewards such as
recognition, privileges and symbols of status

3. Objectives
 To establish fair and equal compensation
 To attract competent personnel
 To retain the present employees
 To control labor and administrative cost
 To improve motivation and morale of employees
 To project good image for the company

4. Principles of wage and salary
administration
 It must be flexible
 Job evaluation must be scientific
 It must consistent with overall plan of the organization
 It must be according to the social and economic objective
of the organization
 It must change according to the local and national
conditions
 It must simplify and speed up the administrative process

5. Difference between wage, salary
and compensation
 Wage : Paid to blue-collar workers- paid daily, weekly or
monthly- paid for the jobs which can be measured in
terms of money’s worth to some extent
 Salary : Paid to white collar workers-paid monthly- paid
to employees whose contribution cannot be easily
measured
 Compensation : a comparative term- includes wage and
all other allowances and benefits like allowances, leave
facilities, housing, travel and non-cost such as recognition,
privileges and symbol of status

6. Types of compensation and wages
 Compensation
 Base compensation : Payment made to employees in
the form of wage and salaries, It is a fixed and non-
incentive payment based on the basis of time spent in
the job
 Supplementary compensation : Incentive payment
based on the actual performance of employee

7.  Wages
 Minimum wage : Compulsory wage paid to employees
irrespective of the financial status of the organization. It
should be calculated based on the minimum food
requirements, cloth requirements, rent to live in a
particular area, standard of a working class family and
fuel, lighting and other needs
 Fair wage : Wage above minimum and below living
wage. It is decided based on productivity of labor,
prevailing rates of wages, level of national income and
the capacity of employer to pay
 Living wage : It provides basic needs of life. It should
meet medical, education and retirement needs and it is
paid according to the efficiency of worker

8. Factors influencing wage and
salary
 Wage policy of the company
 Job needs
 Ability to pay
 Cost of livings
 Prevailing wage rates
 Unions
 State regulations
 Demand and supply of labor
 Economic conditions of the nation

9. Methods of wage payment
1. Time wage system : The workers id paid based on the
time spend on the work irrespective of the work done. It
may be based on hour, day, week or month worked. It is
the oldest method of wage payment
 It is issued in following kind of orgns
 Quality is more important than quantity
 Measurement of work is not easy
 Work requires high degree of skill and dexterity
 When efficiency of work can be measured only by close
supervision

10.  Merits
It is simple to understand and easy to operate
Workers are assured of guaranteed minimum wage
irrespective of output
Suitable for beginners
It is advocate by trade unions
 Demerits
It do not make any differentiation between efficient and
inefficient workers
It does not have provision for offering incentives to
efficient workers
Management should spend more on supervision
The system is unfair as wage and productivity are not
correlated

11. 2. Guaranteed time rates : The wage is paid according to the time rate
and its adjusted according to the cost of living.
3. Piece rate system : The workers are paid at a stipulated rate for per
unit of output. Payment is based on speed,
 This method is applicable
 Quality of work is not important
 Work is of a repetitive nature
 There is sufficient demand for output to guarantee continuous work

12.  Merits
 It provides encouragement for high productivity
 The workers will adopt better and more efficient methods
 Idle time will be reduced to minimum
 The cost of supervision is less
 Types of piece rate system
a) Straight piece rate system : Paid according to fixed amount per fixed
units produces irrespective of time taken
b) Piece rate with guaranteed time rate: Workers are paid minimum
on the basis of time rate plus paid for number of units produced
c) Differential piece rate system : The rate per piece is increased as the
output level gets increased. The increase in rates may be proportionate
to the increases in output

13. Legal frame work on wages
 The payment of Wages Act 1936
 The minimum wages Act 1948
 The companies Act 1956
 The payment of Bonus Act 1965
 The equal remuneration Act 1976

14. Thank you………..