Compensation and Benefits
Compensation and Benefits
Compensation and Benefits
NMIMS BlackBoard
Benefits are Non-Wage benefits, such as paid vacations, pensions, health and welfare provisions, life insurance, the cost of which is borne in whole or in part by the employer.
Compensation Overview
Q1: What are the basic goals of any compensation system?
to attract high quality employees to retain high quality employees to stimulate high performance
Compensation Overview
Q3: What are the basic tools of any compensation system?
Wage surveys Job analysis/evaluation Performance appraisal
External:
labor market factors
area wages/cost of living collective bargaining agreements government regulations
* Fair Labor Standards Act (1938)
B. Pay-Structure Decision:
How do we determine differences in pay for various jobs in our organization? Comparison: Employees working on different jobs within the organization
A. Pay-Level Decisions
Wage and salary surveys are one of the major tools used to make external comparisons
Decision points: Which jobs to make comparison for? What is the appropriate labor market? Which organizations to survey?
B. Pay-Structure Decisions:
Pay-structure decisions are typically made in one of two ways:
a. based on attributes of employees: -- knowledge- or skill-based pay
b. based on attributes of the job: -- job evaluation:
the process of determining the relative worth of various jobs within an organization
Use the job descriptions to classify each job into a job grade
C. Individual-Pay Determination:
On what do we base our individual pay determination?
performance seniority ??? (politics, non-job relevant issues)
Equity Issues
Individual Equity: comparisons across individuals in the same job in the same organization
Example: In a retail store, is the pay difference between 2 Assistant Store Managers perceived as fair?
Equity Theory
Alternative names: Market-Based Pay = Market Pricing = Rank to Market Steps for each job title:
Identify the relevant labor market:
Local Regional National International
Weaknesses:
Assumes all jobs with the same job title across different organizations are the same Hard to use for unique jobs Assumes market differences in pay correctly captures internal equity issues
Use the estimated market pay lines to determine the pay ranges for each job (benchmark and non-benchmark jobs) Optional: create pay grades
individuals (BOI):
Up to 1,10,000 Up to 1,45,000 (for women) Up to 1,95,000 (for resident individual of 65 years or above) 1,10,000 1,50,000 1,50,001 2,50,000 2,50,001 1,000,000 1,000,001 upwards
NIL
A surcharge of 10% of the total tax liability is applicable where the total income exceeds Rs 1,000,000.
Profession Tax
Who is liable to pay Profession Tax (a) Every person getting salary or earning wages about Rs.5000/- per month (b) All legal practitioners including solicitors and Notary public standing in profession for more than 5 years in Municipal Area and more than 10 years in other areas (c) Medical practitioners standing in profession for more than two years. (d) Dealers whose Gross Turnover exceeds Rs.1,00,000/-. (e) Agents having annual gross income of Rs.15,001/- or above (f) Estate agents, brokers, promoters, commission agents, and contractors whose business exceeds Rs.1 lakh. (g) clearing agents, customs agents, licensed shipping brokers (h) Owners and lessee of beauty parlors, health resorts, slimming centers, air conditioned hair dressing saloon. (i) Technical and professional consultants, tax consultants, chartered accounts, cost accountants.
Profession Tax
Profession tax is different from state to state. Maharashtra it is: if the salary is less than Rs. 2500 2500- 3500 3500- 5000 5000-10000 10000 & above nil 60/120/175/200/-
Ref: Maharashtra state tax on trade, callings and employment act, 1975
Free/concession ticket to employees Contribution to Superannuation Fund Entertainment Expenditure Provision of Hospitality of every kind to any person Conference Expenditure Sales promotion expenditure Employees' Welfare expenditure Conveyance, Tour & Travel (incld. Foreign Travel) Hotel, Boarding, Lodging facilities Motor Car expenses (including depreciation) Telephone (including mobile phone) Guest House expenses
Festival celebrations Health club & similar facilities Any other Club facilities Gifts Scholarships 50 %
A salary quoted as CTC may include some/ all of the following: ~ Cash component of salary ~ The rental value of the ( Individual/shared) accommodation provided ~ Interest on the deposit paid for your flat ~ Allocated cost of furnishings ~ Company's contribution towards your provident fund ~ Your contribution towards PF ~ And, of course, the taxes that you have to pay