CHAPTER VII WAGE AND SALARY ADMINISTRATION

Transcription

1 CHAPTER VII WAGE AND SALARY ADMINISTRATION 1. Meaning and objectives of wage and salary administration. 2. System of wage and salary payment. 3. Basic pay. 4. Allowances. 5. Respondents opinion regarding success of wage and salary administration from sample unit.

2 One of the most important factor to be taken care of in human resources management is the amount of remuneration to be paid to an employee for a fairway s work. Work is the expenditure of human energy for direct remuneration or pay. Pay in one form or another is certainly one of the main spring of motivate in our society. Wage and salary administration is concerned with establishing and implementing sound policies and practices of employee compensation. It satisfies physical needs of employees and determines social status. In this chapter we shall discuss meaning and objectives of wage and salary administration, system of wage and salary payment, basic pay, various allowances and advances with special reference to PGVCL in following pages.

3 1 Meaning and objectives of Wage and Salary Administrative: A Wage is the remuneration paid for the service of labour in production periodically to an employee / worker. So payment made to labour is generally referred to as wages. Wages also refer to the hourly rate paid to such groups as production and maintenance. Salary normally refers to the periodically rates paid to clerical. administrative and professional employees. So money paid periodically to person whose output cannot be measured is generally referred as salary. Wage and salary are paid as per contract of employment. Wages include basic wage / salary and allowances. Allowances are paid in addition to basic wage to maintain the value of basic wage over a period of time. In India, different Acts include different item under wages. Though all the lets includes basic wages and Dearness allowance under the item wages. E.g. under the Workmen s Compensation Act, 1923, section 2(m) wages for leave period, holiday, overtime pay, bonus, attendance bonus and good conduct bonus form part of wages and under the payment of wages Act, 1936 section 2(vi) any reward of settlement and production bonus, if paid constitutes wages. Wage and salary administration is establishment and implementation of sound policies and practices of employee compensations. Wage policies of different organisations very somewhat. Some organisations pay minimum necessary to attract the required number and kind of labour, while some organisations pay well above the going rates in the labour market. Various factors influence wage and salary structure and administration like govt. legislation and public policy, organisations ability to pay, labour supply and demand, going wages and salaries, cost of living, productivity, trade union s bargaining power, job requirement, management attitude about wage to be paid etc. The basic objective of wage and salary administration is to establish and maintain an equitable wage and salary structure and secondary objective is to establish and maintain an equitable labour cost structure. Generally sound wage and salary administration tries to achieve following objectives. (1) To attract and retain the service of employee. (2) To pay employees according to the content and difficulty of the job. (3) To reward employees according to the effort and merit. (4) To improve employee morale and productivity. (5) To satisfy employee as to how and why they are paid.

4 (6) To facilitate pay roll administration, budgeting and wage and salary control. (7) To simplify collective bargaining. (8) To promote employee organizational flexibility promotion and transfer. Remuneration provides more than a means of satisfying the physical needs-it provides recognition, a sense of accomplishment and determines social status. Hence formulation and administration of wage and salary to attract and retain right personnel in right position is the prime responsibility of the management in any organisation. [2] System of wage and salary payment: Wages if dependent generally on the rates of wages which may be an hourly rate or time rate or based on a piece rate i.e. dependent on worker s output. The time and piece output rate wage plans are the two basic systems. All other plans are simply variation of these two. In this wage system, an employee is paid a define amount of money for a specific period of work. Production of an employee is not taken into consideration to fix the wages. In piece wage system, an employee is paid fixed rate per unit produced of job completed. The PGVCL applies time wage system for payment of wages and salary which includes basic pay, dearness allowance, C.L.A./H.R.A project allowance tribal allowance, bad climate allowance, hotline allowance, charge allowance etc. [3] Basic pay: The basic pay determines many other payment such as allowances, advances and certain fringe benefits. The existing scales of pay of PGVCL employees have been revised from the existing scales of basic pay are shown in table 7.1.

5 Table 7.1 Scales of basic pay Sr.no. Existing Pay Scales Rs. Revised Pay Scale Rs Source : General standing order. Table 7.1 shows that the highest pay scale is Rs & lowest pay scale is Rs various allowances and advances are paid to employees, in line with basic pay. The basic pay differences reflect differences in qualification, experience, physical and mental ability, etc. Generally inequalities in emoluments of employees belonging to same basic pay are not observed-from the survey of respondents belonging to class I and II (From sample unit), percent respondents are agree with success of the objective-eliminating inequalities in pay (please see table no.7.7).

6 [4] Allowance Allowance from an important part of the employees compensation structure. The PGVCL pay following allowance to the employees. 4.1 Dearness allowance 4.2 C.L.A / H.R.A 4.3 Compensatory local allowance 4.4 Other allowance 4.5 Benefits & facilities [4.1] Dearness allowance: Dearness allowance is a device to meet the needs of the employees in the light of price increase. This reduces the purchasing power of the employees. The objective of paying D.A. to employees is to compensate them for the loss in the real earning caused to them by increase in the cost of living from time to time. PGVCL s employees are paid D.A. as per central govt. rules. Rate of D.A. is revised from time to time (Six monthly) with rise in the average of living index, the rate of D.A. applicable from existing rate are presented in table 7.2.

7 Table 7.2 D.A payable to employees [4.2] Date from which applicable From 1/1/2006 From 1/7/2006 From 1/1/2007 From 1/7/2007 From 1/1/2008 From 1/7/2008 From 1/1/2009 Rate of Dearness Allowance on Basic pay + (NPA wherever applicable) No Dearness Allowance 2% of Basic pay 6 % of Basic pay 9 % of Basic pay 12 % of Basic pay 16 % of Basic pay 22 % of Basic pay House Rent Allowance The house Rent Allowance will be paid on State Government rates with effect from and as may be revised from time to time by GOG. Table 7.3 House rent Allowance payable to employee Classification of Cities/Towns Rate of H.R.A. on Basic Pay + (NPA wherever applicable) X (earlier classification A-1) Y (earlier classification A, B1 and B2) Z (earlier classification C & unclassified) 30% of actual basic pay drawn 20% of actual basic pay drawn 10% of actual basic pay drawn Note : The list of Towns / Cities classified shall be as per State Government orders.

8 [4.3] Compensatory Local Allowance The compensatory Local allowances will be paid on State Government rates with effect from 1 st April, 2009 and as may be revised from time to time. Table 7.4 Compensatory Local Allowance Payable to employees. Revised Pay Amount of C.L.A. in class of cities (per month) Scale X (earlier A-1) Y (earlier A, B1, & (B2) and Rs.300 Rs.240 above Below Rs.200 Rs.150 [4.4] Other allowance [1] Leave/LTC etc. The existing rules regarding LTC Encashment, Earned Leave Encashment, Maternity Leave, Paternity Leave, Sick Leave etc. will be as per State Government lines. [2] NPA and Special Grade to Doctors The Doctors will be eligible for NPA and Selection Grade as per State Government rates as may be revised from time to time. Revised N.P.A. will be paid as per GOG. [3] HBA, Vehicle Advance and other Advance The existing limit and guidelines shall continue. However for enhancing the existing limits of these advances a committee would be formed wherein one representative of recognized Union / Association would be include.

9 [4] Food/Festival Advance The existing amount of advance granted shall be continued for employees having revised Basic Pay of less than Rs.20000/-. [5] CONVEYANCE ALLOWANCE TO BLIND & ORTHOPEDICALLY HANDICAPPED EMPLOYEES: The existing allowances being paid to blind and orthopedically handicap employees at the rate of Rs. 100/- pm shall stand revised to Rs. 500/- pm. w.e.f [6] FAMILY PLANNING INCENTIVE: The existing Family Planning incentive shall be paid at the rates and terms as decided by the State Govt. from time to time. The Tribal Allowance and bad climate allowance will be paid on State Government rates as revised from time to time. Following allowances paid over and above the State Govt. norms shall stand revised w.e.f as mentioned in col.no.5. Table 7.5 Family Planning Allowances Payable to employees. Sr. no. Type of Allowance Payable to Existing Rate(basic+ DP) Revised Percentage on Basic (1) (2) (3) (4) (5) 1. Fringe Benefit All employees 10% 8.00(*) 2. Special Allowance All Non-Tech. employees and engineers working in other than Power Stn. & Sub-Station. 5% 3.75

10 Sr. no. Type of Allowance Payable to Existing Rate(basic+ DP) Revised Percentage on Basic (1) (2) (3) (4) (5) 3. Medical- cum- All employees Rs.100/- Rs.100/- p.m. Misc. Allowance p.m. 4. Generation/ Sub- Engineers and Medical 8% 5.50 Stn. Allowance Doctors Working in PS/SS 5. Field / SS/ Gen. Class III/IV Technical 11% 7.75 Allowance employees and Sr. Security Officer /P.O. /IRO / LWO in Power Station & Doctors Working at other than Power Station. 6. Field Allowance JE/DE working in S/Dn. 19% JE/DE working in Dn. 16% /C.O. JE/DE working in Corp. 6% 4.00 office/z.o. EE working in Dn. /C.O. 14% Special Comp. Allowance (power Station) EE working in Corp. Office /Z.O. 5% 3.50 JE/DE working in PS 19% EE and Safety Officer in 16% PS SE/ACE/CE in PS 12% Special Comp. JE/DE working in S/S 19% 13.00

11 Sr. no. Type of Allowance Payable to Existing Rate(basic+ DP) Revised Percentage on Basic (1) (2) (3) (4) (5) Allowance (Power EE working in S/S 16% Station) 9. Shift Charge EE working in Shift in P.S. 5% 3.50 Allowance 10. Transport Allowance To handicapped children of employees Rs.40/-p.m. per child Rs.100/- P.M. per child Note : (i) Fringe Benefit Allowance shall hence forth be drawn in the name of General Facility Allowance. (ii) Existing rules, applicability and guidelines for drawl of above allowances remains unchanged except altered by the settlement entered. (i) The categories of officers i.e. Sr. Security Officer, IRO, Personnel Officer and Labour Welfare Officer working in Power Station including Medical Officer & Asst. Medical Officer working at Vadodara / Rajkot Dispensaries shall only be eligible for Generation Allowance / Field Allowance at the rate of 7.75% of Basic Pay and entitle for 8 Public Holidays in a year. Above officer working at locations other than power station and dispensaries shall be entitled to only special allowance at the rate of 3.75% of Basic pay and holidays at par with other administrative staff with effect from the date of issue of this GSO. However, there shall be neither recovery not payment of appears on this account. A. The existing amount & rules of Kutch allowance, Hotline allowance shall remain unchanged. Charge allowance shall be paid as per rules and regulations of Government of Gujarat in this regard as applicable from time to time.

12 B. (*) An incentive scheme shall be introduced with effect from 01/04/2009 covering 50% amount of the General Facility Allowance and shall be paid in the form of Performance incentive at the end of the Financial Year. Management to give matching contribution of the above amount towards the corpus. Further depending upon company s performance, Management may consider giving higher contribution to corpus to incentive and motivate employees to achieve higher productivity consequently, the rate of General Facility Allowance shall stand revised to 4% from 01/04/2009. C. Within period of one year a performance based Variable pay on individual basis for all Employees/Officers covering pay and allowance will be introduced after working out modalities with the recognized Unions / Associations and appropriate contribution will be provided by the management of the companies. [4.5] Benefits & Facilities: [1] Medical Facilities The existing medical facilities and medical reimbursement scheme will be continued. The levy of Rs.2/- per case for availing facilities in GUVNL s Dispensaries shall be stopped. Matter regarding extending the facility in GUVNL Dispensaries to retired employee/officer or spouse and dependents of compassionate appointee would be examined separately. [2] Workman compensation The employees covered by workman compensation Act,1923 and who meet with an accident arising out if an during course of employment, shall be given 100% reimbursement of medical expenditure and granted special leave for the period of medical treatment. However, in case of employees who are incapacitated due to accident while on duty and sustain 60% & above permanent partial disablement shall have the option of either seeking employment for their dependent as per compassionate appointment norms or a lump sum amount equivalent to the amount of workman compensation, provided the concerned employee resigns. [3] Over Time

13 All eligible employees/workmen defined under the Bombay Shops & Establishment Act and Rules, Factories Act and Gujarat Factories Rules as the case may be, shall be paid the overtime as per applicable rules. Since Engineers are not covered for the purpose of overtime under these Acts and rules, they shall be given Compensatory off when they perform extra hours of work to be utilized within two months. This shall be effective prospectively from the date of issue of GSO. Over time based on revised pay shall be payable w.e.f 01/06/2009. [4] Holidays The officers mentioned in note (iii) of clause no.23.0 and Engineers working in general and rotating shifts in power stations and sub-stations shall be eligible for 8 public holidays in a year. If a public holiday falls on the day of a weekly off / leave, then compensatory off towards the said public holiday shall not be granted. The above arrangement shall come into force w.e.f July, [5] Gratuity The maximum financial ceiling on the amount of gratuity payable will see as per the payment of Gratuity Act, 1972 as amended from time to time. [6] Bonus The Bonus will be paid in accordance with payment of Bonus Act, 1965 [7] Facilities to Union The existing facility of considering union leaders on duty for attending conciliation and court cases shall be continued for general demands and general disputes only and not for individual employees cases. [8] Shoes/Sandals & Socks Employees/officers working in administrative offices for more than two years shall be paid Rs.1000/- at the end of second financial year for purchase of shoes and sandals. Those of the employees working in field, substation and power plants shall be given industrial safety shoes of

14 ISI mark every two years. They shall also the eligible for reimbursement towards purchase of two pair of socks of not more than Rs.150/- per pair every two years. [9] Higher Grade The existing scheme of grant of higher grade as per GSO 334 and its amendments shall continue. Similarly, the benefit of GSO-247, GSO-235 & GSO-43 as available at present shall continue. Any wrongful payment made to employee/ officer pursuant to these orders or any other justified action of the company, being public money, the same shall be recovered in suitable equal installment. Further those of the employees/officers who have been charge sheeted for loss the companies, misappropriation etc. the amount of loss/misappropriation shall be recovered from arrears payment and / or other sources. Such disciplinary action cases shall be finalized preferably within one year from the date of GSO. Respondents opinion regarding encouraging for the best effort to be achieved and to continue with the PGVCL by existing wage and salary policy. An attempt to study respondents view, belonging to class III and IV regarding encouraging for the best effort to be achieved and to continue with the PGVCL by existing wage and salary policy was made by the researcher. The details are presented in table 7.6

15 Table 7.6 Respondents opinion regarding encouraging for the best effort to be achieved and to continue with the PGVCL by existing wage and salary policy (class III and IV) Sr. Respondents No. opinion regarding encouraging for the best effort to be achieved and to continue with the PGVCL by existing wage and salary policy 1. Strongly agree Number of respondents / percentage Head office Rajkot Jamnager Junagadh Porb Andar Amreli (22.22) (8.70) (13.33) (41.67) (12.90) 2. Agree (0.00) (74.08) (52.17) (63.34) (45.83) (67.74) 3. Neither agree nor disagree (0.00) (0.00) (13.14) (3.33) (0.00) (9.68) 4. Disagree (0.00) (3.70) (26.09) (16.67) (12.50) (9.68) 5. Strongly disagree (0.00) (0.00) (0.00) (3.33) (0.00) (0.00) 6. Total Note: Figure in brackets is percentage to total. Source: Questionnaire B, Qu.no. 17. Total 58 (21.02) 166 (60.14) 14 (5.07) 36 (13.04) 2 (0.73) 276

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17 Table 7.6 shows: (1) per cent respondents agree with the existing wage and salary policy encourages them for the best efforts to be achieved and to continue with the PGVCL. (21.02 per cent respondents strongly agree and per cent respondents agree). (2) per cent respondents disagree with the existing wage and salary policy encourages them for the best effort to be achieved and continue with PGVCL. (13.04 per cent respondents disagree and 0.73 per cent respondents strongly disagree.) It can be said that the existing wage and salary policy encourages the employees for the best efforts to be achieved and to continue with the PGVCL. [5] - Respondents Opinion Regarding Success of Wage and Salary Administration: An attempt to study respondents view, belonging to class I and II, regarding success of wage and salary administration was made by the researcher. The details are presented in table 7.7 Table 7.7 shows that: (1) Maximum respondents (85.80 per cent of the respondents) agree with success of the objective-satisfying employees to reduce the incidence of quitting and grievances. (37.65 per cent of the respondents strongly agree and per cent respondents agree). (2) Minimum respondents (53.09 per cent of the respondents) agree with success of the objective-motivating employees to performance better (16.67 per cent of the respondents strongly agree and per cent of the respondents agree). (3) per cent respondents agree with success of the objective-attracting and retaining the services of employees and per cent respondents disagree with success of this objective. (4) per cent respondents agree with success of the objective-facilitating pay-rate administration, budgeting and wage and salary control and 8.03 per cent respondents disagree with success of these objective. Table 7.7

18 Respondents opinion regarding success of wage and salary administration (class I and II) Sr. Objectives of No. wage and salary administration 1. Attracting and retaining the services of employees 2. Facilitating payroll administration, budgeting and wage and salary control 3. Satisfying employees to reduce the incidence of quitting and grievances 4. Motivating employees to perform better 5. Eliminating inequalities in pay Number of respondents / percentage Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree Total (24.69) (57.41) (6.17) (11.11) (0.62) (12.96) (64.81) (14.20) (8.03) (0.00) (37.65) (48.15) (4.94) (7.41) (1.85) (16.67) (36.42) (0.00) (40.74) (6.17) (12.35) (53.70) (12.35) (20.37) (1.23) Note: Figures in brackets are percentage to total. Source: Questionnaire A, Qu.no. 26.

19 (5) per cent respondents agree with success of the objective-eliminating inequalities in pay and per cent respondents disagree with success of this objective. Thus it can be said that the existing wage and salary policy reduces the incidence of quitting and grievances attracts and retains the services of employees, eliminates inequalities in pay and acts as an incentive to exploit potentialities of employees. The researcher made an attempt to gather suggestions from the respondents for making wage and salary administration more effective-from sample unit. The details are presented in table to table as under. Table shows suggestion made by respondents to make wage and salary administration more effective- class I and II. Table shows suggestion made by respondents to make wage and salary administration more effective- class III and IV. Table shows suggestion made by respondents to make wage and salary administration more effective- class I, II, III and IV. Table shows: (1) Maximum respondents (63.59 per cent of the respondents) have suggested-revising existing pay scales in order to make wage and salary administration more effective. (2) Minimum respondents (22.22 per cent of the respondents) have suggested ensuring prompt payment of dues of the employees and not accumulating arrears of payment with a view to make wage and salary administration more effective. (3) According to per cent respondents, the PGVCL should provide job environment, wagesalary and perquisites as of the private sectors and according to per cent respondents, the PGVCL should appoint representatives of employees on the administration of wage and salary plan committees in order to make wage and salary administration more effective. All these observations show that the existing pay scale should be revised in order to improve wage and salary administration. Though presently govt. is progressively taking steps in this regard. Moreover so far as possible, job environment, wage-salary and perquisites should be provided as of the private sectors. Table 7.7.1

20 Suggestion made by respondents (class I and II) to make wage and salary administration more effective Sr. Suggestion made Number of respondents / percentage No. to make wage and salary administration more effective Head office Rajkot Jamnager Junagadh Porb Andar Amreli No opinio n Total 1. Appointing representatives of (3.09) (10.49) (11.73) (9.26) (7.41) (10.49) (47.53) employees on the administration of wage and salary plan committees 2. Revising existing pay-scale (7.41) (9.88) (18.52) (9.88) (6.79) (11.11) (36.41) 3. Ensuring prompt payment of dues (1.85) (6.79) (6.17) (0.62) (3.70) (3.09) (77.78) of the employees and not accumulating arrears of payment 4. Providing job environment, (6.79) (5.56) (16.67) (9.26) (5.56) (12.96) (43.20) wage-salary and perquisites as of the private sector Note: Figures in brackets are percentage to total. Source: Questionnaire A, Qu.no. 27.

21 Table Suggestion made by respondents (class III and IV) to make wage and salary administration more effective Sr. Suggestion Number of respondents / percentage No. made to make wage and salary administration more effective Head office Rajkot Jamnager Junagadh Porb Andar Amreli No opinion Total 1. Appointing representatives (1.45) (10.87) (11.59) (18.12) (8.70) (15.22) (34.05) of employees on the administration of wage and salary plan committees 2. Revising existing pay- (1.45) (15.22) (13.77) (18.12) (14.49) (16.67) (20.28) scale 3. Ensuring prompt (0.00) (4.35) (1.45) (5.80) (4.35) (8.70) (74.35) payment of dues of the employees and not accumulating arrears of payment 4. Providing job environment, (1.45) (13.04) (9.42) (15.22) (6.52) (18.12) (36.23) wage-salary and perquisites as of the private sector

22 Note: Figures in brackets are percentage to total. Source: Questionnaire-B, Qu.No-18.

23 Table Suggestion made by respondents (class I, II, III and IV) to make wage and salary administration more effective Sr. Suggestion Numbers of Respondents / Percentage No made to Total make wage Head Rajkot Jam- Juna- Porb Amreli No and salary office nager gadh Andar opinion administra- tion more effective 1. Appointing representative (2.33) (10.67) (11.67) (13.33) (8.00) (12.67) (41.33) s of employees on the administratio n of wage and salary plan committees 2. Revising existing pay- (4.67) (12.33) (16.33) (13.67) (10.33) (13.67) (29.00) scale 3. Ensuring prompt (1.00) (5.67) (4.00) (3.00) (4.00) (5.67) (76.66) payment of dues of the employees and not accumulating arrears of payment 4. Providing job environment, (4.33) (9.00) (13.33) (12.00) (6.00) (15.34) (40.00) wage-salary and perquisites as of the private

24 Sr. Suggestion Numbers of Respondents / Percentage No made to Total make wage Head Rajkot Jam- Juna- Porb Amreli No and salary office nager gadh Andar opinion administra- tion more effective sector Note : Figures in brackets are percentage to total. Source : Table and Table shows: (1) Maximum respondents (79.71 per cent of the respondents) have suggested-revising existing pay scales in order to make wage and salary administration more effective. (2) Minimum respondents (24.64 per cent of the respondents) have suggested ensuring prompt payment of dues of the employees and not accumulating arrears of payment with a view to make wage and salary administration more effective. (3) According to per cent respondents, the PGVCL should appoint representatives of employees on the administration of wage and salary plan committees and according to per cent respondents, the PGVCL should provide job environment, wage-salary and perquisites as of the private sectors in order to make wage and salary administration more effective. All these observations suggests that the existing pay scales should be revised so far as possible job environment, wage-salary and perquisites should be provided as of the private sector and representative of employees should be appointed in wage-salary plan committee in order to improve wage and salary administration. Thus any remarkable change in the suggestion suggested by class I and II respondents and class III and IV respondents to make wage and salary administration more effective have not been found.

25 Table shows: (1) Maximum respondents (71.00 per cent of the respondents) have suggested-revising existing pay scales in order to make wage and salary administration more effective. (2) Minimum respondents (23.33 per cent of the respondents) have suggested ensuring prompt payment of dues of the employees and not accumulating arrears of payment with a view to make wage and salary administration more effective. (3) According to per cent respondents, the PGVCL should provide job environment, wage-salary and perquisites as of the private sector and according to per cent respondents, the PGVCL should appoint representative of employees on administration of wage and salary plan committees in order to make wage and salary administration more effective. All these observations show that the PGVCL should revise existing pay scale in order to improve wage and salary administration. Though presently govt. is progressively taking steps in this regard. Moreover the PGVCL should provide job environment, wage-salary and perquisites as of the private sectors for improving wage and salary administration.pgvcl applies time wage system for payment of wage and salary which includes basic pay, D.A. and other allowances and monetary benefits as per govt. rules. The findings indicate that the PGVCL s existing wage and salary policy is attracting and retaining efficient personnel, acting as an incentive to exploit their potentialities and encouraging employees to continue with the PGVCL. All these findings clearly indicate that the PGVCL s existing wage and salary policy is quite fair, equitable and sound in line with cost of living index.