A company must formulate its wage and salary policy in an
integrated manner by taking into account the overall objectives of setting
up the business. This is because a remunerative wage structure helps the
organisation in obtaining and retaining a healthy, competent and devoted
work force, which in turn affects its productivity and profitability.
Such a wage policy acts as a dominating force in motivating the employees
to contribute their maximum worth to the enterprise.
Wages refers to all remuneration (whether by way of salary,
allowances, or otherwise) expressed in terms of money which would (if
the terms of employment, express or implied, are fulfilled) be payable
to a person employed in respect of his employment or of work done in such
employment. It includes:- (i) any remuneration payable under any award
or settlement between the parties or order of a Court; (ii) any remuneration
to which the person employed is entitled in respect of overtime work or
holidays or any leave period; (iii) any sum which by reason of the termination
of employment of the person employed is payable under any law, contract
or instrument which provides for the payment of such sum, whether with
or without deductions, but does not provide for the time within which
the payment is to be made; (iv) any sum to which the person employed is
entitled under any scheme framed under any law for the time being in force.
There are three main legislations govering wages.
The payment of wages may also include the provision of extra
lump-sum income which is awarded by an organisation to its employees usually
on an annual basis. Such income is known as bonus and may be provided
to the employees on special occasions like festivals, new year and other
important celebrations. This enables an employee to buy goods and services
which can improve his way of life. Some firms even distribute bonus to
its employees as a token for their contribution in the high performance
of the firm. All such gestures by an enterprise help in boosting the confidence
of the employees in their efforts as well as in the organisation.
As per the 'Committee on Fair wages', there are three distinct
levels of wages:- (i) Living wage represents a standard of living which
provides not merely for a bare physical subsistence, but for the maintenance
of health and decency, a measure of frugal comfort including education
for children, protection against ill-health, requirements of essential
social needs and some insurance against the more important misfortunes;
(ii) Minimum wage ensures not merely the bare sustenance of life, but
the preservation of the efficiency of the worker by providing some measure
of education, medical requirements and amenities. Thus, the minimum wage
prescribes the lower limit while the upper limit is set by the capacity
of the industry to pay; (iii) Fair wage is the wage which is above the
minimum wage but below the living wage.
The laws and matters relating to wages and bonus come under
the purview of the Ministry
of Labour and Employment. Within the Ministry, Central
Industrial Relations Machinery (CIRM) enforces all the labour legislations
and the rules framed thereunder. CIRM is an attached office of the Ministry
and is also known as the Chief
Labour Commissioner (Central) [CLC(C)] Organisation. The CIRM is headed
by the Chief Labour Commissioner (Central). Also, wage
cell and wage
board have been set up for the purpose.
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