CHAPTER – VII WAGE AND SALARY ADMI 7.pdfCHAPTER – VII WAGE AND SALARY ADMINISTRATION 1. ... To promote employee organizational flexibility promotion and transfer.

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    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


  • 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 fairways 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.

  • 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 Workmens 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 unions 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.

  • (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 workers 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

    1-1-2006. the existing scales of basic pay are shown in table 7.1.

  • Table 7.1

    Scales of basic pay

    Source : General standing order.

    Table 7.1 shows that the highest pay scale is Rs.54700-77000 & lowest pay scale is Rs.

    7300-17940. 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), 66.05

    percent respondents are agree with success of the objective-eliminating inequalities in pay

    (please see table no.7.7). Existing Pay Scales Rs. Revised Pay Scale Rs.

    1 2 3

    1 2750-5215 7300-17940

    2 3050-5985 8100-19870

    3 3200-6905 8800-20940

    4 3400-8300 9700-21710

    5 3600-9350 10100-22000

    6 4000-10025 11300-22470

    7 5000-10525 13600-31300

    8 6500-11750 17300-38610

    9 8000-13000 21200-42000

    10 8500-14250 21900-43350

    11 10400-15525 27000-44710

    12 13000-18600 41200-70270

    13 16000-20050 48590-75900

    14 18400-22400 54700-77000

  • [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.

    PGVCLs 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 1-1-2006 existing rate are presented in table 7.2.

  • Table 7.2

    D.A payable to employees


    House Rent Allowance

    The house Rent Allowance will be paid on State Government rates with effect from 1.4.2009 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) 30% of actual basic pay drawn

    Y (earlier classification A, B1 and


    20% of actual basic pay drawn

    Z (earlier classification C &


    10% of actual basic pay drawn

    Note : The list of Towns / Cities classified shall be as per State

    Government orders.

    Date from which


    Rate of Dearness Allowance on Basic pay + (NPA

    wherever applicable)

    From 1/1/2006 No Dearness Allowance

    From 1/7/2006 2% of Basic pay

    From 1/1/2007 6 % of Basic pay

    From 1/7/2007 9 % of Basic pay

    From 1/1/2008 12 % of Basic pay

    From 1/7/2008 16 % of Basic pay

    From 1/1/2009 22 % of Basic pay

  • [4.3] Compensatory Local Allowance

    The compensatory Local allowances will be paid on State Government rates with effect from 1st

    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)


    (earlier A-1)


    (earlier A, B1, & (B2)

    11300-22470 and


    Rs.300 Rs.240

    Below 11300-


    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.

  • [4] Food/Festival Advance

    The existing amount of advance granted shall be continued for employees having revised Basic

    Pay of less than Rs.20000/-.



    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. 1.4.2009.


    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.

    1.1.2006 as mentioned in

    Table 7.5

    Family Planning Allowances Payable to employees.



    Type of Allowance Payable to Existing





    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. &


    5% 3.75

  • Sr.


    Type of Allowance Payable to Existing





    on Basic

    (1) (2) (3) (4) (5)

    3. Medical- cum-

    Misc. Allowance

    All employees Rs.100/-


    Rs.100/- p.m.

    4. Generation/ Sub-

    Stn. Allowance

    Engineers and Medical


    Working in PS/SS

    8% 5.50

    5. Field / SS/ Gen.


    Class III/IV Technical

    employees and Sr. Security

    Officer /P.O. /IRO / LWO

    in Power Station &

    Doctors Working at other

    than Power Station.

    11% 7.75

    6. Field Allowance JE/DE working in S/Dn. 19% 13.00

    JE/DE working in Dn.


    16% 11.00

    JE/DE working in Corp.


    6% 4.00

    EE working in Dn. /C.O. 14% 9.50

    EE working in Corp.

    Office /Z.O.

    5% 3.50

    7. Special Comp.

    Allowance (power


    JE/DE working in PS 19% 13.00

    EE and Safety Officer in


    16% 11.00

    SE/ACE/CE in PS 12% 8.00

    8. Special Comp. JE/DE working in S/S 19% 13.00

  • Sr.


    Type of Allowance Payable to Existing





    on Basic

    (1) (2) (3) (4) (5)

    Allowance (Power


    EE working in S/S 16% 11.00

    9. Shift Charge


    EE working in Shift in P.S. 5% 3.50

    10. Transport


    To handicapped children of



    per child


    P.M. per


    Note : (i) Fringe Benefit Allowance shall hence forth be drawn in the name of General Facility


    (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.

  • 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 companys 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 GUVNLs 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

  • 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 cover...