presented by:

Fazludeen mehar

Hardik bansal

Contents Basic salary

Allowances

Incentives

Perks

Benefits

Basic salary

What is basic salary Basic salary is a fixed amount of money paid to an

employee by an employer in return for workperformed. Basic salary does not include benefits,bonuses or any other potential compensation from anemployer.

If the appointment of employee is made in pay scale,their basic salary increases every year and the amountof basic salary is changed. If the employee is notappointed in a pay scale, his basic salary remains fixed.

Objective of basic salary The general objectives of the wage and salary

administration are as follows:(a) Control of costs(b) Establishment of fair and equitable remuneration.(c) Utilization of wages and salaries as an incentive to greater employee productivity.(d) Maintenance of a satisfactory public relations image.

What is Allowance? A sum of money paid regularly to a person, typically

to meet specified needs or expenses

Allowance are generallyCalculated on Basic salary

Allowances Dearness allowance

House Rent Allowance

Conveyance Allowance

City Compensatory Allowance

Foreign Allowance

Helper Allowance

Medical Allowance

Tiffin Allowance

Telephone Allowance

Allowances Servant Allowance

Rural Allowance

Overtime Allowance

Family Allowance

Marriage Allowance

Tribal area Allowance

Children education Allowance

Hostel Allowance

Hill Allowance

DA is a cost of living adjustment allowance paid to Government employees and pensioners in India.As of June 2012, the Dearness Allowance is calculated as a percentage of an Indian citizen's basic salary to mitigate the impact of inflation on people belonging to the low income group. The guidelines that govern the DA vary according to where one lives (for example, whether rural or urban)..

(DA Rates for the Central Government Employees)(July 01, 2013 Dearness Allowance Rate: 90%)

HRA is generally paid as component of salary package. This allowance is given by an employer to an employee to meet the cost of renting an accommodation.

Least of following exempt from Tax U/S 10(13A)

1. Residential house in Metro city - 50 % of Salary

Residential house at other place - 40% of Salary

2. Actual House rent allowance received.

3. Rent paid in excess of 10 % of salary.

The conveyance allowance is a type of allowance which is paid to the employees of the state As well as central govt. employees in order to meet the expenses to come to office from the residence of the employees

It varies on the basis of the city of posting, distance of the employees from the residence to office & type of conveyance used to travel.

CA is exempted U/S 10(14) read with Rule 2BB upto Rs. 800/- p.m.

If person blind or OD then upto Rs. 1600/- P.m.

It is an allowance paid by employer to compensate high cost incurred by employee work in big cities like Delhi, Mumbai, Bangalore, and other metropolitan cities.

However, it is a fully taxable allowance. i.e. the amount of this allowance will be taxed with the salary received.

This allowance is paid by the Government of India to its citizen employees for being posted outside the country and it is not included in total income. It is completely tax-free U/S 10 (7).

Exempt to the extent incurred on helper where such helper is engaged for performance of official duties.

Children Education Allowance Paid for education of Employee’s children. Exempt up to Rs. 100/- per month per child up to maximum of 2 child if Expenses made in India.

Children Hostel Allowance Paid for education of employee’s children. Exempt up to Rs. 300/- per month per child up to maximum of 2 child if expenses made in India.

Tiffin / Lunch Allowance It is fully taxable. It is given to employees for lunch as coupons or added as part of salary.

Non practicing Allowance This is normally given to those professionals (like medical doctors, chartered accountants etc.) who are in government service and are banned from doing private practice. It is to compensate them for this ban. It is fully taxable.

Overtime Allowance When an employee works for extra hours over and above his normal hours of duty, he is given overtime allowance as extra wages. It is fully taxable.

It means an allowance payable for the time being to an employee of any factory or other establishment during any period in which the establishment is not working, for retaining his services

Medical Allowance is a fixed monthly allowance which forms a part of Salary. It is paid as a fixed amount which is determined as per the company’s policy where an individual is employed and it has no relevance with the medical expenses incurred.

Medical Allowance is added in taxable income under the head “Salaries” and it is fully taxable.

Money which given by employer is allowed by his or her company to spend on meals with visitors

In the case of a Government employee (i.e., Central Government or a State Government employee), the least of the following is deductible:

Rs. 5,000/- 20% of basic salary ; or Amount of entertainment allowance granted during the

previous year.

Any allowance, which is granted to meet the expenditure incurred on purchase or maintenance of uniforms to wear during the performance of the duties of an office.

Incentives

Incentives The term INCENTIVES mean, something which

encourages a person to do something. Or the “extra

financial reward/ motivation”.

Incentives is the performance-link reward to improve

motivation & productivity of the employees.

Incentives includes all that provide extra pay for the extra

performance in addition to regular wages for the job.

Incentives According to burrack and smith, “An incentive scheme

is a plan or programmer to motivate individual forgood performance. An incentive is most frequentlybuilt on monetary rewards, but may also include avariety of non-monetary rewards or prizes.

Why Incentives are Important?

Incentives are considered beneficial to both employers as well as employees

in following ways.

Workers are likely to work at their best when they are offered monetary

rewards for good performance.

Provide opportunity for hard-working & ambitious employees to earn

more.

To improve work-flow, work methods & man – machine relation ship.

To bring employee involvement to make employee innovative.

Incentives are the sound technique of improving productivity.

Help to improve discipline and industrial relation.

The cost of supervision are reduced.

To obtain desired result.

The basic from of incentives are as follow.

Bonuses :- is an incentive payment that is given to an employee beyond his

normal standard wages. It is generally given at the end of the year & does

not become part of the basic pay.

The payment of bonus Act 1965 is applicable to every factory or

establishment in which 20 or more person are employed in an accounting

year.

Merit pay :- is a reward based pay on haw well an employee done the

assigned job. Higher the performance Greater will be the reward.

The payment is depend on individual employee’s performance.

Commission for sales people :- is paid on the basis of sales made by the

employee, through different plan. Such as

Salary plan :- where new salesman is appointed, is unable to generate new.

Commission plan :- where organization is totally based on sales of their

product.

Combination of both :- is the most frequently used method.

Basic forms of incentives.

Halsey Plan

Halsey Plan:

By F. A. Halsay

Under this plan, a standard time is fixed on basis of past performance record.

A worker who completes his job within or more than the standard time is paid a guaranteed time wage at the normal rate.

A bonus usually 50% of the time saved is paid to a worker who completes his job in less than standard time.

Halsey PlanIllustration:Standard Time (S) = 8 HrsTime taken (T) = 6 HrsRate of Wages (R) = 20/HrBonus (P) = 50% of the time savedTotal wages (W) = (T x R) + (50 % x (S - T) x R)

= (6 x 20) + (50 x (8 – 6) x 20)/100= 120 + (0.5 x 2 x 20)= 120 + (1 x 20)= 120 + 20= Rs.140

Rowan Plan

Rowan Plan:

By D. Rowan in 1901

This is a modified form of Halsey Plan.

Under this plan, a minimum time wage is guaranteed to every worker at the normal rate.

A standard time is determined in advance.

The bonus is that proportion of the wages which the time saved bears to the standard time.

Rowan Plan Illustration:Let us use the same data given above under Halsey Plan:Standard Time (S) = 8 HrsTime taken (T) = 6 HrsRate of Wages (R) = 20/HrTotal Wages= (T x R) + {T x R x (Time Saved)}Standard Time

=(6 x 20) + {6 x 20 x (2)}/8= 120 + (120 x 1)/4= 120 + 30= Rs.150

Note: In this method, Rs. 10 is earned more than the earliermethod (Halsey plan), i.e. Rs. 150 – Rs. 140.

Emerson Efficiency Plan Emerson Efficiency Plan:· Under this plan, standard time for a job is

determined scientifically and a minimum time wage isguaranteed to all workers at the normal time rate.

· Bonus is given at an increasing percentage beyond theprescribed level of efficiency (*usually 66.67 % ofefficiency).

· Efficiency of each worker is determined by dividing thestandard time by the time taken.

*Efficiency = (Std. Time) x 100/Time Taken= (8) x 100/12= 66.67 %

Bedeaux Point PlanBedeaux Point Plan: Under this plan, standard time for the job is set

scientifically and it is expressed in terms of B. For instance, a standard time of 240 B means that the job

should be completed within 240 minutes. In determining the Bs, the time of operation and the rest

time both are taken into account. Minimum time wage is guaranteed to all workers. The workers who complete the job within or more than the

standard time are paid at the normal time rate. Those who complete the job in less than the standard time

are paid bonus for the time saved. Generally, 75% of the wages for the time saved are paid as

bonus to the worker and 25% to the foreman.

Taylors’ Differential Piece Rate Plan Taylors’ Differential Piece Rate Plan:

· F.W. Taylor, the father of Scientific Management devised this plan.

· Under this system, standard task is established through time and motion study.

· Two piece rates are laid down.· The lower rate for those workers who fail to complete

the standard task within the allotted time and the higher rate for those who complete the task within or less than the allotted time.

· The objective is to provide sufficient incentive to workers to work hard and achieve the standard.

Taylors’ Differential Piece Rate Plan

Illustration:

Suppose the standard output is 50 units per day. The piecerates fixed are Rs. 3 and Rs. 4 per unit. Three workers A, Band C produce 40, 50, 60 units respectively during a day.

Their total wages will be as follows:

A = 40 x 3 = Rs. 120

B = 50 x 4 = Rs. 200

C = 60 x 4 = Rs. 240

In this way, an inefficient worker is penalized as he gets alower rate per unit.

Merrick’s Multiple Piece Rate Plan Merrick’s Multiple Piece Rate Plan:

· This plan was developed to overcome a drawback inTaylor’s Plan.

· This drawback relates to an abrupt change in piece rate.

· Under it, three graded piece rates are prescribed.

· Workers producing less than 83% of the standardoutput are paid at a basic piece rate.

· Those producing from 83% to 100% of the standardoutput are paid 110% of the basic piece rate.

· Workers producing more than the standard output arepaid at 120% of the basic piece rate.

Gantt’s Task and Bonus Plan Gantt’s Task and Bonus Plan:

· Under this plan, standard time for every task isfixed through time and motion study.

· Minimum time wage is guaranteed to all workers.

· A worker who fails to complete the task within thestandard time receives wage for actual time spent atthe specified rate.

· Workers who achieve or exceed the standard getextra bonus varying between 20% to 50% of the hourlyrate for the time allowed for the task.

Perks Perks are employee benefits, usually in addition to

salary and standard employee benefits. The word, perkor perks, is a short form of the word perquisite whichmeans incentives, bonuses, extras, or sweeteners. Inuse in business, the term perks has come to meanbenefits or extras above and beyond the normalcomprehensive benefits package.

Examples of Perks Company supplied cars Free lunches or beverages Company logoed shirts, hats, and other merchandise

supplied at low cost or no-cost First choice of vacation schedule First chance to work overtime Professional association membership Conference attendance First chance for lateral moves or promotions Job openings posted and filled internally before externally Flexible schedules Telecommuting opportunities Office, larger office with window Tuition reimbursement Cafeteria benefits plan

The Payment of Bonus Act, 1965The Payment of Bonus Act, 1965 is the principal act forthe payment of bonus to the employees which wasformed with an objective for rewarding employees fortheir good work for the organization. It is a stepforward to share the prosperity of the establishmentreflected by the profits earned by the contributionsmade by capital, management and labour with theemployees.

THANKS