Remuneration

REMUNERATION
Remuneration
Why are remuneration paid ?

Mode of payment
Daily / Weekly / Monthly
Cash / Bank
Piece rated / Time rate
Wage
Factors affecting the Wage

Employers philosophy - to lead / lag / match the
Market
Capacity to pay
Going rate - Local / Industry
Job evaluation – worth of a job
Collective bargaining agreements-
within enterprise or outside (region)
Legislations
WAGE
Legislations and other related matters etc. effect

remuneration
Statutes
Judiciary (settlements, awards), and
Pay commissions
WAGE
Legislation affecting wages

We now have the Wage Code 2019, but
till it is implemented we have
Payment of wages act 1936,
Equal remuneration act 1976,
Minimum wages act 1948 &
Payment of Bonus Act 1965
WAGE
Legislation
Payment of wages act 1936
Regular and timely payment
Prohibiting arbitrary fines / deductions, etc.
Equal remuneration act 1976
Equal remuneration for men and women in
same / similar jobs
Wage
Legislation
Minimum wages act 1948
Minimum Wage - No industry has right to exist unless
it is able to pay its workmen at least a bare
minimum wage
Fair Wage - Mean between the living wage and
minimum wage sufficiently high to provide a standard
family with food, shelter, clothing, medical care and
education of children, appropriate to the workman but not
at any rate exceeding his wage-earning capacity in the
class of establishment to which he belongs
Living Wage - Wage which is sufficient to provide not
only the essentials but a fair measure of frugal
comforts with an ability to provide for old age and evil
days
Payment of bonus act 1965

Bonus is a deferred wage (and for calculations):
eligible employees (Rs.21,000/- per
month)
who has worked 30 days during the period
amount will be between :
8 1/3 % min. 20% max.
For calculations wage deemed to be Rs.7,000/-
per month or the Minimum wage for the
scheduled employment, as fixed by the
appropriate Government, which ever is higher.

Bonus to be given from Allocable surplus
Calculations made on allocable surplus
Gross profit – deductions = Available surplus
Available surplus x 60% = Allocable surplus
For first 5 years of starting, bonus only for year of
profit
Set on / set off following a 4-year cycle
Payment of bonus act 1965 (SET ON / SET OFF)
Set on of allocable surplus

Where for any accounting year , the allocable surplus
exceeds the amount of maximum bonus payable to the
employees in the establishment then, the excess shall,
subject to a limit of twenty percent of the total salary or
wage of the employees employed in the establishment in
that accounting year , be carried forward for being set on
in the succeeding accounting year and so on upto and
inclusive of the fourth accounting year to be utilized for the
purpose of payment of bonus (in the manner illustrated
in the Fourth Schedule).
Payment of bonus act 1965 (SET ON / SET OFF)
Set off of allocable surplus

Where for any accounting year , there is no available
surplus or the allocable surplus in respect of that year falls
short of the amount of minimum bonus payable to the
employees in the establishment, and there is no amount
or sufficient amount carried forward and set on which
could be utilized for the purpose of payment of the
minimum bonus , then , such minimum amount or the
deficiency , as the case may be , shall be carried forward
for being set off in the succeeding accounting year and so
on upto and inclusive of the fourth accounting year (in the
manner illustrated in the Fourth Schedule).
Changes in Bonus as per Code on Wages 2019
Eligibility
Employees whose wages not exceeding as notified by
appropriate government.
There shall be paid to every employee, drawing wages
not exceeding such amount per mensem, as determined
by notification, by the appropriate Govt. [Secn. 26(1)]
For the purpose of calculation of the bonus where the
wages of the employee exceeds such amount per
mensem, as determined by notification by the appropriate
Government, the bonus payable to such employee under
sub-sections (1) and (3) shall be calculated as if his wage
were such amount, so determined by the appropriate
Government or the minimum wage fixed by the
appropriate Government, whichever is higher. [Secn.
26(2)]
Changes as per Code on Wages 2019
Allocable surplus
Allocable Surplus = Available surplus x 60% (banking)
67% (Others)
If Allocable surplus more than minimum bonus amount
payable, then employer pays more than minimum upto a
max of 20% of wages [Secn. 26 (3)]
Where in respect of any accounting year referred to in sub-
section (1), the allocable surplus exceeds the amount of
minimum bonus payable to the employees under that sub-
section, the employer shall, in lieu of such minimum
bonus, be bound to pay to every employee in respect of
that accounting year, bonus which shall be an amount in
proportion to the wages earned by the employee during
the accounting year, subject to a maximum of twenty per
cent. of such wages. [Secn. 26(3)]
Allocable surplus
Allocable surplus = Available surplus x 60% (banking) 67%
(Others)
Set On
Where for any accounting year, the allocable surplus
exceeds the amount of maximum bonus payable to the
employees in the establishment under section 26, then,
the excess shall, subject to a limit of twenty per cent. of the
total salary or wage of the employees employed in the
establishment in that accounting year, be carried forward
for being set on in the succeeding accounting year and so
on up to and inclusive of the fourth accounting year to be
utilised for the purpose of payment of bonus in such
manner as may be prescribed by the Central Government.
[Secn. 36(1)]
Set Off
Where for any accounting year, there is no available surplus
or the allocable surplus in respect of that year falls short of
the amount of minimum bonus payable to the employees in
the establishment under section 26, and there is no amount
or sufficient amount carried forward and set on under sub-
section (1) which could be utilised for the purpose of
payment of the minimum bonus, then, such minimum
amount or the deficiency, as the case may be, shall be
carried forward for being set off in the succeeding
accounting year and so on up to and inclusive of the fourth
accounting year in such manner as may be prescribed by
the Central Government. [Secn. 36(2)]
How adjustments to be made explained in [Secn. 26 (6,7,8)]
and an example given in Schedule A of Rules
Inspector – cum – Facilitator
Appointed by the government they will inspect and also
advice employers and workers relating to compliance with the
provisions of this Code
The appropriate Government may, by notification, appoint
Inspector-cum-Facilitators for the purposes of this Code who
shall exercise the powers conferred on them [secn. 51(1)]
Every Inspector-cum-Facilitator appointed shall be deemed
to be public servant.
The Inspector-cum-Facilitator may––
(a) advice to employers and workers relating to
compliance with the provisions of this Code;
(b) inspect the establishments as assigned to him by
the appropriate Government [Secn. 51(4) (5)]
WAGE (Components)
What are the broad heads in remuneration

Fixed / Basic
Variable
for adjusting hardships
- how ?
Incentives (Individual, Group,
Organization wide)
Benefits & Services
Wage
BENEFITS / SERVICES
Usually all the non-financial payments in a
company for the employees for continuing
his/her services in the organization
Why given –
Voluntarily for attracting and retaining
Forced by Law
Negotiated with union

Remuneration

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REMUNERATION

Why are remuneration paid ?

Factors affecting the Wage

Legislations and other related matters etc. effect

Legislation affecting wages

Payment of bonus act 1965

Payment of bonus act 1965

Set on of allocable surplus

Set off of allocable surplus

What are the broad heads in remuneration

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