WAGES Vs SALARY

INTRODUCTION Most people begin their work life earning an Hourly Wage. A Salary is not offered unless and until you have achieved a certain level of experience and skills in the work world. Which explains why there seems to be a different degree of "status" that goes along with the two different payment methods. But that's not really true -

Neither position is any less or more important than the other. In fact, each supports and depends on the other. And they're both important to the success of any business. And as with most things in life, there are pro's and con's to both of these payment methods.

WAGES :
WAGES Rule 22 (2) of the Minimum Wages (central) Rules defines "wages" as under Wages shall mean all remuneration payable to an employed person on the fulfillment of the contract employment and includes HRA. It excludes (i) The value of rent free accommodation, supply of light, water, medical, (ii) Contributions paid by the employer towards the PF or any scheme of social insurance.....

(iii) Traveling allowance / Traveling concession (iv) Gratuity The wages may consists of (i) a basic rate of wages and special allowance called the cost of living allowance (ii) a basic rate with or without cost of living allowance plus any concession on the supply of essential commodities.

SALARY
"Salary" is the remuneration received by or accruing periodically to an individual for service rendered as a result of expressed or implied contract. Compensation or remuneration even in the following circumstances is chargeable to Income-tax under the head 'Salaries': a) When due from the former employer or present employer in the previous year, whether paid or not. b) When paid or allowed in the previous year, by or on behalf of a former employer or present employer, though not due or before it becomes due.

c) When arrears of salary are paid in the previous year by or on behalf of a former employer or present employer, if not charged to tax in the period to which it relates. It is, therefore, clear that apart from current years salary, even advance salary and/or arrears of salary may be taxed in the year of receipt.

More specifically and elaborately, the Income-taxAct has stipulated that salary includes :a) Salary, including advance/arrears of salary; b) Wages; c) Fees; d) Commission; e) Pension; f) Annuity; g) Perquisite;

Receipts from Provident Fund chargeable to tax; Profit in lieu of or in addition to salary or wages; Gratuity; Contribution of employer to Recognized Provident Fund in excess of prescribed limit; Interest on credit balance of Recognized Provident Fund in excess of notified rates; i) Encashment of leave. definition of 'salary' is inclusive and not exclusive.

SALARY vs. WAGES

Salary was given to people with white collar jobs and wages to blue collar one . The total salary is: Basic Wages + D.A + other allowances What a "Salary" looks like: $45,000 per year. What a "Wage" looks like: $16.50 per hour Wages are paid to the direct labour, either in the form of time rate or piece rate (hourly or weekly basis) Salaries are paid to indirect labour, mostly in the form of time rate (monthly basis)

MINIMUM WAGES:
The minimum wages fixed by government takes into consideration the cost of living . This is the wage which must provide not only for bare sustenance of life but for the preservation of efficiency of the worker- government committee on wages(1948) Fair wages: fixed by employer determined on the basis of : productivity of labor prevailing wage rates in similar jobs level of national income and its distribution place of industry in the economy the employer s capacity to pay

LIVING WAGE: HIGHEST AMONG THE THREE MUST PROVIDE BASIC AMENITIES OF LIFE AND SOCIAL NEEDS LIKE MEDICAL, EDUCATION, ETC - A theoretical wage level that allows the earner to afford adequate shelter, food and the other necessities of life. The living wage should be substantial enough to ensure that no more than 30% of it needs to be spent on housing. The goal of the living wage is to allow employees to earn enough income for a satisfactory standard of living.

COMPENSATION FACTORS:
Compensation management is about a range of interconnected processes that aim through both financial and nonfinancial means to address what employees value in the employment relationship. The various factors affecting the compensation and Wages are: EXTERNAL FACTORS INTERNAL FACTORS

INTERNAL FACTORS
Productivity, Growth and Contribution Performance/ Work Related Company s Affordability & Budgets Ability to Pay Corporate Strategies  Business & HRM Organizational Values Flexibility Responding to Changes

Motivation Oriented Competence Based

 Performance Appraisal  Organization Grade Structure Job Evaluation Relative size of Jobs Non Financial Benefits Employee benefits Trade Unions

EXTERNAL FACTORS
Cost of Living & General needs of people employed Demand & Supply of Human Talent Market Standards Industry Trends State Legislations

In the Innovative employee reward system the features varies from industry to industry. But the common features are : 1. Performance Appraisal System : Performance appraisal system is not only a direct projector of performance by an individual during the year but accounts for so many other parameters 2. Company commitment : If management commitment is not there , then innovative systems will never come into existence. Business simulations if available may be tried to work out the nearest possible results.

3. Minimizing the Bias factor : Bias factor is a stigma on innovative practices. You can not eliminate this but by minimizing the bias factor , one can achieve the objective of innovative system. 4.Availability of resources : For implementation of any system one has to have resources for the same.. If resources are not available the morale which you want to improve will not be as much possible as you desire to be.

THE END