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Hi,
I am working in FMCG Company. I have 250 employees in Production Department. Among them Vice President=1, Manager Production=2, Production Head=1. My query is when I am taking the salary and wages of Production Department,the salary of all the managerial employees of the said department will be calculated in Wages ( Direct Cost) or Salary ( Indirect Cost)?
Regards.
Ankita Shukla

In my view, salary is a general name for remuneration paid to an employee for the work done by him as per the terms of his employment or contract of service where as the expression 'wages' has a statutory flavour as each statute defines 'wages' in a different way keeping in view the objectives of the relevant Statute.For example, the Payment of Gratuity Act defines wages as consisting of basic and DA and excludes HRA, the ESI Act includes it.This understanding is on the basis of different labour laws. It is not known whether distinguishing wages as indicating direct cost and salary as indirect cost is based on accounting norms but I am afraid whether such rule fits into employment norms as it may have legal implications.
B.Saikumar
In-House HR &IR Advisor

Dear Ankita,

The differences b/w Salary and Wage are;

1. We express salary as packages but wages expressed as an hourly payment to employee. in detail-

Salary is best associated with employee compensation quoted on an annual basis. For example, the manager of the assembly plan might earn a salary of Rs12,00,000 per year. If the salaried manager is paid monthly, her or his paycheck will show gross salary of Rs. 1,00,000 for one month. Since the salary is the same amount for each pay period, the salaried employee's paycheck will likely cover the work period through the date of the paycheck.

Wages is best associated with employee compensation based on the number of hours worked multiplied by an hourly rate or piece rate of pay. For example, an employee working in an assembly plant might work 40 hours during the work week. If the person's hourly rate of pay is Rs. 100, the employee will receive a paycheck showing gross wages of Rs 4000 (40 x Rs 100).

2. Salary earners usually receive paid time when they are not working. Wage earners often have to give up pay for time off.

3. Salary workers are rarely offered overtime pay. Salaries can contain all kinds of benefits and perks.

Pls. check the terms & condition of Appointment letter of employee/managers of concerning department whether it is offered in CTC or Gross salary. I am sure that as per Industry rule at Managerial level generally company offers salary not wages.



In my opinion the compensation or financial benefits for services of all the managerial employees of your production department will be calculated in Salary.

I think the above examples will solve your problem.

Regards

Prakash Tiwari

9911523140

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