umakanthan53No law relating to wages/salary defines salary structure nor sets down the components of salary or wage. For instance the Payment of Wages Act prescribes the periodicity in payment of wages i.e., wage periods, the mode of its payment, the deductions that could be made from the wages and the like, the Minimum Wages Act,1948 fixes the minimum rates of wages and their periodical revision in respect of the employments brought under its schedule, the rates of overtime wages etc., the Equal Remuneration Act,1976 ensures equal wages for equal work irrespective of sex, the Payment of Bonus Act,1965 prescribes the compulsory payment of bonus to employees drawing salary up to certain limit, the method of calculation of bonus and the like.
Therefore, wages or salary, in general, would mean the monetary compensation as well as the value of certain amenities provided by the employer payable to the employee at the end of the wage period for the services rendered by him as agreed to under the contract of employment. As such wages or salary would include the sum total of all monetary and non-monetary payments and therefore would be a single package. The practice of breaking the single package into components slowly came into vogue for the purpose of employee retention and therefore it is not possible to precisely define any wage/salary structure. But the components could be just explained as basic wages that would constitute a major portion and other allowances to compensate the periodical hike in cost of living and other necessary expenses to be incurred by the employee on account of his employment like housing, conveyance etc. Even the wage structure can be at times localized like the payment of hill allowance, winter allowance to employment in hilly regions.
That's why only certain components in the wage structure are taken into account for determining certain benefits of employment like gratuity, bonus etc., which are considered as indirect financial commitments of the employer.
From India, Salem
Madhu.T.KIn the modern business scenario there is an unnecessary quest for structuring the salary. The new gen companies don't consider that what is agreed to be paid for the services of the employee is the salary. In fact, if an employee takes one o two days' leave without pay, it will be the gross salary which will be taken to find out the salary to be deducted for these days. This itself proves that it is the gross salary on which you should calculate the statutory payments and contributions. But unfortunately for contributions to be made over and above the salary, the employer will take a fraction/component of salary, called basic salary, and for deduction for absence from work he will take gross salary. Even HRA is excluded only if it is a perquisite falling outside the salary. If an employee is residing in a house the rent of which is paid by the employer separately, then it is an allowance and is paid in full even if the employee was on leave without pay for certain days. Under our case, even the newspaper allowance and education allowance are proportionately deducted if the employee is on LOP!!!
From India, Kannur
Satishchandra123Thank you so much sir. I got the point
From India, undefined
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