Unit- 5

CONTENT
01 Wage and salary Administration

02 Wage policy, Concept and

Importance
03 Fringe Benefits
04 Incentive, Compensation and
Remuneration
05 Factors affecting Wages and
Wage fixing Machinery.
Wages are payments for labour services rendered frequency, expressed in hourly rates, while a salary
is a similar payment, expressed in weekly, monthly or annual rates.

A ‘wage’ (or pay) is the remuneration paid, for the service of labour in production, periodically to an
employee/worker. “Wages” usually refer to the hourly rate or daily rate paid to such groups as
production and maintenance employees (“blue-collar workers”).

‘Salary’ normally refers to the weekly or monthly rates paid to clerical, administrative and professional
employees (“white-collar workers”).
WAGES AND SALARIES
• Wages – paid to blue-collar employees; paid
daily, weekly or monthly; paid to jobs which
can be measured in terms of
money’s worth.
• Salary – paid to white-collar employees; paid
in monthly basis; paid to employees whose
contribution cannot be measured easily.
• Compensation – a comparative term;
includes wages and all other allowances and
benefits. (e.g. allowances, leave facilities,
housing, travel, and non-cost such as
recognition, privileges, and symbols of status)
Wage and salary
Administration
 WAGE AND SALARY ADMINISTRATION

➢ Wage and salary administration is a collection of practices and procedures used for
planning and distributing company-wide compensation programs for employees.
These practices include employees at all levels and are usually handled by the
accounting department of a company.
➢ OR
➢ Wage and salary administration is defined as the process by which wage and salary
levels and structures are determined in organisational settings

➢ A group of activities involved in the development, implementation, and maintenance

of a pay system. An ongoing process of managing a wage and salary structure.
 WHY DO WE NEED TO STUDY WAGE
AND SALARY ADMINISTRATION?

• To have a scientific, rational, and balanced wage and

salary structure.
• In a salary administration, the employer should not feel that
the employees are paid more than they deserve and the
employees should not feel that they are underpaid.