Institutions Related to Compensation

• Wage Boards for industries belonging to private sector including

newspaper establishments and working journalists.

• Pay Commissions  to regulate the compensation of public servants

Wage Boards
• A negotiating body set up by discussions between organized
employers and workers to regulate wages, working hours
and related conditions of employment by collective
bargaining
• The concept of wage board was first articulated by the fair
wages committee.
• The first Wage Board to be set up by the Government was in
1957 in the cotton textile industry
Constitution of Wage Boards
• Wage Board is tripartite in nature
1. A chairperson
2. Representatives of employers
3. Representatives of employees
• In addition two other independent members (an economist and a
consumer’s representative) nominated to the Board.
• Total number of members on a wage board including the chairman
has varied form seven to nine.
Criteria/Factors for Award of the Wage
Board
• needs of the industry,
• system of payment by results
• prevalent rates of wages for comparable employments
• categories of workers to be covered
• capacity to pay
• level of employment
Award of the Wage Board
• Shall be based on the majority opinion and shall be in writing and
signed by the members including the chairman.
• Shall be final and shall not be called in question by any court in any
manner
• Shall come into force with effect from such date as may be specified
therein
• Shall remain in operation for a period of three years and it may be
extended for such further period as may be decided by mutual
agreement between the parties.
Major Criticism of Wage Board
• Serious procedural delays.
• Non-implementation of recommendations
• Reluctance of some employers to implement even ‘unanimous’
recommendations
• The question of linking wages with productivity has not been
considered seriously by any of the Wage Boards.
• Single machinery for wage fixation in all types of industries will not be
suitable
NCL recommendations
• the wage boards should normally be required to submit their
recommendations within one year of their appointment;
• the recommendations of a wage board should remain in force for a
period of five years;
• unanimous recommendations of the wage boards should be made
statutory binding;
• a manual of procedure for wage boards should be prepared.
Wage Boards for Working Journalist and
Newspaper Employees
• The Working Journalists and Other Newspaper Employees (Conditions
of Service) and Miscellaneous Provisions Act, 1955
• Setting up of wage boards Section 9 and Section 13C
• According to the Act, Wage Boards shall consist of the following:
Three persons representing employers in relation to Newspaper
Establishments;
Three persons representing working journalists under Section 9 and
three persons representing non-Journalist newspaper employees under
Section 13 C
Four independent persons Occupational, Safety, Health and
Working Conditions, 2020 (OSH Code)
Pay Commission
• An administrative system or mechanism appointed by Government of
India
• To examine, review and recommend desirable and feasible changes to
salary and its structure 
• Pay Commission is headquartered in Delhi. 
• Pay Commission is provided with 18 months of time to submit its
recommendation via report from the date of its constitution
• Government of India may either accept of reject recommendations
made by Pay Commission. State Government’s usually adopt the
recommendations with certain modifications.
Why Pay Commission is required?
• Over the years the price of different goods and services
increases due to increase in the cost of production

• Due to this the fixed salary of the central and state government
becomes insufficient to fulfil their basic needs.

• To meet the requirements of the employees the government of

India set up Pay Commission at the gap of every 10 years. 
Pay Commission
• Till date since India’s Independence, seven pay commissions (7th
being the latest one) have been set up to review and recommend
changes to emolument structures of civil and defence personnel of
Government. Pay Commissions are generally set up every 10 years.

• Earlier Six Pay Commissions in brief continued…..

7th Pay Commission
• Seventh Pay Commission was set up by The Manmohan Singh led
UPA Government on 28 February 2014

• Justice Ashok Kumar Mathur Chairmanship

• Submitted its report on 19 November 2015 and the recommendations

were to take effect from 1 January 2016.
Composition of Seventh Pay Commission
The Government of India decided to appoint the Seventh Central
Pay Commission, comprising the following members:
1.Justice Shri Ashok Kumar Mathur, Chairman
2.Shri Vivek Rae, Member
3.Dr. Rathin Roy, Member
4.Smt. Meena Agarwal, Secretary
Approach followed by the panel of the
Seventh Pay Commission
• Study by IIM, Ahmedabad to understand the nature and quantum of
total compensation of select job profiles in the government sector vis-
à-vis similarly placed profiles in the CPSUs and the private sector
• Study by Institute of Defence Studies and Analyses on nature,
quantum and components of defence expenditure and defence pension;
• Study by IIM, Kolkata on fiscal implications of implementation of the
V and VI CPC on the finances of the Union and State Governments.
Key Recommendations of the Seventh Pay
Commission
1. Min. Max.
2. Advances
3. Civil services
4. Defense services
5. Slacker/Non performer
6. Misc.
Min. Max.
• 23.55 per cent increase in pay
• Minimum pay: Minimum pay at entry level is increased from Rs 7,000
to Rs 18,000 per month. For a newly recruited Class I Officer, the
minimum salary is now Rs 56,100 per month.
• Maximum pay: Maximum pay the level of secretariat/equivalent is
increased to Rs 2,25,000 per month for Apex Scale and Rs 2,50,000 per
month for Cabinet Secretary and others presently at the same pay level
• Annual increment: The rate of annual increment is retained at 3%
• Fitment factor: A fitment factor of 2.57 is being proposed to be applied
uniformly for all employees.
Changes in advances-Interest-free
Advances
Changes in Advances- Interest bearing
advances
Changes in Advances- Interest bearing
advances
Civil Services
• The commission recommended that the financial edge accorded to
the Indian Administrative Service (IAS) and the Indian Foreign Service
(IFS) be extended to the Indian Police Service (IPS) and Indian Forest
Service (IFoS). However, the commission lacked unanimity on the
issue with Vivek Rae opining that the financial edge was justified only
for IAS and IFS.
Edge enjoyed by IPS and IFS
Defense
OROP
Slacker/Non performers
Misc.
• The upper limit of gratuity has been enhanced from INR 10 lakhs to
INR 20 lakhs.
• A Health Insurance Scheme has been introduced for Central
Government employees and pensioners.
• The Pay Commission recommends full pay and allowances to be
granted to all employees who are hospitalised due to WRIIL.
• Don’t appoint PC/10 years
7th Pay Commission Pay Matrix
National Commission on Labour
• National Commission on Labour is an Indian statutory body
 to recommend the changes in the labour laws.
• The first National Commission on Labour was set up on 24
December 1966 and submit its report in August,1969.
• The second National Commission on Labour (NCL) was set up
on 15 October 1999 and submit its report in June 2002.
Second national commission on labour
• The second NCL was set up on 15 October 1999

• Chairman  Ravindra Varma

• Submitted its report on 29 June 2002

Recommendations of 2nd National Commission
on Labour relating to Compensation
1. There should be a national minimum wage that the Central
Government may notify. This minimum must be revised from time
to time. the minimum wage may be revised once in five years.
Recommendations of 2nd National Commission
on Labour relating to Compensation
2. The Commission recommends that every employer must pay each
worker his one-month's wage, as bonus before an appropriate
festival, be it Diwali or Onam or Puja or Ramzan or Christmas. Any
demand for bonus in excess of this upto a maximum of 20% of the
wages will be subject to negotiation. The Commission also
recommend that the present system of two wage ceilings for
computation entitlement and for calculation of bonus should be
suitably enhanced to Rs.7500/- and Rs.3500/- for entitlement and
calculation respectively.
Recommendations of 2nd National Commission
on Labour relating to Compensation
3. There is no need for any wage board, statutory or otherwise, for
fixing wage rates for workers in any industry.
4. The workers should be compensated for loss of wages suffered by
them during closures of mines on account of violation of safety
standards.
5. Working hours during the night shift should be reduced. A credit of
ten minutes should be given for each hour of work in the night shift.
Six hours' work should thus entitle a worker to extra payment for
one hour.