Amityuniversity.de

MS-27   june-2008

MS-27 : WAGE AND SALARY ADMINISTRATION

1. Explain the concept of compensation. What are the management's responsibilities regarding the compensation programme ?

2. Explain the need and purpose of allowances and fringe benefits given to the employees in an organisation. Discuss with suitable examples.

3. Describe different methods of wag e determination. Discussed why collective bargaining is superior to other methods of wage determination.

4- Explain out   is performance-linked reward system. Discuss various steps involved in designing a performance-linked reward system.

5. Write short notes on any t:hree of the folloving :

(a) Time and piece rate system of wage payment

(b) Tax planning

(c) Downsizing

(d) Stock options

(e) Retiral benefits

6. Read the case given- below and answer the questions given at the end.

A large public sector undertaking employing thousands of supervisors got an interim injunction order from the High Court in a case represented by the Employees Union regarding calculation of tax. The stay order was not to take into account City Compensatory Allowance (CCA), Dearness Allowance (DA) and Additional Dearness Allowance (ADA) for calculation of net taxable income'. If this stay order was implemented/made applicable to that section of the employees who were members of the Union, rnost of the staff will be out of the tax net. The matter was brought to the notice of the General Manager by the Accounts Department for advice /orders. The General Manager contacted his close friend and associate, a senior income tax department official, who advised him, to persuade the

staff and to take into account CCA, DA and ADA, for calculation of net taxable income and to recover tax from all the employees as due, irrespective of the high Court interim injunction or irrespective of the Union to which they belong. The justification for this advice was that the Direct Taxes Amendment Bill was being passed and that in any case the tax will have to be recovered inclusive of CCA, DA and ADA. The General Manager though reluctant; felt that the advice of his friend should be needed. The matter was taken to the personnel Department. The Chief of personnel held a different view. His view was that the not be included in taxable reasons : taken to the Personnel Personnel held a different CCA, DA and ADA should not be included in taxable income for the following reasons :

1. (1)There are the High Court's interim orders and if not obeyed there may be a contempt petition by the Union

2) When in doubt we should always await the final outcome.

3) If we calculate net taxable income without taking CCA, DA and ADA we are not only not violating the High Court's orders but also the staff will feel that we are one with them and not anti-labour.

4) The Union will feel happy, since the others who are not members of the Union, can be wooed and they now know the prowess of the Union.

   When this was pointed out to the General Manager, he again contacted the income tax official. The official stated that the Amendment Bill is in final stage and is almost passed and it would therefore be wise to recover the full tax taking into account the CCA, DA and ADA to avoid double work and extra labour. The Chief of Personnel did not agree. with this view and added that considering the economics of present day with the rising trend in price index, etc., an  amount which is not clearly recoverable at present and in doubt but, will become recoverable subsequently should not be recoveled now. It should be recove red only later when it becomes clearly due and recoverable. Moreover, this course of action would show to the workers the organisation's good intentions towards their workers, oneness with the staff, abiding law and the impression that 'we care for the Union, though this may involve additional labour and extra work later on. The Chief of Personnel also pointed out that employee/employer relation is always ,pay now, recover later' and the maxim 'payments due first preference, recoveries due in due course' would always create a better industrial climate particularly in the context of our culture and work ethos coupled with the socialistic concept of the Government. It would also be good for the organisation, he argued.

   The General Manager was perplexed not only because the high official of the tax department was a well wisher and good friend of the General Manager and his advice was valued, but also in the interest of the company' he did not want strained relations with the tax department.

Questions

(a) Identify and describe the core issue in this case.

(b) with whom do you agree and why ? If you are the General Manager how will you deal with the situation ?