COMPENSATION

&
BENEFITS
presented by
bhanu kalyan 04
preeti dhawan 09
ghansyam
abhijeet hele 17
pratik langi 28
govind masram 31
nidhi chhabra 36
akhil palrecha
Overview of Employee Compensation and Benefit in
India

Employee
Employee
Compensation
Compensation

Salary
Salary Allowances
Allowances Employee
Employee
&&Bonus
Bonus Benefits
Benefits
 Companies providing benefit
Analysed items
House Rent Allowance
Gratuity
Housing Loan
Medical reimbursement/ allowance
Insurance
Leave Travel allowance
Hospitalisation
Variable Bonus
Conveyance allowance
Superannuation
Car Loan
Social/ Sports club membership
Incentive/ Sales Commission
Hard Furnishing
Medical check-up
Fixed Bonus
Other allowances
Flexible benefit plan
HOW TO MOTIVATE?

 One that is based on the understanding of how

human nature works. All humans are motivated by
2 things -- pleasure or pain.
 Ability and motivation are the core part of any good
employee motivation program
 Ability can be improved with training and education.
 Motivation is the willingness of a person to want to
perform a task
KEY ELEMENTS OF
MOTIVATION PROGRAM
 Positive reinforcement along with high
expectations, provide training when
necessary.
 Treat people fairly, with respect, and honestly
 Understanding and addressing employee
needs.
 Teach employees how to set work related
goals.
 Restructure or reorganize jobs and job
descriptions when necessary.
 Have a rewards system based on job
performance.
MOTIVATION
TECHNIQUES
 One technique to motivate employees that
works really well is the employee of the month.
 Other effective employee motivation
techniques include competitions between
teams in order to get projects completed
faster, awards for perfect attendance, and
awards for jobs well done.
 Some companies will let customers rate their
customer service representatives. At the end
of a specific time frame an award is given to
the person who has provided the most
outstanding customer service.
OUTCOME OF THE
PROGRAMS
 Helps in finding out exactly what the
employees like and dislike about their current
employment situation
 How employee satisfaction is changing over
any given time period
 Employee retention and turnover rates can be
greatly improved by using employee
motivation surveys as exit surveys, the
company needs to know why employees are
leaving. Is it a skill issue, a pay rate issue, etc.
 Improving employee retention is a great way to
improve a company's bottom line
Employee Benefits – Insurance Co’s viewpoint

Employee
Employee Benefits
Benefits

Insurance
Insurance Retirement
Retirement

Accident
Accident Mediclaim
Mediclaim Life
Life Leave
Leave Superannuation
Superannuation
Encashment
Encashment

Gratuity
Gratuity

Defined
Defined Defined
Defined
Benefit
Benefit Contribution
Contribution
Mediclaim Insurance
•Reimbursement of medical expenses following hospitalization
•Cash less hospitalization facility available under certain plans
•Tax deduction available for the business

Accident Insurance
•Can offer compensation for any/all of the following:
•Accidental death, disability
•Medical expenses for treatment post accident
Life Insurance
• Benefit payable on accidental/natural death
• Convenient eligibility conditions

Life Insurance – Trends

• Increasing popularity amongst employers/ employees
• General cover is about 3 to 5 times the gross annual salary
Leave Encashment –Defined benefit

 For whom?
If company offers encashment of leave, all employees
 What benefit?
Will be based on the company policy.
Normally x days salary for each accumulated day of leave
 How Funded?
Institute of Chartered Accountants of India require that a
provision be made for the liability.
No special tax benefits for self-funding through a trust
Gratuity – Defined Benefit
 For whom?
Engaged in Factories, Mines, Plantations, Railways, Shops
and establishments notified by Government
In service for 5 successive years
 What benefit?
15 days wages for each year of service
Maximum limit Rs 3,50,000/
7 days wages per season for seasonal occupation
 How Funded?
Special tax concessions if funded through a trust or insurance
company
Superannuation – Defined Contribution/ benefit

 Superannuation, is a special way of saving to provide yourself with

an income when you retire.

 Retirement plans may be set up by employers, insurance

companies, the government or other institutions such as employer
associations or trade unions
 For whom?
 Non-mandatory, defined by company policy
 What benefit?
 Can be defined benefit(certain formula of last drawn salary) /defined
contribution(certain %age of salary every month contributed to a fund)
 Can be different for different grades
 How Funded?
 Special tax concessions if funded through a trust or insurance company
Retirement Benefits - Trends
• Offers a cash-accumulation conventional scheme.
•“Normal Retirement Age” – The normal retirement age is 65 years.

•Human Resource Department will write to each employee 6 months

prior to their normal retirement age.

• More and more companies now funding through Insurance

• Pensions benefits - In general, a pension is an arrangement to

provide people with an income when they are no longer earning a
regular income from employment.
DEARNESS ALLOWANCE
 The Only Purpose of Dearness Allowance is to enable a
worker in event of a rise in cost of living to purchase the
same amount of goods of basic necessity as before
  DA is calculated based on AICPIN (All India Consumer
Price Index Number)
 Dearness Allowance is paid on the Basic Pay as defined
in FR 9(21)(a)(i)+NPA, if any (Personal Pay, Special
Pay, etc., not included)
 There are 2 kinds of payment of DA as practiced in India
:
- linked to cost of living index
- not linked to cost of living index
DA and CONSUMER PRICE
INDEX
 As per the Rupee-point system, Increase or
decrease in DA is decided based on the
average Quarterly/Half Yearly increase or
decrease in Consumer Price Index Point. For
example in the cement Industry DA increases
or decreases by Rs 2.15 per point .The Sugar
Industry calculates DA at Rs 2/- per point.
 The expected All India Consumer Price Index
number (AICPIN) for Industrial Workers Base
2001=100 for the month of May 2010 was
released by Statistical Department, Labour.
The AICPIN for the month of May 2010 is 172.
HOUSE RENT
ALLOWANCE
 House Rent Allowance is wage in cases where it is being paid.
 In cases where an employee is being paid house rent allowance, the
same will be included both for coverage and contribution
 In cases where the staff quarters have been allotted the amount of
salary and wages paid will count for coverage and contribution and
no notional house rent allowance is to be presumed in such cases.
 House rent allowance is a ‘wage’ under Sec.2(22) of the ESI Act.
CONVEYANCE
ALLOWANCE
 Conveyance allowance is paid to the employee
to compensate the expenses incurred by the
employees on travelling etc
 The travelling allowance or value of any
travelling concession is also being paid to the
employees in the nature of conveyance
allowance, which is neither wages for the
purpose of coverage of employees under
Sec.2(9), nor it is treated as wages for the
payment of contribution under Section 2(22) of
the ESI Act.
MEDICAL ALLOWANCE
The employees working in
factories/establishments are being provided
medical services in kind by the employer but in
certain factories/establishments instead of
providing medical services in kind, the amount
spent by the employees on medical care is
reimbursed while in some other organisations,
employees are being paid monthly cash
allowance in lieu of medical aid/reimbursement
of medical expenses. Where such payments
are made by the employer in lieu of the
medical benefit, the same are to be treated as
wages under Sec.2(22) of the ESI Act
NEWSPAPER ALLOWANCE

In certain factories/establishments the

employees are reimbursed the cost of
Newspapers while in some other
factories/establishments the employees are paid
monthly newspapers allowance instead of
reimbursement of the cost of the Newspapers.
Where the amount is being paid regularly to the
employees by the employer as Newspapers
allowance the same will be treated as wages
under Sec.2(22) of the ESI Act
EDUCATION ALLOWANCE
 Employees are being paid monthly Education
allowance for the children studying in the
Schools/Colleges. Where such education
allowance is being paid monthly, the same is
to be considered as wages under Sec.2(22) of
the ESI Act and the contribution is chargeable
on the said amount.
 However, in such cases where instead of
paying the education allowance on monthly
basis, the amount spent as fee is reimbursed
to the employees and booked under education
allowance, in such cases no contribution is
payable
DRIVERS ALLOWANCE
In some of the factories/establishments the officers
employed as employees are being paid drivers’
allowance per month. This allowance is being paid to
enable the officers to appoint a driver at their own
level and such drivers employed are not being paid
salary directly by the factories/establishments.
Where such allowance is being paid to the
employees and the drivers are not engaged by the
employees, in such event the allowance paid as
such will be considered as wage under Section 2(22)
of the ESI Act and contribution will be chargeable
provided the employee is coverable under the
Scheme
EMPLOYEES' PROVIDENT
FUND ORGANISATION
 EPFO statutory body of the Government of
India under Ministry of Labour and
Employment. It administers a compulsory
contributory Provident fund, pension and
an insurance scheme for Indian Work
force.
 The primary aim is to provide old-age
income security so as to contributing to the
economic and social well-being of Indians
 The Employees' Provident Funds and
Miscellaneous Provisions Act, 1952 came
into effect on 4th March 1952
EPFO (contd)
 There are a total of about 40 million
contributing and non contributing members
in about 450,000 covered establishments.
 As per provisions in force almost any
establishment in India is required to have a
registration with the basic criterion being
employment of 20 or more persons
 Contribution is at present 12% of basic
salary as employee's share and a matching
contribution by the employer, with the total
to be 13.61% of the total wages of the
employees.
GRATUITY
 Gratuity is a payment made for the past services of
the employee by the employer when employee retire
or resign from the organization
 It is payable for 15 days per year for a period the
employee has worked in the organization
 Gratuity is payable to any employee only after the
completion of 5 years of continuous service in the
organization
 Covered under the Payment of Gratuity Act,
1971: (Last drawn monthly basic salary + dearness
allowance)/26 x 15 days x number of years of
service (date of joining – date of retirement/leaving
job)
EMPLOYEE STOCK OPTION
PLAN
 An employee stock option is a call option on the
common stock of a company, issued as a form of
non-cash compensation
 Employee stock options are mostly offered to
management as part of their executive
compensation package
 Employee stock options (ESOs) are non-
standardized calls that are issued as a private
contract between the employer and employee. Over
the course of employment, a company generally
issues ESOs to an employee which can be
exercised at a particular price set on the grant day,
generally the company's current stock price.
PERFORMANCE LINKED
INCENTIVES
 PLI is a form of payment from an employer
to an employee, which is directly related to
the performance output of an employee
and which may be specified in an
employment contract
 PLI vs. salary
 PLI vs. bonus
 PLI vs. appraisal
 PLI vs. retention bonus
 Method of calculating PLI
NON MONETARY
BENEFITS
 There are various non-wage compensations
provided to employees in addition to their normal
wages or salaries which are also called as perks
 Some of these benefits are: housing (employer-
provided or employer-paid), group insurance (health,
dental, life etc.), disability income protection,
retirement benefits, tuition reimbursement, sick
leave, vacation (paid and non-paid), social security,
profit sharing, funding of education, and other
specialized benefits.
 The purpose of the benefits is to increase the
economic security of employees.
MARICO
 Marico is a leading Indian group providing
consumer products and services in the areas of
Health and Beauty based in Mumbai
 During 2009-10, the company generated a
Turnover of about Rs.26.6 billion (USD 600
Million), in respect of its food, hair care and
skin care related activities
 The organisation holds a number of brands viz.
Parachute, Saffola, Sweekar, Hair&Care, Nihar,
Shanti, Mediker, Revive,Kaya Skin Clinic,etc
 As of 2010, it employs 1000 people
MARICO’s COMPENSATION
POLICY
 The compensation at marico, like many other
private sector companies consists of 2 components-
basic pay and variable pay
 The employees have the discretion to choose from
a variety of allowances as per their requirements
 The annual increment at marico has a ceiling of
33.33%
 The rates of PF, EPF are the same as Govt
employees and other facilities or perks such as
LTA, medical expenses vary as per the hierarchy of
the employee
ORIENTAL BANK OF
COMMERCE
 Public sector bank
 Established on 19 February, 1943, in Lahore
 Nationalized on 15th April, 1980
 Shri Nagesh Paidah-Chairman
 Head office- New Delhi
 530 branches and 505 ATM's spread
throughout India
 Global Trust Bank Limited (GTB) was
amalgamated into OBC
 VISION
To be a sound all India, customer
centric, efficient retail bank with
contemporary size, technology and
human capital; endeavouring to
enrich lives across all sections of
society; and committed to upholding
the highest standards of corporate
governance.
 MISSION
 To provide the finest banking services by
upgrading human capital and infusing
advanced technology, thereby achieving
total customer satisfaction; and being
reckoned as the “Best Bank” in the
Industry on all efficiency parameters.
 To enhance shareholders’ wealth by
ensuring sound growth of business and
make valuable contributions to national
economic growth.
 CSR ACTIVITIES

 GRAMEEN PROJECT

 'The Comprehensive Village Development

Programmer‘

 14 point action plan

 ALLOWANCES
 Dearness Allowance
 House Rent Allowance
 Travelling Allowance
 Entertainment Allowance
 Hilly Area Allowance
 Medical Allowance
 Children Education Allowance
 OTHER
BENEFITS
NIGHT DUTY ALLOWANCE
GRATUITY
FESTIVAL ADVANCE
LEAVE ENCASHMENT
ENTERTAINEMENT
 Our mission is to improve the quality of human
life by enabling people to do more, feel better
and live longer
 Our business employs 96,500 people in over 100
countries
 Around 13,000 people work in our research
teams to discover new medicines
 Our vaccines are included in immunisation
campaigns in 182 countries worldwide
 We delivered 1.4 billion vaccine doses to 179
countries in 2010
 Our long term vision is for our entire value chain
to be carbon neutral by 2050
 Many of our consumer brands are household
names: alli, Ribena, Horlicks,Lucozade, Aquafres
h, Sensodyne, Panadol, Tums
 Our products
1. Prescription medicines
2. Vaccines
3. Consumer Healthcare
  Salary model:
Basic Rs.170 /- p.m.

Dearness Allowance Rs. 13179.50/- p.m.

House Rent Allowance Rs.1260.58/- p.m.

Medical Allowance Rs. 292/- p.m.

Education Allowance Rs. 639.43/- p.m.

C/F paise Rs.1.89/- p.m.

Total Rs. 15543.4/- p.m.

  Expences :
Dealy Allowance Rs.215/-p.m. (metro city)
Rs.195/-p.m.(other than metro city)
Ex. Headquarter Rs.205/-p.day.

Mob. Allowance Rs.500/-p.m.

Local train pass -------

Traveling Allowance Rs. 3.5/- p.km.(per day 140 k.m.)

Stationary Allowance -------

 Incentives: if target achieve
 Monthly –Rs.2500/-
 Quarterly --- Rs.20,000/-
 Six month —Rs.30,000/-
 Coverage and Reach----Rs. 2500/-p.m.
 Product wise Incentives.