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GEMBA School of HR

2nd Trimester

Compensation & Benefits

Management

Slide Nos. 1 to 37 : Module material

Slide Nos. 38 to 65 : Reference Materials

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1. To establish a fair and equitable remuneration

2. To attract competent candidates

3. To retain workforce4. To improve productivity

5. To control cost

6. To improve industrial relations

7. To improve public image of the organisaion

Purpose of COMPENSATION

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Types of COMPENSATIO

Direct compensationMonetary benefits offered to employees for their

services to the organization. It includes components

like . . . ..

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Types of COMPENSATIO

In-Direct compensationNon-Monetary benefits offered to employees for their

services to the organization. It includes components

like . . . ..

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Pay a competitive base salary - not an aggressive one,but a salary comparable to what an employee could get

somewhere else

Offer equity in the company to all employees so thatthey can reap the rewards of the company

Be aggressive in total overall compensation through

the use of the incentives

Incentive programs should be designed so that high-

performance people get high compensation

Compensation Philosophy

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To improve the motivation of your people to perform better

To have the potential of strengthening the image as GOOD

EMPLOYER

Reward scheme has the potential of motivating employees on effective

implementation ; it would be demotivating if poorly handled

Benchmark salary scheme so that it is at par with salaries paid in theopen market for similar types of jobs

Doing this will minimize the possibility of good employees leaving your

organization for a more lucrative job elsewhere

Paying too low a salary may save you money but will not attract qualitypeople

On the other hand, it may compel good employees to leave

Paying competitive salaries is in accordance with sound employee

recruitment, employee engagement and employee retention practices

COMPENSATION Strategy

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To link the compensation of employees to the

mission, objectives, philosophies, and culture of theorganization

To motivate employees through compensation

To reward employees past performance

To remain competitive in the labor market

To maintain salary equity among employees

To mesh employees future performance with

organizational goals

To control the compensation budget

To reduce unnecessary turnover

Strategic Compensation Planning

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$ Managers tie & link compensation to employees

effort and performance

$ Refers to a wide range of compensation options,including merit-based pay, bonuses, salary

commissions, job and pay banding, team / group

incentives, and various gain sharing programs.

Pay-for-Performance Standard

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How will performance be measured? How will monies to be allocated for

compensation increases ? Which employees will be eligible?

How will payouts be made? How often will payouts occur? How large will the payouts be?

Will employees perceive the rewards asvalued?

Pay-for-Performance Standard

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Hourly WorkWork paid on an hourly basis

Piecework

Work paid according to the number of units

produced

Salaried Workers

Employees whose compensation is computed on

the basis of weekly, bi-weekly, or monthly pay

periods

Bases for Compensation

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A theory of Motivation

Employees should exert greater work effort

if they have reason to expect that it will result

in a reward that they value

Employees also must believe that good

performance is valued by their employer and

will result in their receiving the expected

reward.

Expectancy Theory

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COMPENSATION Approach

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Joaneses model

The value fit model

Tune of the time model

Capacity to pay model

Percentile Position : 75th percentile : : would be one of the top paymasters

This model proved right when the IT industry was its BOOM

To fix up Compensation to a person in a position commensurate withinternal equities

To pay more when the organisation is doing extremely well and to slash downduring bad times ; it is whimsical and inconsistent ; it has its own relevance and

strength with Small / Medium sized establishements

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Performance, Position and Person

Joaneses model

The value fit model

Tune of the time modelCapacity to pay model

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Fairness

Relevance

Consistency

SustainabilityCompliance

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Business GoalsBusiness Goals

BusinessStrategy

BusinessStrategy

Compensation

Plan

Compensation

Plan

Market SurveysMarket Surveys

Compensation

Strategy

Compensation

Strategy

Job EvaluationJob Evaluation

Unit InputsUnit Inputs

Total

remuneration

Total

remuneration

Performance

Management

Performance

Management

Non-Financial

Rewards

Non-Financial

RewardsOrg.StructureOrg.Structure

Performance

linked Pay

Performance

linked PayIndividual PayIndividual Pay

Contribution

/outputs

Contribution

/outputs

InternalE

quity

InternalE

quity

Ex

ternal

Equity

Ex

ternal

Equity

Pay levels /

structures

Pay levels /

structures

The Pay Model

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Payment of Wages Act 1936

All employees to be paid before 7th of the month.

Minimum Wages Act 1948

Stipulates minimum level of payment for sustenance

Labour Law Act, 1988

Provision of Exemption to employers based on manpower size

Payment of Bonus Act 1965

Bonus is profit sharing at a rate of 8.33%

All the employees of service sector, educational institutions and

educational institutions and manufacturing units are covered in the

act

Government Regulations

on Compensation

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Factors Affecting Pay Structure

INTERNAL FACTORS EXTERNAL FACTORS

Job W orthiness Market Conditions

Com pensation Strategy Cost of Living Index

Em ployee's relative

worthinessCollective Bargaining

Em ployer's ability to pay Legal requirements /implications / compliance

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Pay Levels Grid

HIGH PAY LOW

COMMITMENT

HIGH PAY HIGH

COMMITMENT

LOW PAY LOW

COMMITMENT

LOW PAY HIGH

COMMITMENT

TR

ANSACT

IONAL

Low

-----

High

RELATIONAL

Low ----- High

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A curve in a scatter gram representing therelationship between relative worth of jobs

and wage rates

Pay Grades : : Groups of jobs within aparticular class that are paid the same rate

Rate Ranges : : A range of rates for

each pay grade that may be the same foreach grade or proportionately greater for

each successive grade.

The WAGE Curve

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The WAGE Curve

Competence-based Pay also skill-based payor knowledge-based pay

Compensation for the different skills or increased

knowledge employees possess rather than for

the job they hold in a designated job category

Red Circle Rates

Payment rates above the maximum of the pay range

Broadbanding

Collapses many traditional salary grades into a few

wide salary bands

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Anatomy of a Pay structurePay Structure

consists of a series of Pay Ranges, orgrades, each with a minimum and maximumpay rate

Pay RangeHas a minimum pay value, maximum pay valueand a midpoint

Midpoint of a rangeRepresents the competitive market value forthe job or group of jobs.

Midpoint = Max + Min

2

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Variation of Range Spread

Vary based on level and sophistication

of skills required for a given position

Entry level positions (skills that arequickly mastered) have narrower pay

ranges

Managerial positions will have broader

pay ranges

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Typical Range Spreads

20 25 %

Lower-level service, production

30 40 %

Clerical, technical

40 50 %

Professional, Administrative &

Middle management

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To gather information regarding the industrystandards

To know more about the market rate i.e.

compensation offered by the competitors

To design a fair compensation system

To design and implement most competitive

reward strategies

To benchmark the compensation strategies

Salary Survey

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1. Tools used to determine the median or average compensation

paid to employees in one or more jobs

2. Compensation data as collected from several employers is

analyzed to develop an understanding of the amount of

compensation paid

3. Focuses on one or more job titles, geographic regions,employer size, and / or industries

4. It may be conducted by employer associations, survey vendors

or by individual employers

5. It is often time sensitive and may become out-of-date quickly

6. It is a time sensitive information - hence are often carried-out by

the year or quarter in which the data was collected

7. It provides means for comparison of salaries at the company

Salary Survey

T f S l S

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Types of Salary SurveyStandard Surveys

Take by organizations regularly

Annually based on the organizational objectivesAttempts to cover the same companies every year and provide the same type of

analysis

Custom Surveys

Organisations do on some specific informationEither appoint research organizations to conduct theses surveys or they

themselves conduct the survey by sampling few of the competitors on their ownDo not have any time interval ; it is done as the need arises.Focuses on important issues usually one or two

Survey Reports

The survey reports consist of the analysis and conclusion drawn from the

evaluative data based on the objectives of the studyThe reports also include the data, facts and figures to support the analysis and

conclusionThe supportive data and annexure provided in the report form the basis for the un-

biased conclusion and validation of the analysis

S S

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Salary Survey

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Salary MatrixA salary increase matrix is a Two Dimensional Matrix

Axis X

Meets ExpectationsExceeds Expectations

Axis Y

Lower thirdMiddle thirdUpper third

High performers paid low in range should receive

the largest salary increase

Lower level performers already paid at or above midpoint

should receive smaller or no increases

M it b d P

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Merit-based PayManaging merit compensation can be complicated and time

consuming without following a basic structure and automating

wherever possible

Establish a salary range for each position or pay grade

Establish a merit matrix defining increases based on performance

and where the employee falls within the salary range.

Establish your compensation budget

Calculate the employees compensation ratio

Calculate suggested increases based on performance, current

pay, and budgetProvide suggested increases to managers for review and approval

Make any adjustments to the suggested increases and process

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Equal Pay for Comparable Worth

The concept that male and female jobs that aredis-similar, but equal in terms of value or worth to the

employer, should be paid the same

Wage-Rate CompressionCompression of pay differentials between job classes,

particularly the pay differentials between hourly

workers and their managers

Low-wage Budgets

Current wage budgets reflect the general trend toward

tight compensation cost controls

Significant Compensation Issues

ESOP

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1. An Employee Stock Option Plan is when the company offers its shares to the

employees.

2. An ESOP is nothing but an option to buy the company's share at a certainprice. This could either be at the market price (price of the share currently

listed on the stock exchange), or at a preferential price (price lower than the

current market price).

3. If the firm has not yet gone public (shares are not listed on any stock

exchange), it could be at whatever price the management fixes it at.

Why ESOP

1. When you invest in shares, you do not invest in the market. You invest in the

equity shares of a company. That makes you a shareholder or part owner in

the company.

2. Owning an equity share means owning a share in the company business.3. Companies offer their employees shares because it is considered that having a

stake in the company would increase loyalty and motivation substantially.

4. It depends on company policy and your designation.

5. There are time limits for availing this scheme.

ESOPs are taxable when they are sold

ESOP

B fit

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1. Health Plans

2. Dental Plans

3. Vision

4. Life Insurance5. Disability Income Insurance

6. Business Overhead Insurance

7. Individual Long-term care

8. Group long-term care

BenefitsEmployee Benefits

1.SAVING MONEY on employee benefits is a must in todayseconomy

1.The cost of providing benefits is rising significantly, while

employees consistently seek more and more from their benefits

packages

2.Many employers struggle to balance employee needs with their

own capabilities and bottom lines.

A l i & B h ki B fit N d

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Analysis & Benchmarking Benefit Needs

Employers to pitch Employee Benefits Benchmark based on

1. Geography2. Industry

3. Company strategy

4. Local customs

5. Employee Needs & Expectations

Employers to understand

1. How many of their employees are living pay

cheque to pay cheque and employees have

needs that are not met by their salary or present

employee benefits

2. Employee savings rates ; most aren't saving

enough money for retirement

3. How well or poorly their benefits are received

by employees

Time Off Benefits

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As life becomes more stressful and more people feel the pressures of balancing

work and family concerns, benefits involving time off become more and more

valuable to employees. When people talk about benefits, some don't even thinkabout time off as a benefit, but that's exactly what it is

Required time off

In a sense, some types of time off are not benefits because you, as an employer,

are required by law (either federal or state) to provide them to employees. They

include:

Time Off to Vote ; Jury Duty Leave ; Military Leave

Family & Medical Leave

Other time-off benefits

Apart from the above mandated time-off benefits, we could offer the followingleaves which can be paid or unpaid

Holidays ; Vacations ; Sick Leave

Personal Leave ; Funeral Leave ; Maternity / Paternity Leave

Administrative issues

Time-Off Benefits

W k Lif S tti

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Work Life Setting

List out what matters to your life Seek and Accept Help & Guidance Set Boundaries Ergonomically designed work-place Have some Visual Stimulation Work board & Work Calendar

Have some plants in your work area Mild & Melodious music Have a Recreational Space to observe breathing

Employers to build rapport and gain respect

Excellence should not be demanded ( importance to personal

sentiments )

Encourage to have personal life

Designing Benefit Package

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Important recruitment and retention tool

Three most important factors that must be considered

1. What benefits can the employer afford?2. What benefits will best attract and retain the employees needed to execute the

organization's business strategy?

3. What benefit vendors provide a quality and consistent product now, and will

continue to do so in the future?

Employers should engage in strategic planning as they try to balance employees' needs and

budget. Additional Benefits like

1. Financial planning assistance

2. Health club memberships

3. Long-term care insurance

Benefits programs are most effective in attracting, motivating, and retaining employeesStrategic planning can provide for controlled budgets over a period of years and provide

meaningful benefits that aid in recruiting and retaining key employees

To achieve these objectives :

Evaluate current benefit plans and programs Identify corporate objectives Spell out strategies that relate to corporate culture Coordinate benefit strategies with other compensation and human resource programs Design a communication plan

Establish budgets to accomplish these steps

Designing Benefit Package

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ImportantContents for

Reference &Better

Understanding

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J b D i ti F t

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Job Description Format

Job Title

Based at (Business Unit, Section - if applicable)

Position reports to (Line Manager title, location, and

Functional Manager, location if matrix management structure)

Job Purpose Summary

Key Responsibilities and Accountabilities

Dimensions / Territory / Scope / Scale indicators (the areas

to which responsibilities extend and the scale of

responsibilities - staff, customers, territory, products,equipment, premises, etc)

Date and other relevant internal references

J b S ifi ti

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Job Specification

Components

Experience

Education Required Skills Knowledge

Characteristics

J b E l ti

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To determine the relative worth of a job

To frame compensation plans

Reduction in inequalities in salary structure

Specialization identification

Helps in selection of employees

Harmonious relationship between employees and

manager to curb salary controversies

Standardization to bring uniformity in salary structure

Relevance / Creation of New Jobs

Job Evaluation

INCOME TAX SLABS : 2011 12

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INCOME TAX SLABS : 2011 - 12

Assesee Type From To

0 180000 NIL

180001 500000 10%

500001 800000 20%

800001 and above 30%0 190000 NIL

190001 500000 10%

500001 800000 20%

800001 and above 30%0 250000 NIL

250001 500000 10%

500001 800000 20%

800001 and above 30%

IT Slab (in INR)Tax to be

Charged

Male

Female

Senior Citizens

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PROFESSIONAL TAX SLABS : TN

S No Six months income(Rs.) Old Tax(Rs) New Tax(Rs)

1 upto 21,000 - -

2 21,001 30,000 75 1003 30,001 45,000 188 235

4 45,001 60,000 390 510

5 60,001 75,000 585 760

6 75,001 and above 810 1095

Payment of Bonus Act 1965

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An employee who is eligible to receive bonus even after

leaving the service : :

Can claim the same for the period equivalent to what he

has worked for, even after leaving the job. Such bonus -

which is due and unpaid - can be claimed by the employee

within one year of its becoming due and the employer isliable to pay the same.

However, NO such liability incurs on employer when an

employee has been dismissed from service for fraud,

riotous or violent behavior, or theft, misappropriation orsabotage of any property of the establishment.

The employer even has a right to forfeit bonus of such an

employee.

Payment of Bonus Act , 1965

LABOUR WELFARE FUND

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Contribution to the Fund by Employee and

Employer (Sec 15) and rules 11(a):

1.Every Employee contributes Rs.7/- per year

2.Employer in respect of and such Employee,

contributes Rs.14/- per yearto the Fund

3.Government in respect of each such employee

contributes Rs.7/- per yearto the Fund.

LABOUR WELFARE FUND

Needs to be deducted from Attrited employees also from the FnF dues

Remitted to LW Board annually

Regulatory ACTs

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Regulatory ACTs

S No Central Acts

1 The Factories Act 1948

2 Contract labour (Regulations & Abolition) Act 1970

3 Child Labour (Prohibition & Regulation) Act 1986.

4 The Equal Remuneration Act 1976.

5 Inter State Migrant Workmen Act 1979

6 The labour Laws (Exemption from furring returns) Act 1988.

7 The Maternity Benefit Act. 1961.

8 The Minimum wages Act 1948

9 The Payment of wages Act 1936

Regulatory ACTs

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Regulatory ACTsS No Regulations / ACT

1 COMPANY LAW

2 THE (State) SHOPS AND INDUSTRIAL ESTABLISHMENT ACT

3 THE FACTORIES ACT4 The PROFESSIONAL TAX Act

5 THE PAYMENT OF BONUS ACT

6 THE PAYMENT OF GRATUITY ACT

7 THE MINIMUM WAGES ACT

8 MATERNITY BENEFITS ACT

9 WORKMEN COMPENSATION ACT10 PROVIDENT FUND ACT

11 EMPLOYEES STATE INSURANCE CORPORATION ACT

12 TN LWF ACT AND RULES

13 THE INCOME TAX ACT

14 NATIONAL AND FESTIVAL HOLIDAYS

15 THE INDUSTRIES DEVELOPMENT & REGISTRATION ACT

16 TN Confirment for permanent status Act & Rules

17 TN SUBSISTENCE ALLOWANCE ACT

18 THE (State) GENERAL SALES TAX ACT

19 THE CENTRAL SALES TAX ACT

20 CENTRAL EXCISE TARIFFS AND MANUALS

21 THE STANDARD OF WEIGHTS & MEASUREMENTS ACT

22 FOREIGN EXCHANGE MANAGEMENT ACT

Regulatory ACTs

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Regulatory ACTs

S No Registers under Contract Labour Act

1 Form XIII - Register of Persons employed

2 Form XIV - Employment Card

3 Form XV - Service Certificate

4 Form XVI - Muster Roll

5 Form XVI - Register of wages

6 Form XX - Register of Deductions for damage or loss

7 Form XXI - Register of Fines

8 Form XXII - Register of Advances

9 Form XIX - Wage Slips

Regulatory Registers

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S.No ActResgister/Form

NumberDescription of the Register

1 Form P Register of Advances, Deductions for DamagLosses and Fines

2 Form Q Register of Employment & Leave

3 Form R Register of W ages

4 Form T W age slip

5 - Inspection Note

6 National & Festival Holiday Act 1958 Form VI Register of National and Festival Holidays

7 Equal Remuneration Act 1976 Form D Register of employees

8 The Maternity Benefit Act 1961 Form A Muster roll

9 Paym ent Subsistence Allowance Act 1981 Form I Register of em ployees placed under suspensi

10 Conferment of permanent status of workAct 1981

Form I Register of W orkmen

11 Form A Register showing computation of allocable sur

12 Form B Register showing set-on and set-off the alloc

13 Form C Register of bonus.

14 Form B Register of wages

15 Form C Register of unpaid accum ulations, fines an

Tamil Nadu List of Registers to be m aintained.

Shops & Establishment Act 1947

The Payment of Bonus Act 1965

The Labour Welfare Fund Act 1972


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1 Form X THE MINIMUM WAGES ACT - 1948

2 Form V THE PAYMENT OF WAGES ACT - 1936

3 Form U THE PAYMENT OF GRATUITY ACT - 1972

4 Form J THE MATERNITY BENEFIT ACT - 1961

5 THE CONTRACT LABOR (REGULATION & ABOLITION) ACT - 1970

6 THE SHOP AND ESTABLISHMENTS ACT - 1947

ABSTRACTS DSPLAY

1 Name Board -THE SHOP AND ESTABLISHMENTS ACT - 1947

2 Form S THE SHOP AND ESTABLISHMENTS ACT - 1947

3From V THE INDUSTRIAL ESTABLISHMENTS (NATIONAL AND FESTIVAL

HOLIDAYS) ACT - 1958

4 Pay master THE PAYMENT OF WAGES ACT - 1936

5 Form A THE PAYMENT OF GRATUITY ACT - 1972

6 Notice of Opening THE PAYMENT OF GRATUITY ACT - 1972

7From I THE INDUSTRIAL ESTABLISHMENTS (NATIONAL AND FESTIVAL


8From II THE INDUSTRIAL ESTABLISHMENTS (NATIONAL AND FESTIVAL


NOTICES


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1Form II Half yearly Return The Tamilnadu Industrial Establishments (Conferment

of Permanent Status to Workmen) Act - 1981 and Rules - 1981

2Form II Half yearly Return The Tamilnadu Payment of Subsistence Allowance Act

1981 and Rules 1981

3

The Tamil Nadu Labour Welfare Fund Act 1972 - Annual Return and Contribution

Form A

4 THE MINIMUM WAGE ACT 1948 FORM - III ANNUAL RETURN

5 THE PAYMENT OF WAGES ACT 1936 FORM - IVV ANNUAL RETURN

6 THE MATERNITY BENEFIT ACT FORM K , ANNUAL RETURN

RETURNS AND REMITTANCES



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FORM No. II (Register of deductions for damage or loss caused to employers

through the neglect or default of employed persons in respect of goods expressly

entrusted to them for custod .

FORM NO. II-A (Register of wages)

FORM NO. III(Register of advances made to employment persons)

FORM NO. III-A (Register of loans granted to the employed persons for house

building or other purposes)

FORM NO. IV(Annual Return)

FORM NO. V(Abstract of the payment of wages act, 1936, and the rules made

thereunder.)

Payment of Wages Act

HAYs Job Evaluation : : An Overview

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Work measurement Do you know how, where and why work is done?

Work alignment Does your structure fit with your strategy

Work fit Do you have the right people in the right roles?

Work value What is each role really worth to your organization?

Know-How

Depth & Range of Know-How Planning & Organizing Communicating &

Influencing ('Human Relations Skills)

Problem Solving

Thinking Environment ; Thinking Challenge

AccountabilityFreedom to Act ; Nature of Impact ; Area of Impact (Magnitude)

Measures jobs to reflect their relative weight in the organization Provides means to assess pay across different market/functions Evaluates jobs and not people

Not based on performance, title, writing skills or current salary

HAY s Job Evaluation : : An Overview

HAYs Job Evaluation : : An Overview
http://www.haygroup.com/in/services/index.aspx?id=30202http://www.haygroup.com/in/services/index.aspx?id=30257http://www.haygroup.com/in/services/index.aspx?id=30312http://www.haygroup.com/in/services/index.aspx?id=30367http://www.haygroup.com/in/services/index.aspx?id=30367http://www.haygroup.com/in/services/index.aspx?id=30312http://www.haygroup.com/in/services/index.aspx?id=30257http://www.haygroup.com/in/services/index.aspx?id=30202

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A set of compensable factors are identified as determining the worth of

jobs. Typically the compensable factors include the major categories of :

Skill

Responsibilities

Effort

Working Conditions

These factors can then be further defined.

1.Skill

a. Experience b. Education c. Ability

2.Responsibilities

a. Fiscal b. Supervisory3.Effort

a. Mental b. Physical

4.Working Conditions

a. Location b. Hazards

c. Extremes in Environment

HAY s Job Evaluation : : An Overview

HAYs Job Evaluation

Points range from

127 to 1300

HAYs Job Evaluation : : Points Table

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Position / IncumbentKnow-

HowProblem Solving Accountability

Total

Points

Manager 304 115 152 571

Supervisor 230 76 115 421

Systems Specialist 230 76 76 382

HAYs Job Evaluation : : Points Table

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Coverage under the ESI Act,1948APPLICABILITY

Under Section 2(12) the Act is applicable to non-seasonal factories employing 10 or more persons.

Under Section 1(5) of the Act, the Scheme has been extended to shops, hotels, restaurants, cinemas includingpreview theatres, road-motor transport undertakings and newspaper establishments employing 20* or more

persons.

Further under section 1(5) of the Act, the Scheme has been extended to Private Medical and Educational

institutions employing 20* or more persons in certain States/UTs.

*Note: 14 State Govts. / UTs have reduced the threshold limit for coverage of shops and other establishments

from 20 to 10 or more persons. Remaining State Governments/UTs are in the process of reducing the same.

The existing wage limit for coverage under the Act is Rs. 15,000/- per month ( w.e.f. 01/05/2010).

AREAS COVERED

The ESI Scheme is being implemented area-wise by stages. The Scheme has already been implemented in

different areas in the following States/Union Territories

STATES

All the States except Nagaland, Manipur, Tripura, Sikkim, Arunachal Pradesh and Mizoram.

UNION TERRITORIES

Delhi, Chandigarh and Pondicherry

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E.S.I. Scheme being contributory in nature, all the employees in the factories or

establishments to which the Act applies shall be insured in a manner provided by the Act.

Employees contribution rate (w.e.f. 1.1.97) is 1.75% of the wages and that of employers is

4.75% of the wages paid/payable in respect of the employees in every wage period.

Employees in receipt of a daily average wage upto Rs.100/- are exempted from payment ofcontribution.

Employers will however contribute their own share in respect of these employees.

Collection of Contribution

An employer is liable to pay his contribution in respect of every employee and deduct

employees contribution from wages bill and shall pay these contributions at the abovespecified rates to the Corporation within 21 days of the last day of the Calendar month in

which the contributions fall due. The Corporation has authorized designated branches of

the State Bank of India and some other banks to receive the payments on its behalf.

Contribution Period and Benefit Period

There are two contribution periods each of six months duration and two corresponding

benefit periods also of six months duration as under.

Contribution Period Cash Benefit Period

1st April to 30th Sept. 1st January of the following year to 30th June.

1st Oct. to 31st March 1st July to 31st December of the year following

M a t er n it y B e ne f it

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M a t e r n it y B e n e f it is p a y a b le t o a n I n s u r e d W o m a n i n t h e f o l lo w in g c a s e s s u b j e

c o n d i t i o n s : -

C o n f in e m e n t - p a y a b le f o r a p e r io d o f 1 2 w e e k s ( 8 4 d a y s ) o n p r o d u c t io n o f F o r m

M is c a r ria g e o r M e d i ca l T e r m i n a t io n o f P r e g n a n c y ( M T P ) - p a y a b l e f o r 6 w e e k s ( 4

f o llo w in g m is c a r ria g e - o n t h e b a s i s o f F o r m 2 0 a n d 2 3 .

S i c k n ess a r i s in g o u t o f P reg n an c y , Co n f in e m en t , P rem atu re b i rth -p ayab le fo r a

o n e m o n t h -o n t h e b a s i s o f Fo r m s 8 , 1 0 a n d 9 .

I n t h e e v e n t o f th e d e a t h o f t h e I n s u r e d W o m a n d u r in g c o n f in e m e n t le a v in g b

M a t e r n it y B e n e f it is p a y a b l e t o h e r n o m in e e o n p r o d u c t io n o f F o r m 2 4 ( B ) .

M a t e r n it y b e n e f it r a te i s 1 0 0 % o f a v e r a g e d a ily w a g e s .

Maternity benefit is payable to insured women in case of confinement or miscarriage or sickness

related thereto.

For claiming this an insured woman should have paid for at least 70 days in 2 consecutive

contribution periods i.e. 1 year.The benefit is normally payable for 12 weeks, which can be further extended up to 16 weeks on

medical grounds.

The rate of payment of the benefit is equal to wage or double the standard sickness benefit rate.

The benefit is payable within 14 days of duly authenticated claim papers

T em porary Disablement Benefit

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(a) TD B is payable to an em ployee who suffers em ploym ent injury (EI) o

O ccupational Disease and is certif ied to be tem porari ly incapa ble to wor

"Em ployme nt Injury" has been def ined under Sect ion 2(8) of the Act, as

injury to an em ployee caused by a ccident or occupational disease arisin

in the course of his employm ent, being in insurable em ploym ent, whethaccident occ urs or the occupa tional disease is contracted within or outsi

territorial l im its of India.b. Certificates Required for TDB :

Accid ent Report in form 16,

Form 8,9,10, 11 and ESIC M ed.13.c. Eligibility for TD B :

Th e ben efit is not subject to any contributory cond it ions. An IP is el igible

day he joins the insurable em ploymen t.

(d) TD B Rate is 90% of average daily wages.

d. Duration of TDB :Th ere is no prescribed l im it for the duration of TD B. Th is is payable as l

tem porary disablem ent lasts and signi f icant im provem ent by treatm ent i

a Tem porary Disablem ent spell lasts for less than 3 days (excluding day

IP wil l be paid sickness ben efit, i f otherwise el igible. A special point for I

that som e IPs m ay resist taking a Final Certi f icate especial ly before 3 d

loss of TDB .

Permanent Disablement Benefit

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Permanent Disablement Benefit(a) PDB is payableto an IP who sufferspermanentresidualdisablementas a resultof EI (includingOccupationa

Diseases)and resultsin loss of earning capacity.The properauthorityfor assessingloss of earning capacityfor

injuries is the Medical Board and for Occupational Diseases, Special Medical Board.

(b) The durationof PDB may be for the periodgiven by MedicalBoard,if assessmentis provisionalor for entire

life if assessment is f inal.

(c) PDB Rate: The PDB rate is calculatedas percentageof loss of earningcapacityas assessedby the Medical

Board/MAT/EICourt in relat ion to TDB. List of injur ies deemed to result in permanenttotal disablementand

percentage loss of earning capacity has been prev iewed in 2nd Schedule to ESIC Act, 1948. Hence, the

max imum rate of PDB can be equal to the rate of TDB.

PDB amountis revisedby the ESIC from time to time to adjust for inflation.The latest enhancementis

with effect from 01.08.2009(d) Commutationof PDB (Regulation76-B): IP whose PDB has been assessed as f inal and who has been

awardedthe same at the rate not exceedingRs.1.50per day may apply for commutationof periodicalpayment

of PDB into a lum p-sum . W hen an application for com mutation is m ade within 6 m onths of the date of

communicationof MedicalBoarddecisionperiodicalpaymentsshall be commutedinto a lump sum providedthe

total commutedvaluedoes not exceedRs.10,000at the time of commencementof final award.However,where

such an applicationis made after expiryof 6 months,LO/ROwill refer the case to MR/PTMRto certi fy whethe

the IP has an average expectat ionof l ife for h is age. Such a certi ficate is issued by Medical Referee in therelevant place on RO/LO letter.

(e)Age of an IP will have to be prov ed to the sat isf actionof the Corporationin al l cases. Medical Boards assess

the age of IPs who are not able to producesatisfactoryproof of age and opinionof MedicalBoardshall be final in

this regard.

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PRIVATE LIMITED COMPANYSection 3(1) (iii) defines a private company as one which:-

has a m inimum paid-up share capital of Rs.1 Lakh or such higher capital as may be prescribed;and

by its Articles Association:restricts the right of transfer of its share;

limits the number of its members to 50 which will not include:-

m embers who are employees of the company; and

m embers who are ex-employees of the company and w ere members while in such em ployment and who have

to be m embers after ceasing to be employees;

prohibits any invitation to the public to subscribe for any shares or debentures of the com pany; and

Prohibits any invitation or acceptance of deposits from persons other than its m embers, directors or their relati

This goes to say that a private company, in addition to the earlier conditions, shall have a m inimum paid-up s

of Rupees One Lakh or such higher capital as m ay be prescribed and its Articles shall prohibit invitation or ac

deposits from persons other than its m embers, directors or their relatives. In case of such com panies, public i

not involved.

The basic characteristics of a private company in terms of section 3(1)(iii) of the Act do not get altered just be

subsidiary of a public com pany in view of the fiction in terms of section 3(1)(iv)(c) of the Act that it is a pub licMay be it is a public company in relation to other provisions of the Act but not with reference to its basic chara

terms of that section, a company is a private company when its articles restrict the right of transfer of shares,

m embership to 50 (other than employees shareholders) and prohibits invitation to public to subscribe to its sh

Therefore, all the provisions in the articles to m aintain the basic characteristics of a private company in term s

section is restriction on the right to transfer and the same will apply even if a private company is a subsidiary

company.

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PUB LIC L IM ITED CO MPAN Y

The Com pany d ef ined u nder sec t ion 3(1) ( iv ) o f the Com panies Act , 1956 i

wh ich-

is no t a p r iva te comp any;

has a min imum pa id-up cap i ta l o f Rs. 5 lakhs or such h igher cap i ta l as m

is a pr iva te comp any bu t subs id ia ry o f a pub l ic compan y.

Pr ivate Co m panies deem ed to be Publ ic Co m panies

Cer ta in pr ivate co m panies are deem ed to be publ ic co m panies by v i rt

viz.-when 25% or more o f its pa id-up share cap i ta l i s he ld by on e or mo re bo

when i ts average annu a l tu rnover (dur ing the las t 3 years) exceeds Rs.

when i t ho lds 25% or more o f the pa id-up sha re cap i ta l o f Pub l ic Co mp a

when i t accepts or renew s de pos i ts f rom the pub l ic a f te r ma k ing an inv it

adver t isement .

Ho weve r , as per the Com panies (Am endm ent ) Ac t , 2000 e f fec t ive f rom 1

2000 such de em ed pu b l ic l imi ted comp anies are requ i red to in t imate to t

rever t back to the i r or ig ina l s tatus as a p r ivate l im i ted co m pan y.

FIRM

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A firm is a group of persons, with production tools, located in some premises, who,

with work, transform raw materials into goods and services, and sell them.

The work and the raw materials are bought on some markets, and the goodand services are sold on other markets.

Three Types of Firms

1.Industrial firms : think of a workshop, a plant, or a group of plants

2.Commercial firms : think of a retailer, a wholesaler, or a large commercial

organisation3.Financial firms : banks, insurance companies, mutual funds

FIRM

Co Owners & Partnership
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In co-ownership, there is only a combined ownership without any business purpose.

In partnership, joint ownership and business are pooled. Partnership is based on

contractual association among partners ; Co-ownership may be by a procedure of law.

On the death of father, sons become co-owners of his possessions. On the other handpartnership is the result of an accord.

The purpose of partnership is to enter into some business and earn profits whereas co-

ownership is not meant for business intentions.

No partner can reassign his interest without the approval off all other partners.

A co-owner can transfer his interest whenever he likes without asking from other co-owners.Partners can also act as mediators of business. The have an indirect power to bind the firm

by their acts.

No agency affiliation exists in co-ownership. Every co-owner is answerable for his deeds only.

A co-owner can insist the division of property but in partnership such a provision is not

feasible.

A partner can demand the imbursement of his share in business through cash.

If a partner pays out some money for business he can demand its repayment.

On the other hand, if a co-owner spends money for the upgrading of property he cannot claim

it by the way of a lien of property.

Co-ownership does not require the formation of a well-defined act that can govern its

p

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