Remu Na Ration

7/29/2019 Remu Na Ration

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INTRODUCTION

Remuneration consists of the rewards that employees receive from their work.

Employees that work for modern companies and other major UK companies will

receive a range of money based and other rewards ranging from discounts on

company products, to subsidized company pension schemes. There are various

ways of rewarding employees, including the following.

1. Basic pay for standard hours. An employee works to a set contract e.g. x per

hour for a 30 hour week, of a salary of y per month. This scheme alone does not

provide an incentive to work harder, but if the rewards are good relative to those

offered for similar work then this will act as a motivating factor in itself.

2. Additional hours rewards. Employees are usually paid extra for working

unsocial hours (e.g. a night shift) or for working longer hours (overtime rates).

3. Commission. Sales staff are typically paid on a commission basis. The

commission rate depends on their success rate so acts as an incentive to employ

effective selling techniques.

4. Bonuses are another form of incentive to meet particular targets. Typically these

will be used to encourage and motivate employees to work harder when required,

e.g; offering football players an incentive bonus to win an important game.

5. Performance related pay. Many companies operate some form of performance

related pay scheme. Pay is then related to the achievement of objectives and

targets. The performance that is measured may be at company wide level, plant

level, team level or individual level.

6. Profits related pay. Employees pay and bonuses may be related directly to the

profits that a company makes.

7. Payment by results. This is a similar form of incentive scheme to profit related

pay. The results measured will be key results areas for a company such as sales.

8. Piece rate reward systems relate to paying employees according to their level of


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output. Where such a scheme operates it is essential that there is a good quality

checking procedure to make sure that the 'pieces' are of the required standard.


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EMPLOYEE REMUNERATION

Employee Remuneration refers to the reward or compensation given to the employees

for their work performances. Remuneration provides basic attraction to a employee to

perform job efficiently and effectively. Remuneration leads to employee motivation.

Salaries constitutes an important source of income for employees and determine their

standard of living. Salaries effect the employees productivity and work performance.

Thus the amount and method of remuneration are very important for both management

and employees.

There are mainly two types of Employee Remuneration

1. Time Rate Method2. Piece Rate Method

These methods of employee remuneration are explained below in detail

Methods of Employee Remuneration

1. Time Rate Method: Under time rate system, remuneration is directly linkedwith the time spent or devoted by an employee on the job. The employees

are paid a fixed pre-decided amount hourly, daily, weekly or monthly

irrespective of their output. It is a very simple method of remuneration. It

leads to minimum wastage of resources and lesser chances of accidents.

Time Rate method leads to quality output and this method is very beneficial

to new employees as they can learn their work without any reduction in their

salaries. This method encourages employees unity as employees of a

particular group/cadre get equal salaries.


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There are some drawbacks of Time Rate Method, such as, it leads to tight

supervision, indefinite employee cost, lesser efficiency of employees as

there is no distinction made between efficient and inefficient employees, and

lesser morale of employees.

Time rate system is more suitable where the work is non-repetitive in nature

and emphasis is more on quality output rather than quantity output.

2. Piece Rate Method: It is a method of compensation in which remunerationis paid on the basis of units or pieces produced by an employee. In this

system emphasis is more on quantity output rather than quality output.

Under this system the determination of employee cost per unit is not difficult

because salaries differ with output. There is less supervision required under

this method and hence the per unit cost of production is low. This system

improves the morale of the employees as the salaries are directly related

with their work efforts. There is greater work-efficiency in this method.

There are some drawbacks of this method, such as, it is not easily

computable, leads to deterioration in work quality, wastage of resources,

lesser unity of employees, higher cost of production and insecurity among

the employees.

Piece rate system is more suitable where the nature of work is repetitive and

quantity is emphasized more than quality.


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HUMAN RESOURCE MANAGEMENT

In addition to payment systems many jobs involve some form of benefits,

including:

A company pension scheme. The employee may subsidise the contributions

made by an employee into a company pension scheme. The employee

may also be able to benefit from a range of other subsidised services such

as insurance etc.

Subsidised canteen, and leisure facilities.

Use of a company car/phone with mileage/phone bills paid.

Access to and use of other company facilities e.g. computer facilities, on-site

creche and hairdressing etc.

The remuneration package therefore consists of a range of payment methods and

accompanying benefits which can be used as motivators by modern companies and

are all part of the human resource management philosophy prevalent in modern

business.

Human Resource Management involves treating employees as the most important

resource of the organisation.


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FEATURES OF REMUNERATION

Record, analyse and better manage your business total employment costs Full customisation options allow you to include superannuation, health fund

contributions, tools of trade, laptops, mobile phones, company vehicles and any

other employment related costs relevant to an employee.

Data can be reviewed and analysed online in real time, helping yourorganisation control total employment costs.

Built-in reporting provides users with the ability to mine the full range of datawithin Moorepayhrs integrated database


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BENEFITS OF REMUNERATION

Relevant data can be imported and exported quickly between Moorepay HRremuneration and other modules, ensuring packages can be applied quickly and

consistently across your organisation.

This eliminates the need for data re-entry, and allows changes to remunerationpackages to be instantly reflected in payroll.

Full visibility of total employment costs including - vehicles, utilities andpackages.

Comprehensive review and reporting functionality including odometer mileagereports to know where your field staff - really are!

Automation and integration: save time, improve accuracy


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COMPONENTS OF REMUNERATION

An average employee in the organised sector is entitled to several benefitsboth

financial as well as non-financial. To he specific, typical remuneration of an

employee compriseswages and salary, incentives, fringe benefits, perquisites,

and non-monetary benefits.

WAGES AND SALARY

Wages represent hourly rates of pay, and salary refers to the monthly rate of pay,

irrespective of the number of hours put in by an employee. Wages and salaries aresubject to annual increments. They differ from employee to employee, and depend

upon the nature of job, seniority, and merit.

Incentives

Also called 'payments by results', incentives are paid in addition to wages and

salaries. Incentives depend upon productivity, sales, profit, or cost reduction

efforts.

There are:

1) individual incentive schemes and

2) group incentive programmes.

Individual incentives are applicable to specific employee perform-

ance. Where a given task demands group effort for completion, incentives are paid

to the group as a whole. The amount is later divided among group

members on an equitable basis.


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Fringe Benefits

These include such employee benefits as provident fund, gratuity, medical care,

hospitalisation, accident relief, health and group insurance, canteen, uniform,

recreation and me like.

Perquisites

These are allowed to executives and include company car, club membership, paid

holidays, furnished house, stock option schemes and the like- Perquisites are

offered to retain competent executives.

Non-monetary Benefits

These include challenging job responsibilities, recognition of merit, growth

prospects, competent supervision, comfortable working conditions, job sharing,

and flexitime.


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PRINCIPLES OF FLEXIBLE REMUNERATION PACKAGING

Flexible remuneration packaging is provided to employees at the option of RMIT

with the following provisions:

No additional cost is incurred by RMIT. The cost to RMIT of an employee including salary sacrificing in their

employment package should be no more than the total cost of employing the

individual if they had not included salary sacrificing in their employment

package. In the event of an increase in taxation payable by the employer,

including fringe benefits tax (FBT) or any other required taxes, the employer

will pass on such costs to the employee where applicable.

Any salary sacrificing must be cost effective and balance flexibility optionsagainst benefits to RMIT.

Salary sacrificing is only available to employees who are covered by acertified agreement that includes an offer of salary sacrifice.

3. Basis for calculation of salary

The maximum gross annual salary, not gross salary less salary sacrificed amounts,

will be used as the basis for calculation of the following entitlements:

termination payments including superannuation*, annual leave and longservice leave entitlements;

retrenchment benefits; overtime and shift penalties; trade union dues; and annual leave loading entitlements


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*Executive staff remunerated under a total employment cost (TEC) arrangement

will have their superannuation based on the salary for superannuation as listed in

the applicable Remuneration Schedule.

4. Salary recovery to meet benefit payments

If a remuneration packaging arrangement is discontinued, or the employment of

the employee with the University ceases, the University will be entitled to recover

any monies to meet obligations entered into by the employee through flexible

remuneration packaging.

To effect such a recovery, the University may make deductions from an

employees salary or any other monies that would be payable upon the employees

employment cessation.

5. Fringe benefits tax (FBT)

The Income Tax Assessment Act (ITAA) and the Fringe Benefits Tax Assessment

Act (FBTAA) regulate the relevant tax payable on benefits.

Fringe Benefits Tax (FBT) was introduced in 1986 to tax the value of benefits

given by employers to employees and their associates including third parties. Not

all benefits attract the full FBT rate and some benefits are exempt from FBT.

FBT ensures that the appropriate tax is payable on benefits which are provided in

place of, or in addition to, salary or wages of employees. FBT is payable by

employers and is assessed on the value of the fringe benefits provided to

employees. FBT is a reportable benefit on annual payment summaries (group

certificates).


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6. Items able to be included as salary sacrifice

RMIT has selected items which are FBT exempt or concessionally treated for FBT.

Items that attract full FBT such as mortgage payments have not been included.

There is no tax advantage in salary sacrificing items if the full FBT applies as the

rate of FBT payable of 46.5% is equal to the highest income tax rate.

Items currently available for salary sacrifice include;

Superannuation Portable Electronic Devices where the primary use is for business purposes Car parking (When provided by RMIT) Such as the Wilson Car Park in

Cardigan Street off Russell Street

RMIT Fitness Centre membership costs Novated vehicles leases Additional contributions to approved superannuation funds Pre tax employee contributions to Unisuper and ESS Super Education expenses (only when ATO rules are met for a deduction to be

allowable)

Qantas and Virgin Airlines Club Professional Subscriptions (subscription to Trade and Professional Journals

associated with an individuals position)

7. Superannuation

Pre tax Unisuper contributions

Unisuper Defined Benefit and Accumulation 2 members have the option to convert

their after tax employee contributions to pre-tax contributions. The contributions


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are then considered to be employer sponsored benefits and then attract a 15%

contributions tax payable by the fund.

Employees with an income tax marginal rate greater than 15% will consequently

increase their take home pay as a result of a reduction in the tax liability by

changing from after tax to pre-tax contributions.

Staff are reminded that pre-tax contributions are not eligible for any government

co-contribution that may apply. Further information regarding cocontributions

can be found atAustralian Tax Office.

To commence or change this arrangement follow the instructions on theSuperannuation Contribution Election Form found by following the forms link at

the top of this page.
http://rmit.com/redirect?URL=http%3A%2F%2Fwww.ato.gov.au%2Fsuperhttp://rmit.com/redirect?URL=http%3A%2F%2Fwww.ato.gov.au%2Fsuperhttp://rmit.com/redirect?URL=http%3A%2F%2Fwww.ato.gov.au%2Fsuperhttp://rmit.com/redirect?URL=http%3A%2F%2Fwww.ato.gov.au%2Fsuper


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INDEX

1.Introduction2.Employee Remuneration3.Human Resource Management4.Features Of Remuneration5.Benefits Of Remuneration6.Components Of Remuneration7.Principles Of Flexible Remuneration Packaging8.Bibliography

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