Saturday Brain Storming Thought (80) 26/09/2020 By Vr Avinash Kulkarni
Remuneration
Remuneration is the money and other types of compensation an employee or executive of a company receives for their works
Remuneration includes
1) Salary or hourly pay
2) Commissions
3) Bonuses
4) overtime pay, less the premium portion
5) Holiday, vacation and sick pay
6) Rental value of employer provided housing
7) Value of employer provided meals & lodging
8) Time worked and accrued vacation upon dismissal
9) Piecework, incentive plans and profit sharing plans
10) Value of store certificates, merchandise or credits given to employees
11) salary, fee, bonus, wage, gratuity, pension, leave encashment, emolument, voluntary award, commission, annuity, stipend, retirement allowance
Positive impact of remuneration
1) it creates good relation between workers and management
2) employees get motivated
3) it declines the labour turnover rate
4) employees feel satisfied with their wages and thus contribute their best effort
5) it raises the standard of living of the employees
6) it develops the society indirectly
Consequences of violation of remuneration
1) employees efficiency decreases
2) conflicts between management and employees
3) labour turnover rate will be more
4) the immediate result is incomplete work
5) hard to achieve organizational objective
Difference between salary and remuneration
Salary is a fixed compensation for services, paid to a person on a regular basis
Salary does not include value of benefits
*Remuneration is a pay or compensation that one receives for a service not on regular basis
Remuneration includes salary, commission, compensation and wages
Remuneration package
It includes salary, wages but also contain other benefits or rewards such as accomodation, a car, telephone, gas or electricity allowances, meals or milk
Working out a good remuneration will help to attract, retain and encourage the right employees
Difference between remuneration and reward
Remuneration is specifically what you are paid/given for doing a job or providing services
Reward is sort of like a bonus for doing something special
For example, oftentimes police will offer a money reward for giving information that leads to solving a big crime
Remuneration Strategy importance
1) designed to attract high calibre talent in the market
2) reward employees for demonstrating the right behaviors
3) motivate employees to achieve the organisations goals and objectives
4) ensure what you pay is market related
5) control employee remuneration costs
6) job evaluation or sizing
7) integration with your performance and appraisal process
8) consideration of other benefits
9) flexibility – the strategy must be responsive to changes in the organization and external market
Managerial Remuneration
It is the remuneration paid to managerial personals ie directors including managing director, whole time director and manager
The overall maximum managerial remuneration payable by a public company u/s 197 of companies act 2013, shall not exceed 11% of net profit for that financial year
Provided that, company can pass a special resolution in general meeting for payment of managerial remuneration more than 11% of net profit
Work Cover Remuneration
It applies in determining the amount of remuneration an employer must declare to their scheme agent
Remuneration costs
These are the remuneration to be paid to the consultants staff/personnel who are directly engaged in the consulting services as per agreed meaning schedule
Deferred compensation
It is the remuneration, which sets aside an employees earnings to be redeemed at a later date
One common example is retirement plan
Fair Remuneration
It is in the light of world of management, along with relating that concept back to employee satisfaction
Remuneration affects taxes
With the exception of health insurance, all types of remuneration are taxable
Compiled by:-
Avinash Kulkarni
Chartered Engineer
Govt Regd Valuer
IBBI Regd Valuer