Tuesday, May 21, 2019

Fringe Benefits

Fringe realize meaning either privilege, service, facility or amenity, at once or indirectly endured to employee by an employer Any reimbursement for whatever purpose . Contri stillion to approved superannuation fund The term Fringe r all(prenominal)s refer to various unembellished benefits provided to the employees, in attachment to the compensation stipendiary in the form of net profit or recompense. These benefits mountain be delimit as any wage terms non directly connected with the employees nut-bearing effort, exertion, service or sacrifice.Diffe pack terms be used to denote beautify benefits. They argon welfargon measures, sociable charges, social credential measures, supplements, sub-wages, employee benefits etc. In addition workers commonly receive much(prenominal) benefits as holiday with pay, low follow meals, low-rent housing etc. Such additions to the wage proper argon some successions referred to as beautify benefits. Benefits that stomach n o relation to employment or wages should not be regarded as fringe benefits even though they may pay impinge on a significant part of the workers total income.Thus, fringe benefits ar those monetary and non-monetary benefits given to the employees during and post employment stay which be connected with employment but not to the employees components to the organization. Coverage Fringe benefits covers bonus, social security measures, retirement benefits like provident fund, gratuity, subvention, workmens compensation, housing, medical exam, canteen, co-operative credit, consumer stores, educational facilities, unskilled facilities, financial advice and so on. OBJECTIVES OF FRINGE BENEFITS The historic objectives of fringe benefits be 1.To create and improve sound industrial relations 2. To boost up employee morale. 3. To motivate the employees by identifying and satisfying their unsatisfied needs. 4. To provide soft work environment and work life. 5. To provide security t o the employees against social risks like obsolete age benefits and maternity benefits. 6. To comfort the health of the employees and to provide safety to the employees against happenings. 7. To conjure employees welf ar by providing welfare measures like recreation facilities. 8. To create a sense of belongingness among employees and to retain them.Hence, fringe benefits are called golden hand-cuffs. 9. To meet requirements of various legislations relating to fringe benefits. NEED FOR EXTENDING FRINGE BENEFITS Most organisation have been extending the fringe to their employees, year after year, for the following reasons i) Rising prices and apostrophize of living has brought about incessant ask for provision of extra benefit to the employees. (ii) Employers too have found that fringe benefits present attractive areas of negotiation when larger wage and honorarium increases are not feasible. iii) As organizations have unquestionable ore elaborate fringe benefits programs f or their employees, greater pressure has been placed upon competing organizations to match these benefits in topical anaestheticize to attract and keep employees. (iv)Recognition that fringe benefits are non-taxable rewards has been major stimulus to their expansion. v) The growing volume of labor legislation, specially social security legislation, made it imperative for employers to distribute equally with their employees the cost of old age, survivor and disability benefits. vi) The growth and strength of trade unions has substantially influenced the growth of go with benefits and service. (vii) The management has increasingly realized its responsibility towards its employees and has come to the conclusion that the benefits of increase in productivity resulting from increasing industrialization should go, at least partly, to the employees who are responsible for it, so that they may be saved against the insecurity arising from unemployment, moldness, injury and old age. te lephoner benefits-and-services programs are among some of the mechanisms which managers use to supply this security.TYPES OF FRINGE BENEFITS Organizations provide a variety of fringe benefits. The fringe benefits are separateified chthonian four items as given here downstairs pic 1. For Employment Security Benefits under this head include unemployment, insurance, technological adjustment pay, draw a blank travel pay, overtime pay, level for negotiation, hold for maternity, leave for grievances, holi geezerhood, cost of living bonus, call-back pay, lay-off, retiring rooms, jobs to the sons/daughters of the employees and the like. 2. For Health ProtectionBenefits under this head include stroking insurance, disability insurance, health insurance, hospitalization, life insurance, medical care, sick benefits, sick leave, etc. 3. For Old Age and Retirement Benefits under this kinsperson include deferred income plans, pension, gratuity, provident fund, old age assistance, old ag e advise , medical benefits for retired employees, traveling concession to retired employees, jobs to sons/daughters of the deceased employee and the like. 4. For Personnel Identification, Participation and input signal This category overs the following benefits anniversary awards, attention bonus, canteen, cooperative credit societies, educational facilities, violator parlor services, housing, income tax aid, counseling, quality bonus, recreational programs, stress counseling, safety measures etc. CLASSIFICATION OF FRINGE BENEFITS 1. PAYEMENT FOR TIME not WORKED-Benefits under this category include sick leave with pay, vacation pay, paid rest and relief time, paid lunch periods, grievance time, bargaining time, travel time etc. 2.EXTRA TIME FOR TIME WORKED-This category covers benefits such as premium pay, incentive bonus, shift premium, old age insurance, profit sharing, unemployment compensation, deewali or pooja bonus, food cost subsidy, housing subsidy, recreation etc. 3. E MPLOYEE security system-Provided with the benefits of confirmation of the employee on the job creates a sense of job security. Further, a stripped and continuous wage or earnings gives a sense of security to life. 4. SAFETY AND HEALTH-In India, the Factories Act, 1948, stipulated certain requirements regarding on the job(p) conditions with a view to providing a safe working environment.FRINGE BENEFITS IN A MANUFACTURING FIRM To study the fringe benefits provided to employees particularly in a manufacturing concern , lets look at some of the major manufacturing companies. These are i) Larsen and Toubro iii)Nokia ii)Mahindra and Mahindra iv)Tata Motors LARSEN AND TOUBRO The governing theme in this organisation is the headspring being of employees. The salary and benefits offered are on par with the best available in Construction Industry.A few important perquisites & welfare avoidances are highlighted below Special Facilities for Site employees are provided. These special facili ties include ? Subsidized accommodation, ? Part furnishing of accommodation provided ? Free transport facilities for work. ? Special Medical restitution system of rules This scheme is in addition to new(prenominal) medical benefits available to employees. Employees have the pickaxe of covering their parents, aged upto 85 years under this scheme. ? Retirement Benefits all staff members are cover under Provident Fund and Gratuity Scheme. L&T base of Technology, Mumbai is an exclusive facility for L&T employees children. -The Institute conducts four-year industry-integrated diploma courses in Mechanical plan and Electronics Engineering. On successful course completion, students are awarded diplomas by the Directorate of Technical teaching method, Maharashtra to which LTIT is affiliated. Prize Money for Academic exercise To acknowledge and motivate meritorious wards of employees, the benefit Department of LT presents cash awards to students who have scored high percentage ma rks. There are several special benefits at Managerial Levels.Several attractive benefits are available including ? Provision of company car, ? Loans for furniture, housing ? Children higher(prenominal) education ? Purchase of Personal Computer, ? Membership of Superannuation scheme ? Reimbursement of costs on club membership MAHINDRA AND MAHINDRA requital RULES AND DESIGN GUIDELINES Monthly Components Guidelines ? Basic Minimum Basic cipher for skilled, semi skilled and un skilled employees is a minimum of Rs. 2650, 2950 and 3250/-. yet on the safer side, Basic figure less is not less than Rs. 3500/- p. m. Income taxation Benefit NIL House Rent Allowance (HRA) upper limit 50% basic (Metro cities) 40% basic (non thermionic tube cities).Income Tax Benefit Excess of Actual rent paid over 10% of Basic salary OR uttermost HRA allowed (50% or 60% of basic) OR Actual Rent Paid whichever is lower is Exempt from Tax. ? Transport Allowance Conveyance allowance meant for transportation between office and residence only. Income Tax Benefit Exempt maximum up to Rs. 800/- per month. No proof required. ? Childrens education allowance Income Tax Benefit Rs. one hundred per child idea to max 2 children. Hence maximum Rs. 200/- is exempt Special Allowance Balancing figure after choosing all the above components with respect to their maximum limits absorbed, remaining touchstone can be named as Special Allowance. It is fully taxable. ? Medical Reimbursements Pay against medical bills Income Tax Benefit Maximum Rs. 1250/- p. m. (Rs. 15000 p. a. ) is exempt only if Original Bills are provided ? Food Coupons Non cash component, exempt up to Rs. 1000/- p. m. ? Provident Fund (Retrials) Employers contribution (this is given to RPFC directly. However employees contribution is deducted from his Monthly salary above and sent to RPFC.Hence total deduction works out to be 12+12 = 24% of Basic. Income Tax Benefit Employees contribution of 12% is eligible for Deduction from Tax able income. It can be treated as exempt investment. ? Gratuity(Retirals) It is an annual component. 15 long time monthly basic per year. ? make hold out Allowance / Concession ( yearbook) Journey within India primarily by Rail 2nd A/c class for employee and his immediate family (spouse, children, parents, siblings). ? Gift Vouchers Non cash component, these coupon companies like Sodexho Pass provide attractive Gift Vouchers, which is given on Diwali Festival Occasion.For junior employees amount can be lower, for seniors, amount can be higher up to Rs. 5000 or so. PERQUISITES For Senior Management Employees only ? Rent Free Accommodation Income Tax do Taxable perquisite Value of rent put out accommodation is considered to be taxable for the period of house occupied is either of the following 10% of recompense (for tube-shaped social organisation cities) or (7. 5% for non metro cities) + Excess of Fair Rent Value ( commercialize rent) over 60% of salary (i. e. Market Rent 60% of salary) = organic taxable value of rent free accommodation ? Car (For personal) Owned by the EmployerIncome Tax effect Taxable Value includes the following Actual discharge Maintenance expenditure incurred by the employer + device drivers Salary + Depreciation any amount charged by employer to employee for personal use of the car. ? Employee Stock weft Plan Employee exercises the option plan by buying out the shares during the exercise period however tax liability occurs only when an employee sells the shares on the value of trade made under the Capital Gains head of income. OTHER BENEFITS ? Personal Accident Insurance Scheme (For employee only) Medical Insurance Scheme (For employee dependents which can be spouse,first both children, parents or in-laws (either of them) etc. ? Performance colligate insurance plan The Performance Linked Incentive Plan is found on employees Performance Ratings during the one-year Performance Appraisal Plan in the month of March / April each year. Each employee would be eligible for a performance base incentive plan based on following guidelines. Maximum Potential Incentives under PLIP will be 30% of Total Monthly Salary. OR up to Rs. 75000/- p. a. TATA MOTORS i) Gratuity The family has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump sum payment to vested employees at retirement, termination while in employment or on termination of employment of an amount equivalent to 15 to 30 days salary due for each completed year of service. Vesting occurs upon completion of five dollar bill years of service. The come with makes annual contributions to gratuity fund established as faith. The attach to accounts for the liability for gratuity benefits payable in future based on an independent actuarial valuation. ii) Superannuation The Company has two superannuation plans, a defined benefit plan and a defined contribution plan. Employees who are members of the defined benefit superannuation plan are entitled to benefits depending on the years of service and salary drawn. The monthly pension benefits after retirement range from 0. 75% to 2% of the annual basic salary for each year of service. The Company accounts for the liability for superannuation benefits payable in future under the plan based on an independent actuarial valuation.With effect from April 1, 2003, this plan was amended and benefits earned by covered employees have been protect as at March 31, 2003. Employees covered by this plan are prospectively entitled to benefits computed on a behind that ensures that the annual cost of providing the pension benefits would not exceed 15% of salary. The Company maintains a separate irrevocable trust for employees covered and entitled to benefits. The Company contributes up to 15% of the eligible employees salary to the trust every year. The Company recognizes such contributions as an expense when incurred.The Company has no further obligation beyond this contribution. (iii) Bhavishya Kalyan Yojana (BKY) BKY is an unfunded defined benefit plan. The benefits of the plan settle to an eligible employee at the time of expiry or permanent disablement, while in service, either as a result of an injury or as certified by the Companys Medical Board. The monthly payment to dependents of the deceased / disabled employee under the plan equals 50% of the salary drawn at the time of death or accident or a specified amount, whichever is higher. The Company accounts for the liability for BKY benefits ayable in future based on an independent actuarial valuation. (iv) Post-retirement Medicare Scheme Under this scheme, employees get medical benefits subject to certain limits of amount, periods after retirement and types of benefits, depending on their grade and location at the time of retirement. Employees separated from the Company as part of Early disengagement Scheme, on medical grounds or due to pe rmanent disablement are also covered under the scheme. The liability for post-retirement medical scheme is based on an independent actuarial valuation. v) Provident Fund The eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees salary (currently 12% of employees salary). The contributions as specified under the law are paid to the provident fund and pension fund set up as irrevocable trust by the Company or to respective Regional Provident Fund Commissioner and the Central Provident Fund under the State Pension scheme.The Company is generally liable for annual contributions and any shortfall in the fund assets based on the government specified minimum rates of return or pension and recognises such contributions and shortfall, if any, as an expense in the year incurred. (vi) Compensated absences The Company provides for the encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits, for future encashment. The liability is provided based on the number of days of unutilised leave at each eternal rest sheet date on the basis of an independent actuarial valuation.Some other benefits advanced to the permanent employees are ? Allowances like Transport allowance, Education allowance, Sanitation allowance, ? Leave and travel allowance etc. ? Annual Performance linked Payment ? Free Medical facility for family ? Company loans advances NOKIA Nokia is the world leader in mobility, campaign the transformation and growth of the converging mesh and communication industry. Nokia started its operations in India in 1995 and since then has played a pioneering role in the growth of cellular technology in India.Today it is the leading disgrace in the mobile devices market in India with one of the largest distributi on networks. COMPENSATION BENEFITS Nokias Total Compensation big money is tailored for each country. It typically consists of elements such as annual base salary, incentives, bonuses, possible stock options or performance shares, conciliative Work-Life labyrinthine sense solutions, and other local benefits. Nokia rewards employees for commodity performance, competence development, and for overall company success. This creates a positive and encouraging environment with opportunities for employees to optimize their potential and be rewarded fairly. Higher performance and contribution leads to higher rewards. The Nokia spheric market competitive rewards twist addresses the need for flexibility, personalization, empowerment and commitment. The basic salary is set to meet market conditions, the demands of the job and single(a) competence and performance. The shifting part may consist of incentives or bonuses and other compensation, such as overtime pay and call-out pay.Nok ia provides compensation on competitive basis it provides employees with market competitive rewards through a flexible global structure. The Compensation package consists the following ? Basic pay, equity bonuses and incentives ? Health and welfare benefits ? Vacation and time off The compensation also includes various benefits ? Insurance (healthcare and life) ? Transportation (free buses) ? gifts on special occasions (e. g. birthday, marriage) ? Relocation support (need based) ? Work related mobile phone ? Education assistance ? Creche support ? premium SystemShort-term incentive programs such as individual, team up, project/program incentives and the Nokia Connecting People Bonus allow Nokia to offer immediate rewards for employee and team achievements. Eligibility for an incentive, bonus or stock option plans is defined by the content and nature of each individuals job. Local Benefits Additional local rewards and benefits are also developed to complement the global programs a nd to ensure that the local market conditions are met. Annual Reviews -Nokia has implemented a global process, where the change in the pay level for each employee is based on the results of the annual performance review.Health -Nokias Work-Life balance solutions provide health benefits and local retirement benefits are tailored to individual needs according to factors such as tenure, contribution, performance, roles and responsibilities. Nokia offers services, programs and guidelines to support employees? possibilities to maintain work-life balance according to their changing needs and life situations. Typically they include teleworking, mobile working, flexible working hours, sabbaticals, study leaves, health care services as well as recreational activities and other activity clubs.Flexible Working -Depending on the situation and needs, flexible working solutions can provide alternative modes of working such as teleworking at home or at other locations (e. g. working at remote site s). Nokia provide employees with advanced(a) solutions aiming at having positive effects on the overall quality of life, job satisfaction and job performance. Flexi Time Depending on the local market conditions, employees may put on advantage of flexi time including flexible working hours and part-time working. Time Off- Nokia? s flexible working solutions include unpaid time off and sabbaticals.These solutions support Nokia? s philosophy of Employee Personal Growth and Self-management and modify employees to take extended leave from work. Health-care Services Nokia aims to maintain and improve the working environment and well-being of its employees by crack medical check-ups, counselling and insurance programs to the employees. Volunteering Nokias global volunteer program Nokia Helping Hands gives employees a chance to contribute their time and effort to worthy causes in their communities. Nokia employees can use 1-2 working days per year for Nokia Helping Hands volunteering .Other Services Sporting, social and cultural activities and workplace relationships are promoted within the company. These well-being services can also include wash service, cafeteria, take-away food, day care and on-site concierge services etc. CONCLUSION Each company is pioneer in their own way of producing their products and equally compensating the employees. TATA Motors, L&T and most companies have evolved from the traditional fixed pay and more and more covariant pay is introduced in every company. Nowadays we find that the variable component is quite large as compared to the fixed one.There are huge advantages due to a variable pay and fringe benefits which are as follows ? Employee answerableness ? Motivation to perform more ? Performance leading to rewards and recognition ? High self motivation to perform However, critics have argued that such a pay structure would always put huge loads of pressure on the employees and hence an employee is looked merely as a mould wit h no emotions. Some of the disadvantages may be as follows ? Increased stress levels due to heavy expectations ? Performance anxiety ? Employee worn-outThus the three manufacturing companies are equally good in compensating the employees. It should be noted that by giving only monetary benefits would not suffice the needs of the employees as not everyone is motivated only by money. Nokia has this ideology of overall growth of an individual which is the best way to compensate an employee. Thus the company should look after the overall growth of the individual and ordinate his career aims with the goals of the company. pic Personnel Identification, Participation and Stimulation Old Age and Retirement Health Protection Employment SecurityFringe BenefitsFringe Benefit meaning Any privilege, service, facility or amenity, directly or indirectly provided to employee by an employer Any reimbursement for any purpose . Contribution to approved superannuation fund The term Fringe benefit s refer to various extra benefits provided to the employees, in addition to the compensation paid in the form of wage or salary. These benefits can be defined as any wage cost not directly connected with the employees productive effort, performance, service or sacrifice.Different terms are used to denote fringe benefits. They are welfare measures, social charges, social security measures, supplements, sub-wages, employee benefits etc. In addition workers commonly receive such benefits as holiday with pay, low cost meals, low-rent housing etc. Such additions to the wage proper are sometimes referred to as fringe benefits. Benefits that have no relation to employment or wages should not be regarded as fringe benefits even though they may constitute a significant part of the workers total income.Thus, fringe benefits are those monetary and non-monetary benefits given to the employees during and post employment period which are connected with employment but not to the employees contribu tions to the organization. Coverage Fringe benefits covers bonus, social security measures, retirement benefits like provident fund, gratuity, pension, workmens compensation, housing, medical, canteen, co-operative credit, consumer stores, educational facilities, recreational facilities, financial advice and so on. OBJECTIVES OF FRINGE BENEFITS The important objectives of fringe benefits are 1.To create and improve sound industrial relations 2. To boost up employee morale. 3. To motivate the employees by identifying and satisfying their unsatisfied needs. 4. To provide qualitative work environment and work life. 5. To provide security to the employees against social risks like old age benefits and maternity benefits. 6. To protect the health of the employees and to provide safety to the employees against accidents. 7. To promote employees welfare by providing welfare measures like recreation facilities. 8. To create a sense of belongingness among employees and to retain them.Hence, fringe benefits are called golden hand-cuffs. 9. To meet requirements of various legislations relating to fringe benefits. NEED FOR EXTENDING FRINGE BENEFITS Most organisation have been extending the fringe to their employees, year after year, for the following reasons i) Rising prices and cost of living has brought about incessant demand for provision of extra benefit to the employees. (ii) Employers too have found that fringe benefits present attractive areas of negotiation when large wage and salary increases are not feasible. iii) As organizations have developed ore elaborate fringe benefits programs for their employees, greater pressure has been placed upon competing organizations to match these benefits in order to attract and keep employees. (iv)Recognition that fringe benefits are non-taxable rewards has been major stimulus to their expansion. v) The growing volume of labor legislation, particularly social security legislation, made it imperative for employers to share equal ly with their employees the cost of old age, survivor and disability benefits. vi) The growth and strength of trade unions has substantially influenced the growth of company benefits and services. (vii) The management has increasingly realized its responsibility towards its employees and has come to the conclusion that the benefits of increase in productivity resulting from increasing industrialization should go, at least partly, to the employees who are responsible for it, so that they may be protected against the insecurity arising from unemployment, sickness, injury and old age. Company benefits-and-services programs are among some of the mechanisms which managers use to supply this security.TYPES OF FRINGE BENEFITS Organizations provide a variety of fringe benefits. The fringe benefits are classified under four heads as given here under pic 1. For Employment Security Benefits under this head include unemployment, insurance, technological adjustment pay, leave travel pay, overti me pay, level for negotiation, leave for maternity, leave for grievances, holidays, cost of living bonus, call-back pay, lay-off, retiring rooms, jobs to the sons/daughters of the employees and the like. 2. For Health ProtectionBenefits under this head include accident insurance, disability insurance, health insurance, hospitalization, life insurance, medical care, sick benefits, sick leave, etc. 3. For Old Age and Retirement Benefits under this category include deferred income plans, pension, gratuity, provident fund, old age assistance, old age counseling , medical benefits for retired employees, traveling concession to retired employees, jobs to sons/daughters of the deceased employee and the like. 4. For Personnel Identification, Participation and Stimulation This category overs the following benefits anniversary awards, attendance bonus, canteen, cooperative credit societies, educational facilities, beauty parlor services, housing, income tax aid, counseling, quality bonus, rec reational programs, stress counseling, safety measures etc. CLASSIFICATION OF FRINGE BENEFITS 1. PAYEMENT FOR TIME NOT WORKED-Benefits under this category include sick leave with pay, vacation pay, paid rest and relief time, paid lunch periods, grievance time, bargaining time, travel time etc. 2.EXTRA TIME FOR TIME WORKED-This category covers benefits such as premium pay, incentive bonus, shift premium, old age insurance, profit sharing, unemployment compensation, deewali or pooja bonus, food cost subsidy, housing subsidy, recreation etc. 3. EMPLOYEE SECURITY-Provided with the benefits of confirmation of the employee on the job creates a sense of job security. Further, a minimum and continuous wage or salary gives a sense of security to life. 4. SAFETY AND HEALTH-In India, the Factories Act, 1948, stipulated certain requirements regarding working conditions with a view to providing a safe working environment.FRINGE BENEFITS IN A MANUFACTURING FIRM To study the fringe benefits provid ed to employees particularly in a manufacturing concern , lets look at some of the major manufacturing companies. These are i) Larsen and Toubro iii)Nokia ii)Mahindra and Mahindra iv)Tata Motors LARSEN AND TOUBRO The governing theme in this organisation is the well being of employees. The salary and benefits offered are on par with the best available in Construction Industry.A few important perquisites & welfare schemes are highlighted below Special Facilities for Site employees are provided. These special facilities include ? Subsidized accommodation, ? Part furnishing of accommodation provided ? Free transport facilities for work. ? Special Medical Insurance Scheme This scheme is in addition to other medical benefits available to employees. Employees have the option of covering their parents, aged upto 85 years under this scheme. ? Retirement Benefits All staff members are covered under Provident Fund and Gratuity Scheme. L&T Institute of Technology, Mumbai is an exclusive facil ity for L&T employees children. -The Institute conducts four-year industry-integrated diploma courses in Mechanical Engineering and Electronics Engineering. On successful course completion, students are awarded diplomas by the Directorate of Technical Education, Maharashtra to which LTIT is affiliated. Prize Money for Academic Achievement To acknowledge and motivate meritorious wards of employees, the Welfare Department of LT presents cash awards to students who have scored high percentage marks. There are several additional benefits at Managerial Levels.Several attractive benefits are available including ? Provision of company car, ? Loans for furniture, housing ? Children higher education ? Purchase of Personal Computer, ? Membership of Superannuation scheme ? Reimbursement of expenses on club membership MAHINDRA AND MAHINDRA COMPENSATION RULES AND DESIGN GUIDELINES Monthly Components Guidelines ? Basic Minimum Basic figure for skilled, semi skilled and un skilled employees is a m inimum of Rs. 2650, 2950 and 3250/-. However on the safer side, Basic figure less is not less than Rs. 3500/- p. m. Income Tax Benefit NIL House Rent Allowance (HRA) Maximum 50% basic (Metro cities) 40% basic (non metro cities).Income Tax Benefit Excess of Actual rent paid over 10% of Basic salary OR Maximum HRA allowed (50% or 60% of basic) OR Actual Rent Paid whichever is lower is Exempt from Tax. ? Transport Allowance Conveyance allowance meant for transportation between office and residence only. Income Tax Benefit Exempt maximum up to Rs. 800/- per month. No proof required. ? Childrens education allowance Income Tax Benefit Rs. 100 per child subject to max 2 children. Hence maximum Rs. 200/- is exempt Special Allowance Balancing figure after choosing all the above components with respect to their maximum limits absorbed, remaining amount can be named as Special Allowance. It is fully taxable. ? Medical Reimbursements Pay against medical bills Income Tax Benefit Maximum Rs. 12 50/- p. m. (Rs. 15000 p. a. ) is exempt only if Original Bills are provided ? Food Coupons Non cash component, exempt up to Rs. 1000/- p. m. ? Provident Fund (Retrials) Employers contribution (this is given to RPFC directly. However employees contribution is deducted from his Monthly salary above and sent to RPFC.Hence total deduction works out to be 12+12 = 24% of Basic. Income Tax Benefit Employees contribution of 12% is eligible for Deduction from Taxable income. It can be treated as exempt investment. ? Gratuity(Retirals) It is an annual component. 15 days monthly basic per year. ? Leave Travel Allowance / Concession (Annual) Journey within India primarily by Rail 2nd A/c class for employee and his immediate family (spouse, children, parents, siblings). ? Gift Vouchers Non cash component, these coupon companies like Sodexho Pass provide attractive Gift Vouchers, which is given on Diwali Festival Occasion.For junior employees amount can be lower, for seniors, amount can be highe r up to Rs. 5000 or so. PERQUISITES For Senior Management Employees only ? Rent Free Accommodation Income Tax effect Taxable perquisite Value of rent free accommodation is considered to be taxable for the period of house occupied is either of the following 10% of Salary (for metro cities) or (7. 5% for non metro cities) + Excess of Fair Rent Value (market rent) over 60% of salary (i. e. Market Rent 60% of salary) = Total taxable value of rent free accommodation ? Car (For personal) Owned by the EmployerIncome Tax effect Taxable Value includes the following Actual Running Maintenance expenditure incurred by the employer + Drivers Salary + Depreciation any amount charged by employer to employee for personal use of the car. ? Employee Stock Option Plan Employee exercises the option plan by buying out the shares during the exercise period however tax liability occurs only when an employee sells the shares on the value of sale made under the Capital Gains head of income. OTHER BENE FITS ? Personal Accident Insurance Scheme (For employee only) Medical Insurance Scheme (For employee dependents which can be spouse,first two children, parents or in-laws (either of them) etc. ? Performance linked insurance plan The Performance Linked Incentive Plan is based on employees Performance Ratings during the Annual Performance Appraisal Plan in the month of March / April each year. Each employee would be eligible for a performance based incentive plan based on following guidelines. Maximum Potential Incentives under PLIP will be 30% of Total Monthly Salary. OR up to Rs. 75000/- p. a. TATA MOTORS i) Gratuity The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 to 30 days salary payable for each completed year of service. Vesting occurs upon completion o f five years of service. The Company makes annual contributions to gratuity fund established as trust. The Company accounts for the liability for gratuity benefits payable in future based on an independent actuarial valuation. ii) Superannuation The Company has two superannuation plans, a defined benefit plan and a defined contribution plan. Employees who are members of the defined benefit superannuation plan are entitled to benefits depending on the years of service and salary drawn. The monthly pension benefits after retirement range from 0. 75% to 2% of the annual basic salary for each year of service. The Company accounts for the liability for superannuation benefits payable in future under the plan based on an independent actuarial valuation.With effect from April 1, 2003, this plan was amended and benefits earned by covered employees have been protected as at March 31, 2003. Employees covered by this plan are prospectively entitled to benefits computed on a basis that ensures that the annual cost of providing the pension benefits would not exceed 15% of salary. The Company maintains a separate irrevocable trust for employees covered and entitled to benefits. The Company contributes up to 15% of the eligible employees salary to the trust every year. The Company recognizes such contributions as an expense when incurred.The Company has no further obligation beyond this contribution. (iii) Bhavishya Kalyan Yojana (BKY) BKY is an unfunded defined benefit plan. The benefits of the plan accrue to an eligible employee at the time of death or permanent disablement, while in service, either as a result of an injury or as certified by the Companys Medical Board. The monthly payment to dependents of the deceased / disabled employee under the plan equals 50% of the salary drawn at the time of death or accident or a specified amount, whichever is higher. The Company accounts for the liability for BKY benefits ayable in future based on an independent actuarial valuati on. (iv) Post-retirement Medicare Scheme Under this scheme, employees get medical benefits subject to certain limits of amount, periods after retirement and types of benefits, depending on their grade and location at the time of retirement. Employees separated from the Company as part of Early Separation Scheme, on medical grounds or due to permanent disablement are also covered under the scheme. The liability for post-retirement medical scheme is based on an independent actuarial valuation. v) Provident Fund The eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan, in which both employees and the Company make monthly contributions at a specified percentage of the covered employees salary (currently 12% of employees salary). The contributions as specified under the law are paid to the provident fund and pension fund set up as irrevocable trust by the Company or to respective Regional Provident Fund Commissioner an d the Central Provident Fund under the State Pension scheme.The Company is generally liable for annual contributions and any shortfall in the fund assets based on the government specified minimum rates of return or pension and recognises such contributions and shortfall, if any, as an expense in the year incurred. (vi) Compensated absences The Company provides for the encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits, for future encashment. The liability is provided based on the number of days of unutilised leave at each balance sheet date on the basis of an independent actuarial valuation.Some other benefits advanced to the permanent employees are ? Allowances like Transport allowance, Education allowance, Sanitation allowance, ? Leave and travel allowance etc. ? Annual Performance linked Payment ? Free Medical facility for family ? Company loans advances NOKIA Nokia is the world leader in mobi lity, driving the transformation and growth of the converging internet and communication industry. Nokia started its operations in India in 1995 and since then has played a pioneering role in the growth of cellular technology in India.Today it is the leading brand in the mobile devices market in India with one of the largest distribution networks. COMPENSATION BENEFITS Nokias Total Compensation Package is tailored for each country. It typically consists of elements such as annual base salary, incentives, bonuses, possible stock options or performance shares, flexible Work-Life balance solutions, and other local benefits. Nokia rewards employees for good performance, competence development, and for overall company success. This creates a positive and encouraging environment with opportunities for employees to optimize their potential and be rewarded fairly. Higher performance and contribution leads to higher rewards. The Nokia global market competitive rewards structure addresse s the need for flexibility, personalization, empowerment and commitment. The basic salary is set to meet market conditions, the demands of the job and individual competence and performance. The variable part may consist of incentives or bonuses and other compensation, such as overtime pay and call-out pay.Nokia provides compensation on competitive basis it provides employees with market competitive rewards through a flexible global structure. The Compensation package consists the following ? Basic pay, equity bonuses and incentives ? Health and welfare benefits ? Vacation and time off The compensation also includes various benefits ? Insurance (healthcare and life) ? Transportation (free buses) ? gifts on special occasions (e. g. birthday, marriage) ? Relocation support (need based) ? Work related mobile phone ? Education assistance ? Creche support ? Bonus SystemShort-term incentive programs such as individual, team, project/program incentives and the Nokia Connecting People Bonus allow Nokia to offer immediate rewards for employee and team achievements. Eligibility for an incentive, bonus or stock option plans is defined by the content and nature of each individuals job. Local Benefits Additional local rewards and benefits are also developed to complement the global programs and to ensure that the local market conditions are met. Annual Reviews -Nokia has implemented a global process, where the change in the pay level for each employee is based on the results of the annual performance review.Health -Nokias Work-Life balance solutions provide health benefits and local retirement benefits are tailored to individual needs according to factors such as tenure, contribution, performance, roles and responsibilities. Nokia offers services, programs and guidelines to support employees? possibilities to maintain work-life balance according to their changing needs and life situations. Typically they include teleworking, mobile working, flexible working hours, sabbatic als, study leaves, health care services as well as recreational activities and other activity clubs.Flexible Working -Depending on the situation and needs, flexible working solutions can provide alternative modes of working such as teleworking at home or at other locations (e. g. working at remote sites). Nokia provide employees with innovative solutions aiming at having positive effects on the overall quality of life, job satisfaction and job performance. Flexi Time Depending on the local market conditions, employees may take advantage of flexi time including flexible working hours and part-time working. Time Off- Nokia? s flexible working solutions include unpaid time off and sabbaticals.These solutions support Nokia? s philosophy of Employee Personal Growth and Self-management and enable employees to take extended leave from work. Health-care Services Nokia aims to maintain and improve the working environment and well-being of its employees by offering medical check-ups, counse lling and insurance programs to the employees. Volunteering Nokias global volunteer program Nokia Helping Hands gives employees a chance to contribute their time and effort to worthy causes in their communities. Nokia employees can use 1-2 working days per year for Nokia Helping Hands volunteering.Other Services Sporting, social and cultural activities and workplace relationships are promoted within the company. These well-being services can also include laundry service, cafeteria, take-away food, day care and on-site concierge services etc. CONCLUSION Each company is pioneer in their own way of producing their products and equally compensating the employees. TATA Motors, L&T and most companies have evolved from the traditional fixed pay and more and more variable pay is introduced in every company. Nowadays we find that the variable component is quite large as compared to the fixed one.There are huge advantages due to a variable pay and fringe benefits which are as follows ? Empl oyee accountability ? Motivation to perform more ? Performance leading to rewards and recognition ? High self motivation to perform However, critics have argued that such a pay structure would always put huge loads of pressure on the employees and hence an employee is looked merely as a machine with no emotions. Some of the disadvantages may be as follows ? Increased stress levels due to heavy expectations ? Performance anxiety ? Employee worn-outThus the three manufacturing companies are equally good in compensating the employees. It should be noted that by giving only monetary benefits would not suffice the needs of the employees as not everyone is motivated only by money. Nokia has this ideology of overall growth of an individual which is the best way to compensate an employee. Thus the company should look after the overall growth of the individual and align his career aims with the goals of the company. pic Personnel Identification, Participation and Stimulation Old Age and Ret irement Health Protection Employment Security

No comments:

Post a Comment