Wage and Salary Administration

The word salary and wage are use interchangeable, conceptually there is no difference between them. Wage and salary administration refers to the establishment and implementation of sound policies and practices of employee compensation. It includes such areas as job evaluation, surveys of wages and salaries.

Meaning of Salary

The term salary is defined as the remuneration paid to the clerical and managerial personnel employed on monthly or annual basis. Thus, salary is a fixed compensation paid by the employer to his employees for the provided services to the firm.

Meaning of Wage

Wage is the payment for labour or services to a workers especially remuneration on an hourly, daily or weekly basis or by the piece.

According to Benham, “Wage means the amount paid to the labour for his service to the employer“.

“Wages is the payment to labour for its assistance to production.” -A.H. Hansen

According to payment of wage Act 1936, “Any award of settlement and production bonus, if paid, constitute wage”. Thus, Wage are the remuneration paid for the service given by the labourer.

Nature / Characteristics of Wage And Salary Administration

1. Employer and employee relationship: The salary/wage is a relationship between employer and employee, where compensation is provided for the services rendered by the employee  to his employer.

2. Salary and Wages are same: salary and wage is a benefit provided by the firm to his employees. There is no much difference among them. The only difference is salary is paid for administrative type of work, Where as wages are paid for manual type of work.

3. Consideration of Benefit: Salary paid or allowed in the present or previous year due to the required consideration of benefit.

Objectives Wage And Salary Administration

1. Maintain Wage And Salary Structure: The basis purpose of wage and salary administration is to establish and maintain an equitable wage and salary structure.

2. Equitable Labour Cost Structure: It is concerned with the establishment and maintenance of equitable labour cost structure i.e.,an optimal balancing of conflicting personnel interest so, that the satisfaction of the employees and employers is maximized and conflicts are minimized.

3. Financial Aspects: The wage and salary administration is concerned with the financial aspects of needs,motivation and rewards.

4. Payment in Accordance to Requirement: Employees should be paid according to the requirements of their jobs i.e., highly skilled jobs are paid more compensation than low skilled jobs.

5. Minimize Favouritism: To minimize the chances of favouritism.