COMPENSATION, & WAGES

LESSON OBJECTIVES

• Identify the mode of compensation/payment

• Compute for some employee payment
• Explain the impact of various payments to
employee development
• Appreciate the role of organization in
providing different compensation to
employees
 COMPENSATION

•is any tangible equivalent or

reward for services rendered in
the org.
•can be direct or indirect
compensation
 COMPENSATION
GUIDELINES

•nature & environment of a

particular industry
•regulations & restrictions on
salary (minimum wage law)
SALARY

•compensation given to
professionals on a monthly
or semi-monthly basis
 WAGE

•compensation given on a
weekly or daily basis to
manual workers/laborers
BASE PAY / BASIC PAY

•fixed part of the pay

Should workers share
information about
their salaries?
 COMMON MODES OF
PAYMENT
• 1. payment for time worked
• 2. flat rates
• 3. through incentives
• 4. based on skills
• 5. based on knowledge/credentials
• 6. executive payment
• 7. special payment
1. Payment for time
worked
•Monthly, daily,

Adjustments for time

worked are based on the
1.1 Across-the-board
increase
•pay adjustments
provided to all
employees with the
same rate regardless of
1.2 Merit increase
•salary or wage
increase given to
employees on the
basis of performance
1.3 Cost-of-living allowance
(COLA)
•given to employees to help
them cope with the prevailing
conditions of the economy
related to the standard of
living and increasing prices of
1.4 Seniority pay
•is given to
employees based on
the number of years
of service in the
2. Flat rates
•payment is the
same amount
regardless of rank
3. Compensation through
incentives
3.1 Merit pay
•this is given in recognition of
outstanding performance
and based on the results of a
3.2 Piece rate pay
•is given to
employees who are
paid a fixed rate per
product produced
3.3 Commission
•is compensation
based on an
achieved sales quota
by their sales
3.4 Group
incentives
•is given to a team
that has achieved a
particular sales or
4. Payment based on
skills
•pay increase is based
on the number of skills
the employees gain
while working for the
5. Payment based on
knowledge or credentials
•pay increase is based on
the seminars,
conferences, advance
education, and publish
6. Executive payment
•payment given to chief
executive officers, the
chairman of the board,
and other members of top
management
7. Special payment
•additional
compensation given
in special cases
7.1 Overtime Pay
•on ordinary working days,
overtime pay is 25% of the
hourly rate
•on a scheduled rest day, a
special day, and a regular
holiday, overtime pay is at
7.2 Holiday pay
•payment for an unworked regular
holiday based on the employees’
daily rate
•employee is paid 100% of the daily
rate (minimum wage and COLA)
even he or she does not report for
work
7.3 Premium pay
•payment given to employees
who work during rest days
(50%) and special holidays
(30%)
•is also given on special
holidays declared by the
7.4 Night differential payment
•additional 10% of basic
rate for each hour of work
performed between
10:00pm to 6:00am
•COLA is excluded
7.5 Service charge
•fees charged over
services related to the
production of a product
or provision of service
7.6 Severance or separation pay
•pay to employees who are
terminated with authorized cause
such as:
retrenchment to prevent losses
closure of a firm
illness
•equivalent to half a month’s pay for
7.7 Retirement pay
•an employee who is 60 or 65
years old shall receive one-
half month salary for every
year of service provided that
he or she has rendered five
years of continuous service to
basic salary worth 15 days
based on the retiring
employee’s latest rate
five days service incentive
leave
one-twelve of his 13th month
pay or two and a half days
7.8 Thirteenth month pay
•all employees who have
worked for at least one
month in a calendar year
•given not later than
December 24
EMPLOYEE BENEFITS

•can be government-
mandated or voluntary
benefits
 GOVERNMENT-
MANDATED BENEFITS
1.Social Security System
(SSS)/ Government
Service Insurance
System (GSIS) benefits
•benefits include: sickness,
maternity, death and
2. Employees’
compensation (EC)
program
•given to private &
government employees in
case of work-related
3.Pag-ibig (Home
Development Mutual
fund) benefits
•benefits include: housing
loan, salary loan, calamity
loan, and provident loan –
4. Philhealth (Philippine
Health Insurance Corp.)
•health insurance program
that gives members and
their dependents financial
assistance for hospitalization
(in/out-patient care)
5. Service incentive leave
•five days service incentive leave
with pay provided that employees
have rendered at least one year of
service
•for health and vacation purpose
•unused leave will be converted to
cash at the end of the year at the
6. Maternity leave
•given to all female SSS
members whether
married or unmarried
•105 days of paid leave
•optional 30 days
7. Paternity leave
•granted to all married male
employees working in private &
public firms, for the first four
deliveries of the male
employee’s lawful wife
•can last up to 7 days after the
8.Special leave for women
•granted to female
employees with
gynecological disorders that
involve surgical procedures
regardless of age or civil
status
VOLUNTARY
BENEFITS
1. Vacation leaves
•number of vacation days
may vary from one company
to another
•not convertible to cash and
must be used up before the
end of the calendar year
2. Sick leaves
•companies may provide
more than the allotted
number of days for the
service incentive leave as
sick leaves
•convertible to cash at the
3. Emergency leaves
•can last up to 3 days or
more for reasons such as:
immediate family health
emergency, floods, and
the like
4. Summer outings
•exclusive summer
outings where company
may spend expenses
5. Sportsfest
•where employees
engage in sports and
usually scheduled after
office hours
6. Rice subsidy
•regular employees are
provided one sack of
rice per month
7. Meal subsidy
•meal stubs are given
with equivalent values
8. Shuttle service
•availed by employees who
live far from office or plant
where shuttle buses pick
them up at designated
points and bring them to
9. Hospitalization
•additional benefit where
employees and/or their
dependents are given health
cards and a list of
accredited hospitals whose
services they can avail to be
10. Group life
insurance program
•employees are enrolled in
a group life insurance
program with benefits
provided to beneficiaries
11. Bonuses
•14 month pay to 17
th th

month pay
12. Profit sharing
•a company divides their net
income among all
13. Stock options
•given to those who have
rendered more than 10
years of service
14. Christmas parties
& packages
•in may come in the form
of parties that include
exchange gifts, raffles,
and gift basket giveaways
15. Cash bonuses
•given at the end of the
year
16. Emergency loan
•interest-free emergency
loans payable through
17. Free uniform &
laundry allowance
•given upon
regularization or after
one year of service
18. Executive
perquisites or
“Executive perks”
•given to top management
in the form of free
limousine service, free
Do pays and benefits
contribute to
employee
development?
PERFORMAN
CE
APPRAISAL
PERFORMANCE APPRAISAL

 the process where employee

performance is documented and
evaluated periodically
•also known as performance review or
performance evaluation
 PURPOSE OF P.A.

1.Needs Assessment
2.Employee Movements
3.Basis for merit
increase
 PURPOSE OF P.A.

5. Development
6. Channel of
communication
7. Source of motivation
 P.A.
METHOD:
a. Objective Methods
a.1 Measures of
actual output
a.2 Performance
 P.A.
METHOD:
b.Judgmental
Methods
a.1 Ranking
 P.A.
METHOD:
b.Judgmental
Methods
a.3 360-degree
What are your
concerns on
Performance
Evaluation?
PERFORMANCE APPRAISAL

Managers & supervisors are

provided extensive training
Evaluators practice consistent &
effective ways on P.A.
Goal setting, effective selection
& use of evaluation methods,
proper documentation,
conducting feedback, and post-
review actions with employees
 EMPLOYEE
MOVEMENTS
Vertical Movement
•from a lower position to a
higher one

Horizontal Movement
•transfer of an employee to
another department or position
PROMOTION
•is a movement to a higher
level or position
DEMOTION
•is a movement to a lower
level or position
TENURE
•the number of years in
service of an employee
MERITORIOUS PERFORMANCE
•an excellent/ outstanding
performance of an employee
TRANSFER
•is a movement to another
position but with the same
level or scope of
responsibility
SEPARATION
Forms of Separation:
1. Resignation
2. With authorized
cause
3. With just cause
EMPLOYEE
RELATIONS
1. Drive for commitment
2. Harmonization of terms
and conditions of
employment
3. Emphasis on mutuality
4. Policies and practices
LABOR UNION
•also known as labor organizations
•serves for the purpose of collective
bargaining or mutual aid, interest,
cooperation and protection
•it should be freely entered by
employees
•managerial positions are not
COLLECTIVE
BARGAINING
•the process by which
the labor union
negotiates a labor
COLLECTIVE
BARGAINING
AGREEMENT
•contains agreements on
compensation, benefits, duties
of employees and management,
work hours, job security,
Employee Code of Conduct
1.Prohibition of illegal activities such
as gambling, smoking, or drinking
2.Prohibition of discrimination
against gender, race, religion, and
civil status
3.Sexual harassment
4.Confidentiality and disclosure of
Employee Code of Conduct
5.Dress code and appearance
6.Punctuality (tardiness and
absences)
7.Procedures for sick leaves
and emergency leaves
8.Sanctions for violations of
General Steps in the Disciplinary
Process through HRD:
1. Identify the employee who
committed the violation
2. Identify the violation/s committed
3. Consult the department head or
the immediate supervisor and
make an initial assessment of the
General Steps in the Disciplinary
Process through HRD:
4.Set a meeting with the department
head or immediate supervisor and
the employee
5.Ensure that the employee is
provided with due process
6.Plan and discuss the corrective
 How would you
describe the work of
the
HR department?