CHAPTER 7

CHAPTER 7 : COMPENSATION MANAGEMENT

1.Direct financial compensation - the pay that a worker receive as wages , salaries , commissions and bonuses

2.Indirect financial compensation - all financial rewards that are not included in direct compensation


EMPLOYEE REMUNERATION

A.Pay

B.Incentives

• Bonuses
• Profit sharing
• Shares

C.Benefits

FEATURES OF A GOOD PAY SYSTEM

A.Fairness and equity
-external equity
-internal equity

B. Flexibility

C. Uniformity

D. Certainty

E. Simplicity

BENEFIT PROVIDED TO EMPLOYEE

Statutory benefits

- some small employers may wonder what employees benefits they're legally required to provide.

EMPLOYEE PROVIDENT FUND

Is a Malaysian government agency under the Ministry of Finance.

Its manages the compulsory saving plan and retirement planning for private sector worker in Malaysia.

EPF is mandatory for Malaysian citizens employed in private sector , and voluntary for non-Malaysian citizens for employees who receive salary of RM5000 and below the contribution is 11% For employer contributes 13%.

SOCIAL SECURITY

Concept which overtime has gained importance in the industrialized countries
define as measures providing protection to working class against contingency like retirement , resignation , retrenchment , maternity , old age, unemployment, death, disablement and other similar conditions


GAZETTED PAYMENT - EMPLOYMENT ACT 1955

Payment of wages - every employer shall pay to each of his employees not later than seventh day.

Payment on normal termination of contract shall be paid to such employee on the same day on which such contract of services terminates.

Overtime paid -for any overtime work carried out in excess of the normal hours of work, the employee shall be paid at a rate not less than one and half times his hourly rate of pay

Termination and lay-off payment/benefit - employee whose contract of service is terminates or he is laid off by his entitles to the payment by employers of :
a)terminations benefits
b)lay-off benefits

GAZETTED PAID LEAVES - EMPLOYMENT ACT 1955

Maternity paid leave -''confinement'' means parturition resulting after at least twenty-two weeks of pregnancy in the issue of a child or children, whether alive or dead

REST DAY

Every employee shall be allowed in each week a rest day of one whole day for overtime work on a rest day, an employee shall be paid at a rate which is not less than two times his hourly rate of pay

ANNUAL LEAVE

a) 8 days for every 12 months of continuous service with the same employer if he has been employed by the employer for a period of less than 2 years

b)12 days for every twelve months of continuous service with the same employed by that employer for a period of 2 years or more but less than 5 years

c)16 days for every twelve months of continuous service with the same employed by that employer for a period of 5 years or more and if he has not completed 12 months

PUBLIC HOLIDAY

a)On ten of the gazetted public holidays, four of which shall be

• The National day
• The birthday of the Yang Di-pertuan Agong
• The birthday of the ruler or yang Di-pertuan Negeri of the state or the Federal Territory day
• The worker day

b)On any day declared as a public holiday under section 8 of the holidays Act 1951;

• If the public holiday falls on a rest day the working day following immediately the rest day shall be paid holiday in substitution

SICK LEAVE
a)By a registered medical practitioner duly appointed by the employer

b)If no such medical practitioner is appointed or , if having regard to the nature or circumstances of the illness, the service of the medical practitioner so appointed are not obtainable within a reasonable time

• 14 days in a each calendar year if the employee has been employed for less than 2 year
• 18 days in a each calendar year if the employee has been employed for less than 2 year or more but less than 5 years
• 22 days in a each calendar year if the employee has been employed for less than 5 year or more

NON STATUTORY BENEFITS

Based on customs , precedents or previous court decisions.
1)payment for time not worked
2)Health and security benefits
3)Employee services
4)Premium pay

REWARDS

a.Salary increment

-Expressed as a percentage of an employee’s overall based pay

-One time payment

-Annual pay increase

-Salary negotiation

-Skill enhancement

B.bonuses and profit sharing

-Bonuses

-Profit sharing

C.shares

NON FINANCIAL REWARDS

A)Performance awards

B)Letter of appreciation

C)Sponsorship to seminars , conferences and overseas tour

D)Rewards for long service

WAGES DETERMINANT
BASIS OF DETERMINING WAGES

A)Legal frameworks

B)Market survey

C)Working values

D)Compensation strategies