Other Legislations affecting compensation

Various other laws influence compensation decisions. For example, the Age Discrimination in Employment Act prohibits age discrimination against employees who are 40 years of age and older in all aspects of employment including compensation. The Americans with disabilities act prohibits discrimination against qualified persons with disabilities in all aspects of employment including compensation. The Family and Medical Leave act aims to entitle eligible employees both men and women to take up to 12 weeks of unpaid job protected leave for the birth of a child or for the care of a child spouse, or parent. And various executive orders require employers that re federal government contractors or subcontractors to not discriminate and to take affirmative action in certain employment areas including compensation.

Each state has its own workers’ compensation laws. Among other things these aim to provide prompt sure and reasonable income to victims of work related accidents. The Social Security Act of 1935 (as amended) provides for unemployment compensation for workers unemployed through no fault of their own for up to 26 weeks, and for retirement benefits. The federal wage garnishment law limits the amount of an employee’s earnings that employers can withhold (garnish) per week and protects the worker from discharge due to garnishment.

Union influences on compensation decisions

Unions and labor relations laws also influence pay plan design. In India, formal collective bargaining agreements between trade unions and employers form the foundation of pay plans. However, such agreements are generally restricted to the public sector or private sector employment, leaving out the large number of informal sector employees. In the formal sector, pay agreements with union involvement happens either at the industry level (in nationalized bank or public sector insurance companies, where the union representing employees across organizations negotiates a common pay agreement with the association of employers) the multiunit company level (one agreement for different units of the same company) or through unit / plant specific agreements (localized agreement with the local union(s)). These agreements obtain legal sanctity when registered under the ID act of 1947.

For employees of central or state governments, pay commissions are constituted by the government to recommend a compensation structure. Representatives of government employees are given an opportunity to present their case before the pay commission. The pay commissions are recommendatory in nature and it’s for the government to act on the proposals. For instance, the Sixth Central Pay Commission submitted its report in March 2008 and the government constituted a committee of secretaries to examine the recommendation and suggest an implementation plan.

In the US, the National Labor Relations Act of 1935 (Wagner act) and related legislation and court decisions legitimized the labor movement. It gave union legal protection and granted employees the right to unionize to bargain collectively and to engage in concerted activities for the purpose of collective bargaining or other mutual and or protection. Historically, the wage rate has been the main issues in collective bargaining. However, unions also negotiate other pay related sues including time off with pay income security (for those in industries with periodic layoffs) cost of living adjustments and health care benefits

The 1935 act created the National Labor Relations Board (NLRB) to oversee employer practices and ensure that employees receive their rights. Its ruling under score the need to involve union officials in developing the compensation package For example, employers must give the union a written explanation of the employer’s wage curves —the graph that relates job to pay rate. The union is also entitled to know its members salaries.

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