Tag: University of Mumbai BMS Notes

Corporate reputation is defined in business dictionary as “The collective assessment of corporations past actions and the ability of the company to deliver improving business results to multiple stockholders over time.”

There are agencies who after careful observation and considerations, attribute a company as “most admired” by virtue of the social, economic and environmental impact it has over a sustained period over time. The reputation of a company also depends on these factors and is instrumental in creating favourable or unfavourable impressions in the observer or assessor’s eyes.

It is essential for a business to have good reputation in the market in order to service competition. Word of mouth definitely is a bonus, however it is also important how the company handles crisis or responds to controversies. This apparently is a cyclic process. A strong reputation helps a business overcome crisis, on the other hand effectively managing crisis or controversy promotes a strong reputation.

This allows a company to differentiate its product from similar competitive ones and over sell it at a higher price. Businesses are now concentrating more on reacting eco-friendly products, biodegradable products, organic products and so on. Research finds that customers don’t mind paying a premium price for products that has a strong brand reputation.

Organisation can actively promote a good reputation by being sensitive to the following factors:

1. Creating trust amongst its vendors, suppliers etc., by paying off their timely dues. Deliver to customer what is promised. Provide timely service and maintain quality etc.
2. Maintain transparency and honesty in communication with customers. This also includes timely reply to queries, respond to emails, promptly address issues and grievances etc.
3. Taking ownership of problems that may crop up from time to time instead of pushing it back to the customer. With so much of options and varieties available these days, customers are very less likely to stick to any particular brand for long if it continues to dissatisfy them.

For example: a dissatisfied Airtel customer may switch to any other service provider if his grievances are not addresses, its billing details, network problem, data connection and so on. Almost all the business thus has a customer care service department that is reachable through a toll free number.

A customer may budge a telephonic complaint and the customer service department may escalate the issue to concerned authorities and try to sort out the problem to immediate effect and thus retain its customer.

4. Many companies offer free services and latter to the preferences of the legal customers. Offering high level value and services help sustaining the existing customer base also create a good reputation in the market.
5. Having a strong online presence in terms of a polished and updated website is always essential for letting the customer know about new or improved product or services.

Transparency of information and effective communication through mailers, messages etc., are also vital for survival of any business irrespective of the type or size.

6. Availability of company name on the first page of Google or other search engines also create a big impact. This indirectly says that the brand is an esteemed one. Presence and visibility in networking sites such as twitter, feedback, LinkedIn also gives the flavour of a premium brand. This all add up to the reputation of the company and its products.

The biggest advantages of a favourable reputation are:

• More and more customers are willing to buy the product or services of a particular company whereas there are other companies offering the same identical quality in competitive price.
• To be able to sustain stakeholders support in adverse times.
• To be able to maintain good quote in the stock market.
• To be able to charge premium price for the product or services.

Essentials of Corporate Reputation

• Ethical with stable workplace
• Financial performance
• Leadership and Management
• Social responsibility
• Customer focus
• Quality and Reliability
•  Emotional Appeal

Ethical behaviour and corporate social responsibility can bring significant benefits to a business. For example, they may attract customers to the firm’s products, thereby boosting sales and profits.

In communication, ethics work to enhance credibility, improve the decision-making process and allow for trust between the two parties. Ethics provide the groundwork for right and wrong, allowing two parties to communicate with a basic understanding of what is expected.

Ethics serve as a guide to moral daily living and helps us judge whether our behaviour can be justified. Ethics refers to society’s sense of the right way of living our daily lives. It does this by establishing rules, principles, and values on which we can base our conduct.

Ethical issues of business communication is the way by which individuals or groups of people exchange information between them. From end-to-end the process, effective communicators try as clearly and accurately to pass on their ideas, intentions and, objectives to their receiver. Communication is successful only when both the sender and the receiver understand the same information. Nowadays business world, effective communication skills are necessary due to the highly informational and technological era, which has made it easier for exchanging of information between the parties.

Despite of the context, communication is all about choice, reflects values, and has consequences. For better communication, understanding the obvious and the subtle issues relating to communication is necessary. Any company that aims to be socially and ethically responsible must make a priority of ethical communication both inside the company and in its interactions with the public. In theory, many consumers prefer to do business with companies they believe are ethical which gives those ethical businesses an advantage in the market.

Some of the vital characteristics of ethical communication are discussed below.

• Conveying the point without offending the audience:

While communicating with the audience, expressing the desired message to them in a significant manner is of primary importance. Strong conversation skills can make a big difference in the workplace. Knowing how to share an attentive, friendly discussion will give you more confidence and help you build better relationships. As you improve your skills, you’ll become a more thoughtful listener, give sharper responses, and learn how to handle common mistakes. For instance, the employees in a company can be asked to increase their efficiency in a demanding manner whereas managers and executives will feel offended if the same tone is used on them. There are different ways to explain the exact things to them in a much smoother manner.

• Maintain a relationship with the audience:

Maintaining the same wavelength with the audience is very important for a communicator to ensure the audiences feel at home. Experienced communicators immediately build a relationship based on trust with the audience as soon as they start speaking. As the audience shares, ask relevant questions to give them further chances to express themselves. Be curious about the audience! For instance, if they’re talking about a tough presentation they just gave, ask how they felt when they finished.

• Avoid withholding crucial information:

In the modern era, information is vital for all decision. Hence, it is essential for any organization to be cautious when communicating with titanic. The related information should be absolute, and all crucial information must be passed on appropriately. Purposely withholding crucial information might result in the public conceiving a bad image.

• Well organized value system:

In order to ensure that this concept is successfully practiced and understood in an organization, a well-organized value system must be established throughout the organization by the top management. If an organization functions on the base of value systems common to both the top management and the employees, mutual respect between them will be present. A sound and healthy value system can make way for ethical communication.

• Accuracy of information is necessary:

Any information that is to be passed on must be true and accurate. Communicating without checking the truth of the information can be highly dangerous for the organization. Identification of the source and testing the information is necessary before communicating it.

In any organization, communication plays a crucial role. It helps an organization to build the primary resources (Labour, Capital, and Raw Materials) and secondary resources (such as legitimacy and reputation). We have ample examples wherein the reputation of an organization has been demolished on the basis of their unethical practices, false commitments or mishandling of their stakeholders. Therefore, any successful organization should follow the standard code of ethics and government guidelines and laws.

The concept of ethics and law in corporate communication is divided into 4 parts:

As the role of a corporate communicator is to make the consumer aware, instruct and persuade towards the organization vision, mission and values to create a good image and reputation, therefore, they need to be extremely truthful and accurate before their internal and external stakeholders.

Let’s study in details to understand the concept of ethics and law in context of corporate communication with suitable examples:

Mass Media Laws:

The brief history of mass media laws: In India, the concept of mass media laws were enacted during the British Raj.  In 1799, Lord Wellesley promulgated the Press Regulations and imposed the censorship on newspaper for publishing any information against the government. The passed act of 1835 was repressive in nature and imposed restrictions on the printing industry. In 1857, Government passed the “Gagging Act” which had the rule to have compulsory licensing for the owning or running of printing presses and gave multiple rights to government to suppress the freedom of the press. In 1867, the ‘Press and Registration of Books Act” 1867 came. The Vernacular Press Act of 1878 was also repressive in nature. After that, there were various acts introduced by British governor which curbed the freedom of the press.
But after independence, The Indian constitution has signified the “Freedom of Press” and empowered press to disseminate knowledge to the masses and the Constituent Assembly and in Article 19 (1) (a) enumerated certain rights regarding individual freedom of speech and expression.

Article 19 of the Indian Constitution Lays down:

“All citizens shall have the right to freedom of speech and expression, to assemble peacefully, a without arms, to form associations or unions, to move freely throughout the territory of India, to reside in any part of the territory of India, to acquire hold and dispose of property and to practice any profession or to carry any occupation, trade or business.” It is defined that such freedom is not absolute but is qualified by certain clearly defined limitations under Article 19 (2) in the interests of the public, sovereignty and integrity of nation, state security, relations with neighbouring and foreign countries, public decency and mortality, or in relation to contempt of court, defamation or incitement to offence.

Defamation: The term “defamation” is an all-encompassing term that covers any statement that hurts someone’s reputation. If the statement is made in writing and published, the defamation is called “libel.” If the hurtful statement is spoken, the statement is “slander.” Defamation is not a crime; it is a civil wrong. The law of defamation varies from state to state.  Few cases of defamation incorporate which had made the headlines as follows:

1. 1997: B V P Rao vs Rata Tata and others V P Rao contended that Tata Tea had twisted and suppressed the facts projecting him in a very poor light by alleging that there was no response from him as home secretary in December 1995 for providing security after the Tata Tea received a letter from the Ulfa demanding hundred walkie-talkie sets. Rao, who was then the state power commissioner, claimed damage of Rs 1 crore against the Tata Tea, its managing director R Krishna Kumar and chairman of Tata group of companies Ratan 
2. 2006: R S Lodha vs B K Birla Auditor R S Lodha, who had claimed that Priyamvada Birla had bequeathed her assets worth thousands of crores to him, sued industrialist B K Birla for damages of Rs 100 crore. He said Birla’s statements in the media had tarnished his image.
3. 2008: Anil Ambani vs Mukesh Ambani Anil Ambani sued brother Mukesh for damages of Rs 10,000 crore for certain libelous statements by the latter in an interview to New York Times. The American publication and some Indian papers which reproduced this were also made respondents. A case was withdrawn after the truce between brothers a few years later.
4. 2010: Chris Cairns vs Lalit Modi New Zealand cricketer Chris Cairns sued the then IPL chairperson Lalit Modi, in the UK’s first Twitter libel case over a defamatory tweet sent in January 2010, in which Modi referred to Cairns’ alleged involvement in match-fixing as the reason for barring him from the IPL  “The allegation made by Lalit Modi that I have been involved in match-fixing is scandalous and wholly untrue. For him to circulate such a falsehood around the world is outrageous,” Cairns said in a statement. In 2012, a UK court awarded damages of 90,000 pounds and costs of 1.5 million pounds. Modi had said he would appeal.
5. 2014: Veritas vs India bulls Canadian investment firm Veritas Investment filed a suit of a settlement of a claim in Ontario against India bulls claiming $11 million (Rs 70 crore) in damages for the alleged defamatory announcements and press releases put out by India bulls, which led to the closure of its India Research services. India bulls won an interim order against the move in Delhi High court. A few months later, it also filed a suit claiming Rs 200 crore damages from Veritas and its analyst Neeraj Monga for submissions made in the Ontario 

Invasion of Privacy:

In India, we all have the right to privacy. But, sometimes, this right is being curbed especially in case of celebrities or any public figure. Invasion of privacy is the unjustifiable intrusion into the personal life of another without consent. However, invasion of privacy is not a tort on its own; rather it generally consists of four distinct causes of action. The four most common types of invasion of privacy torts are as follows:

• Appropriation of Name or Likeness
• Intrusion Upon Seclusion
• False Light
• Public Disclosure of Private Facts

Appropriation: Appropriation of a person’s name or likeness for commercial or trade purpose without any permission is an invasion of privacy. Use of an individual’s photograph, a sketch of the person’s nickname or any other names is all considered use of a name or likeness.

E.g. In 2005, when famous musician Tom Waits declined an offer made by an advertising agency to do an ad campaign for a new automobile, then the advertisers hired someone who sounds like him to do the soundtrack which made Waits to sue the automaker for appropriating his likeness.

Intrusion upon seclusion: Intruding someone’s private affairs, physically or otherwise, is subject to liability if the other person finds it offensive and unacceptable. When someone illegally intercepting private phone calls and snooping someone’s private records without the permission, take someone’s photographs without permission, etc. are the examples of intrusion to right to privacy.

E.g. – A famous Ratan Tata – Radia Tape case is an example of intrusion upon solitude which showed the interesting woman attempting to influence policy by controlling politicians and journalists, destroyed reputations and careers, but Ratan Tata emerged with mere scratches.

Public Disclosure of Private Facts: As the term suggests, it is about encroaching someone’s personal territory. Wherein, the media tries to cover all the irrelevant personal information about the public figure which is not of much concern.

False Light Claim: False light laws protect your right to not have potentially misleading or damaging information about yourself publicly disclosed. This includes the disclosure of information that may be true but is nonetheless misleading or damaging. For example, it may be an invasion of privacy if a caption published with a photograph in a news article about a protest describes a person as a participant, when in fact, the person was only observing the protest. Generally, the elements of false light are as follows:

• The defendant publicly disclosed information about the plaintiff;
• The information placed the plaintiff in a false light; and
• The false light would be highly offensive to a reasonable person.

Copyright act:

Copyright protects the original work of artists in the area of literature, dramatics, music, artistic works, anonymous and pseudonymous works, posthumous works, cinematograph films, sound records, government work, public undertaking, international agencies a photograph.

The duration of the copyright protection varies. Infringement of copyright occurs whenever somebody exercises copyright owner’s right without permission. The Copyright ACT, 1957 gives various rights to the owners.

Copyright guidelines:

• It is essential for a corporate communicator to copyright all the literature, brochures or relevant documents deal with company information to protect legally.
• No download/upload other person’s work without having proper information about its protected rights.
• Always seek permission for materials used for sale.
• All celebrity letters, photographers to be protected.
• Government documents are not copyrighted but avoid implying government endorsements.

E.G. Apple vs Microsoft

The battle between these techs giants started with a simple question: who invented the graphical user interface (GUI)? The company that controls the interface of the next major operating system will have the ability to set the standards for application software, so it’s unsurprising that Apple tried to stop Windows from becoming a major operating system.

It seemed that although Microsoft helped develop Macintosh, Jean-Louis Gassée, who had taken over from Steve Jobs at the time, refused to allow Microsoft to use their software. Bill Gates pressed on nonetheless, deciding to add in features of its own too early prototypes of the Macintosh.

When Gassée noted the software, he was enraged. However, he didn’t want a lawsuit and ended up agreeing to license Mac’s visual displays. But Windows 2.0 turned out to be almost identical, and Gassée believed it to be a breach of contract, only having allowed their software to be used for 1.0 and not future versions.

So, without warning, Apple filed a lawsuit against Microsoft in 1988. Apple’s case included 189 contested visual displays that violated its copyright. This led to a six-year-long battle.

In 1989, the court ruled that 179 of the 189 disputed displays were covered by the existing license. Furthermore, the other ten were not violations of Apple’s copyright due to the merger doctrine, where the idea-expression divide limits the scope of copyright protection by differentiating an idea from the manifestation of that idea. The lawsuit was decided in Microsoft’s favor on August 24, 1993.

Digital piracy:

Digital piracy is a form of online piracy and includes the unauthorized online distribution of electronic copies of copyrighted material such as software, movies, and music. Recently, we have seen that many filmmakers have shown their concern towards the release of the movie on the digital platform prior to release date and it gets leak on the digital platform which impacts their business and in larger context employment. Though it has many advantages to businesses and consumers alike, there are many challenges have also been emerged such as:

• Availability of lots of unauthorized sites: Such websites allow web users to download the media content for free and it is pirated and make it widely available for users.
• High-Speed Internet: Today, the high-speed technology and availability of many apps through which we can share the large MB data in few seconds capitalize the high traffic by selling the advertising space of their webpage to advertisers to reach the target audience. Such promotional tactics help them to generate revenue through digital advertising. Such advertisers may be harmful to all people who get associated with it. It might get indulge in illegal activity.
• Unsafe digital environment: The sites on which digital advertising is shown might be interpreted by consumers that it is a well-known brand but it might not be the case in reality.

Therefore, it becomes the responsibility of a communication expert of a company to avoid ads going to suspected IP infringing websites. Also, it is essential to eliminate fraud traffic, combat malware, fight internet piracy, and promote brand safety through transparency.

Canadian Association of Journalists (CAJ) has provided the list of some ethical rules to publish the information in the digital media:

• Ethical practice does not change the medium.
• All online content should be accurate and consider carefully.
• It is important to quote the used sources when the information gets published online.
• Ensure credibility
• When errors or corrected, it needs to be mentioned.
• Online printed materials need to be used with proper permissions.
• Information gathered through online should be confirmed, checked, varied and authenticate with the list of sources.

Right to Information:

Right to Information (RTI) is an Act of the Parliament of India to provide for setting out the practical regime of right to information for citizens and replaces the erstwhile Freedom of information Act, 2002. Under the provisions of the Act, any citizen of India may request information from a “public authority” (a body of Government or “instrumentality of State”) which is required to reply expeditiously or within thirty days. The Act also requires every public authority to computerize their records for wide dissemination and to proactively certain categories of information so that the citizens need minimum recourse to request for information formally. The Law came into force on 13 October 2005. However, under this act, the private bodies are not covered directly but information that can be accessed under any other law in force by a public authority can get access.

Code of Ethics and its implementation:

Companies constitute a committee consisting of internal and external directors for institutionalizing ethical behaviors. The function of such committee includes:-

1. Inform all members the code of ethics.
2. Regular meeting to discuss the ethical issues.
3. Enforcing the code
4. Dealing with concern areas
5. Reviewing and updating the code
6. Reporting the activities of the committee to the board of Directors.

Professional Code of Ethics:

International Code of Ethics adopted in All India Public Relations Conference in 1968 states that United Nations Organizations have agreed to abide by its charters reaffirms” its faith in fundamental human rights, in the dignity and worth of the human person” and that having regard to the very nature of their profession, Public Relations practitioners in these countries should undertake to ascertain and observe the principles set out. This code of ethics highlights the important aspects of Public Relations practitioners such as Honesty, Advocacy, Expertise, Independence, Loyalty, and Fairness.

Business in the present world survives majorly on corporate communication. Many organisations have witnessed disastrous consequences like dissatisfied customers, breaking down of relationships with shareholders and loss of business due to ineffective or lack of communication.

organisations need to maintain harmonious relationships with everyone they deal with, including internal employers and outside vendors, workers, distributers etc. One of the main tasks that corporate communication accomplishes is to provide clarity of information to everyone concerned and to meet organisational goals by eliminating confusions that may arise from distortion of messages.

Contemporary business organisations have expanded beyond geographical boundaries. They constantly deal with different races and cultures. This makes business communication challenging as any trans-border communication gap may disturb business relationship and may create dissonance between two parties.

Effective business communication not only promotes business development but also serves multiple other functions such as:

1. Generating trust: For any organisation to run a sustainable business, it is important to acquire trust from its employees, vendors, customers, business associates, partners etc. An honest and efficient communication goes a long way in creating this trust among people concerned. Standing true to organisation’s commitments is also equally important.

Let’s take a simple example of corporate banks. They establish 24 hours helpline and customer support round the year. Instant messaging services to customers regarding financial services and transactions, sending timely alerts, offering net banking facilities that save hours of standing in a queue, e-billing, addressing customer grievances instantly, alerting customers of fraudulent calls are all different ways of creating trust and communicating reliability among customers.

Contemporary organisations believe in providing more and more transparency and access to their customers there by creating a bond of trust.

2. Dissolve communication barriers: Effective communication minimizes the chances of misunderstandings and resolves conflicts. With the opening up of horizons for business, corporate organisations make cross border business dealings. Mergers, acquisitions, partnerships, collaborations and such type of activities are based on effective communications.

Lack of transparency, false assumptions, inaccurate information etc. may tarnish the brand image of an organisation and may lose business in the global market. When a company wants to sell its products in the international market, it is basically dealing with a lot of challenges like creating product of international standard, creating value, generating reliability amidst scepticism. For any company to establish its position in the global market the most significant tool is its corporate communication.

3. Creating and retaining customers: Big corporate houses with an international client base are constantly in pursuit of betterment of their product quality not only for the purpose of business expansion but also to retain its chain of existing customers. Almost every big company with international customers has call centers with executives dealing with customer issues and grievances. Companies spend millions of rupees in product advertisement and creating a brand value. Much of the organisation’s goal of retaining and enhancing customer base is also accomplished by thinking ahead of time so that not only have answers to the current problems but also to those that may arise in future.

An organisation that successfully communicates its futuristic thoughts and promises to deliver quality product and services for a longer period of time definitely enjoys a sustainable position in the market.

4. Customer awareness: Customers already know about the product they want to purchase by seeking information about the product online.
5. Internet: The rapidly changing global economy, a revolution of media fuelled by democratisation of the internet and a substantially transformed the 21st century corporation and is making the business more competitive.
6. More clutter: On average a person is hit by 13,000 commercial messages daily integrated communication strategies are more likely to break through this clutter.
7. Emphasis in ICT: Organisations are also realising that messages in various media can complement one another leading to a greater communication impact than any single message can achieve.

The Equal Remuneration Act, 1976 provides for payment of equal remuneration to men and women and help prevent gender discrimination. Article 39 of the Indian Constitution envisages that the States will have a policy for securing equal pay for equal work for both men and women. To give effect to this constitutional provision, the Equal Remuneration Act, 1976 was introduced.

An Act to provide for the payment of equal remuneration to men and women workers and for the prevention of discrimination, on the ground of sex, against women in the matter of employment and for matters connected therewith or incidental thereto.

The purpose of the act is to make sure that employers do not discriminate on the basis of gender, in matters of wage fixing, transfers, training and promotion. It provides for payment of equal remuneration to men and women workers, for same work or work of similar nature and for the prevention of discrimination against women in the matters of employment.

The salient features of the Equal Remuneration Act, 1976

• The Act is a Central Legislation and applies to the whole of India.
• The objective of the Act is to provide for protection against discrimination of women workers on the ground of sex, about the payment of equal remuneration in the matter of employment.
• Restricting the employer to create terms and conditions in a contract of service or work of labor contrary to equal pay for equal work doctrine and the provisions of Equal Remuneration Act.
• The Act doesn’t make a distinction like employment or the period of employment and applies to all workers even if engaged only for a day or few days.
• No overriding effect is given to any agreement, settlement or contract to the provisions of the Equal Remuneration Act.
• Any settlement or any agreement with the employee that is detrimental to the employee isn’t allowed.
• The Ministry of Labour and The Central Advisory Committee are responsible for enforcing this Act.
• Meaning of equality of work: The equality of work is not based solely on the designation or the nature of work but also on factors like qualifications, responsibilities, reliabilities, experience, confidentiality, functional need and requirements commensurate with the position in the hierarchy are equally relevant.
• When the employer doesn’t comply with the provisions of the act, he will be liable to pay fine, imprisonment, or both.

Various provisions of the Act

Every employer covered under this act shall pay the employees remuneration in cash/kind at a rate which shall not be less favourable to the other gender if the work is the same or of similar nature.

Same work or work of similar nature would mean if the work is performed under similar conditions either by a man or woman it would require the same skill, effort and responsibility. If there are any differences in the skill, effort and responsibility required from a man when compared to a woman the same is not important to the employment.

• No employer shall be allowed to reduce the remuneration of any worker in order to comply with the provisions of this act.
• In case the remuneration payable before the commencement of this act was different due to discrimination then going forward the higher(in case of two rates) or highest(in case of more than two rates) rate shall be payable. However the same shall not apply to the remuneration payable for the services rendered before the commencement of the act
• While employees are recruited for work which is the same or of similar nature no discrimination shall be directed towards women unless any law prohibits the same. This provision is also extended to activities after recruitment i.e promotion, training or transfer. The reservations made towards Scheduled Castes or Scheduled Tribes, ex-servicemen, retrenched employees or any other class or category of persons will not be affected by this provision.
• An advisory committee shall be formed which shall consist of 10 members half of which shall be women and the committee shall focus on providing its advice for increasing the employment opportunities for women, hours of work, nature of work and such other matters.
• Every employer is required to maintain registers and other documents in relation to the workers employed by him.
• The appropriate government shall appoint inspectors for the purpose of investigation of compliance with the provisions of this act.
• The Inspector shall have the power:
• To enter any building/premises/factory/vessel
• Require the production of documents
• Take evidence from any person to confirm compliance of the act
• Examine the employer/agent/servant

The term wage policy refers to legislation or government action undertaken to regulate the level or structure of wage, or both, for the purpose of achieving specific objectives of social and economic policy.

A wage policy guides organizations in taking decisions on wage-related matters. At the organizational level, wage policies are framed, keeping in mind various regulatory requirements and the organizations own strategies.

The term wage policy refers to legislation or government action undertaken to regulate the level or structure of wage, or both, for the purpose of achieving specific objectives of social and economic policy. It involves all systematic efforts of the government in relation to a national wage and salary system, legislations, and so on to regulate the levels or structures of wages and salaries with a view to achieving economic and social objectives of the government.

The first step towards the evolution of wage policy was the enactment of the payment of Wages Act, 1936. The main objective of the Act is to prohibit any delay or withholding of wages legitimately due to the employees. The next step was the passing of the Industrial Disputes Act, 1947, authorizing all the State governments to set up industrial tribunals that would look into disputes relating to remuneration.

Another notable development that led to the evolution of wage policy was the enactment of the Minimum Wages Act, 1948. The purpose of the Act is the fixation of minimum rates of wages to workers in sweated industries such as woolen, carpet making, flour mills, tobacco manufacturing, oil mills, plantations, quarrying, mica, agriculture, and the like.

The Act was amended several times to make it applicable to more and more Industries. Then the Equal Remuneration Act, 1976, which prohibits discrimination in matters relating to remuneration on the basis of religion, region or sex was enacted. The Constitution of India committed the government to evolve a wage policy. Successive five-year plans have also devoted necessary attention to the need for a wage policy.

Following the recommendations of the First and Second Plans, the Government of India constituted wage boards for important industries in the country. A wage board is a tripartite body comprising representations from the government, owners, and employees. Technically speaking, a wage board can only make recommendations, and wage policies are normally implemented through persuasion.

In spite of legislations, tribunals, and boards, disparities in wages and salaries still persist.

Some of the disparities are:

1. Employees of MNCs are paid much more than their counterparts in host countries for identical work.
2. Different industries have different wage and salary structures resulting in disparities in remuneration for identical work.
3. Wide gaps exist between wages and salaries of employees in the organized sector and of those in the unorganized sector, the latter earning much less than the former.
4. Differences exist between earnings of employees in the government sector and those in the private sector.
5. Within the government sector, salary differences exist among employees of different departments.

The disparities are glaring. If an illiterate supervisor in leather processing unit can earn Rs. 12,000 plus per month and a half-yearly bonus, how much can a university professor earn? Rs. 10,000 and no bonus? If an auto driver can earn Rs. 3000 per month, how much should a temporary lecturer in a college earn? Rs. 5000 per month? And remain temporary forever. A sweeper in L&T is an Income tax assessee but a BE or an MBBS degree holder works for Rs. 800 per month in a small-scale unit or Rs. 1200 in a private nursing home, respectively.

In order to correct such disparities, the Government of India appointed a Committee headed by Mr Bhootalingam in 1979. The committee was to suggest regional and integrated wage policy covering all sectors of the economy. Soon after the committee submitted its report, it was criticized as anti-labor and impracticable.

Recent wage practices in India in the organised sector are such that dearness allowances are paid to neutralise at least partially, price increases, bonus paid as per the Bonus Act, and fringe benefits given under this Employees’ State Insurance Act and the Employees’ Provident Fund” Act. Wage Boards have attempted to settle wage disputes, taking into account the principle of fair wages first set forth by the Report of Committee on Fair Wages.

The Fair Wages Committee recommended that the “minimum wage should represent the lower limit of the fair wage, the upper limit being the capacity of industry to pay”. Between these two limits, the Committee suggested that the fair wage should depend upon – (i) productivity of labour; (ii) prevailing rates of wages in the same and similar occupations in the same neighbouring localities; (iii) level of the national income and its distribution, and (iv) place of the industry concerned in the economy of the country. The Committees’ recommendations are similar to the requirements laid down above.

Wage Policy

A rational wage policy is essential both on social and economic grounds. Without it there is a danger of unreasonable exploitation of workers leading to discontent which must result in disharmony between workers and management. Therefore, a sound wage policy is needed in the interest of workers, employers, the Government and the country.

Three Concepts of Wages:

Three concepts of wages are commonly used in discussions on wage policy, and the same concepts were also explained by the Fair Wages Committee, namely:

1. Minimum wage,
2. Living wage, and
3. Fair Wage.

These are broadly based on the needs of the workers and the capacity of employers to pay, as also on the general economic conditions prevailing in a country.

1. Minimum Wage:

A minimum wage is said to be a wage which is sufficient to satisfy at least the minimum needs, of at least a frugal and steady workers. According to the Committee on Fair Wages, the minimum wage is an irreducible or minimum amount regarded necessary for the bare sustenance of the worker and his family and for the preservation of his efficiency at work.

In most countries, like ours, Minimum Wages Legislation has fixed minimum wages for specified occupations, especially where sweating and exploitation of labour had been prevalent. In fixing a minimum wage both the need of the workers and the capacity of the industry to pay are taken into account. From the social point of view, an industry which cannot even afford to pay a basic minimum wage has no justification for existence in the long-run.

2. Living Wage:

It is a wage which should offer an employee incentive to work and produce enough in quantity, without sacrificing quality, so that the payment of such a wage is justifiable by the industry. The living wage for a worker should be such as to include not merely the cost of maintenance for himself but also for supporting his family.

As such, living wage should include provision for the following:

1. Bare necessaries such as food, clothing and shelter;
2. A measure of frugal comfort includes:

(a) education for children

(b) protection against ill-health

(c) requirements of essential social needs

(d) a measure of insurance against the more important misfortunes including old age.

3. Some margin for self-development and recreation.

The concept of living wage, to be realistic, should be linked with economic conditions and the size of the family. While determining expenditure under various heads, attention should be paid to the changes in the cost of living as prices fluctuate from time to time.

3. Fair Wage:

While living wage is the cherished goal and the ultimate aim or target, a fair wage is a step towards a living wage. In the narrow sense, a wage rate is fair if it is equal to the rate prevailing in the same area and industry. In the wider, sense, fair wage is the predominant rate available for similar jobs and occupations throughout the country or in all industries.

The demand for a fair wage is also reflected in the slogan ‘equal pay for equal work’ In simple terms, it is the wage equal to that received by employees performing equal work, demanding equal skill, equal difficulty and equal unpleasantness. Equal work is considered not only in the same job but also work in similar and comparable jobs. Fair wage is positively higher than the minimum wage, but it may be lower than the living wage.

The actual fixation of a fair wage depends upon the productivity of labour, prevailing rates of wages, level of national income, capacity of the industry to pay, wage differentials in corresponding places and the importance of industry in relation to the national economy.

Wage Policy Objectives of Sound Wage Policy

The objectives of a sound/ideal wage and salary policy are manifold.

A sound wage policy promotes industrial relations, protects against price rise, and serves many more purposes:

1. Establish good labour relations
2. Decide on appropriate wages
3. Decide wages based on the individual’s capability
4. Develop a pre-determined scheme for payment of wages
5. Establish linkages of wage payment with performances
6. Maintain parity of wages with other organizations
7. Provide for incentive payment
8. Guarantee minimum wages
9. Provide for neutralization of price rise
10. Develop wage structures that can attract talent.

The Employees’ Provident Funds & Miscellaneous Provisions Act, 1952 has been enacted with the main objective of protecting the interest of the employees after their retirement and their dependents after death of the employee. The Act provides insurance to workers and their dependents against risks of old age, retirement, discharge, retrenchment or death.

The objective of this act is to provide substantial security and timely monetary assistance to the employer and their family members. This act covers all the state of India except Jammu and Kashmir. It applies to any factory or any other establishment employing 20 or more persons with the permission of central, according to central government’s official gazette. But the central government is empowered to apply this provision to any employing less than 20 persons with prior notification at least 2 months before.

EPF Applicability

The Employees’ Provident Funds & Miscellaneous Provisions Act, 1952 extends to whole of India except the state of Jammu & Kashmir.

It applies on every establishment employing 20 or more persons & engaged in industry specified in Schedule I of the Act or any other activity notified by the Central Government.

It applies to all departments / branches of an establishment wherever situated.

Any establishment employing even less than 20 persons can be covered voluntarily under section 1(4) of the Act.

EPF Eligibility

Employees drawing salary / wages at the time of joining up-to Rs. 6,500/- per month are governed by the provisions of the Act;

Employees drawing salary / wages more than Rs. 6,500/- per month may also be brought under the purview of the Act at the discretion of the management and by furnishing a joint undertaking to the Provident Fund Commissioner;

Employees engaged through the Contractor in or in connection with the work of an establishment are also covered under the purview of the Act.

This act covers three major schemes:

(i) Employees provident fund scheme.

(ii) Employees’ pension scheme.

(iii) Employees deposit linked insurance scheme.

Employee’s Contribution

An employee is eligible for membership of Employee Provident Fund from the very 1st date of joining in any establishment getting salary up to Rs6500 Provident fund contribution is recovered at 12% of wages from employee salary. The pension is that which represents a person has retired. To avail pension a person should have 10years of continues service and with age of 50years or more will receive pension amount on monthly basis after the age of 58. A member is eligible to apply for withdrawing his provident and pension fund only after 2 months from the date of registration, provident that he/she is not employed during those 2months. Employer’s Contribution: Employer is also required to contribute towards provident fund, the deduction rate is same as employee’s contribution i.e. 12% of the wages. Of this 12%, 3.67% goes to Provident Fund and the balance of 8.33% goes to Pension Fund.

Thus, Employee Provident Fund grants the employee to have a regular income through a pension. These are the important facts of Employee Provident Fund and Miscellaneous Provisions Act,1952.

The Employees’ Provident Fund Organisation (abbreviated to EPFO), is an organisation tasked to assist the Central Board of Trustees. Employees’ Provident Fund is a statutory body established by the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 and is under the administrative control of the Ministry of Labour and Employment, Government of India.

EPFO assists the Central Board in administering a compulsory contributory Provident Fund Scheme, a Pension Scheme and an Insurance Scheme for the workforce engaged in the organised sector in India. It is also the nodal agency for implementing Bilateral Social Security Agreements with other countries on a reciprocal basis. The schemes cover Indian workers as well as International workers (for countries with which bilateral agreements have been signed. As of now 19 Social Security Agreements are operational). The EPFO’s apex decision making body is the Central Board of Trustees (CBT).

On 1 October 2014, the government of India launched Universal Account Number for Employees covered by EPFO to enable PF number portability.

The total assets under management are more than ₹11 lakh crore (US$157.8 billion) as of 2018 .

Broadbanding is a job grading structure that falls between using spot salaries vs. many job grades to determine what to pay particular positions and incumbents within those positions. While broadbanding gives the organization using it some broad job classifications, it does not have as many distinct job grades as traditional salary structures do. Thus, broadbanding reduces the emphasis on ‘status’ or hierarchy and places more of an emphasis on lateral job movement within the company. In a broadbanding structure an employee can be more easily rewarded for lateral movement or skills development, whereas in traditional multiple grade salary structures pay progression happens primarily via job promotion. In this way, broadbanding is a more flexible pay system. This flexibility, however, can lead to internal pay relativity problems as there is not as much control over salary progression as there would be within a traditional multi-level grading job (structure).

Organisations with broadband pay structures have broader salary ranges but there are fewer one of them this type of structure is found in flattened organisations where there is a reduced chance of promotion in terms of responsibility. Broadbanding allows organisations to increase pay and offer opportunities for training without promoting employees.

Broadband pay structures aren’t as sensitive to changing market conditions and also allow skills to more easily develop because there’s an increased emphasis placed on jobs without traditional areas of responsibility, such as managers.

Broadbanding is defined as a strategy for salary structures that consolidate a large number of pay grades into a few “broad bands“

In a broadband pay structure, the numbers of salary grades are consolidated into fewer, but broader, pay ranges. In broadbanding, the spread of the pay ranges is wider and there is less overlap with other pay ranges.

Broadbanding evolved because organizations want to flatten their hierarchies and move decision-making closer to the point where necessity and knowledge exist in organizations. In flattened organizations, fewer promotional opportunities exist so the broadbanding structure allows more latitude for pay increases and career growth without promotion.

Benefits of Broadbanding

Broadbanding has been successfully implemented in large, hierarchical organizations which attempted to flatten their organizations and remove levels of management. For example, organizations that had eight levels of management could eliminate four levels, widen the salary ranges of the remaining four levels, and simply slot each manager into one of those ranges.

With broadbanding, a manager can more easily encourage his/her employees to broaden their skills and abilities. This is valuable to organizations because employees with broad skills and abilities are critical for the success in a total quality/continuous improvement environment. In contrast, the jobs in traditional organizations are narrow and specialized. In order for employees to advance in pay and responsibility, they have to further develop their specialized skill. Thus, a bias exists against the broadening of skills.

New Pay

The New Pay’ is an approach to focusing investment in employee reward, which can be located in the ‘best practice’ (or ‘normative’) tradition of thinking. This can be contrasted with a ‘contingency’ approach matching decisions to the circumstances of institutions and people and attempts to adopt what has been termed a ‘configurational’ perspective. That approach emphasises ensuring that with lots of moving parts involved in the employment relationship those designing and administering reward management remain actively aware of the ‘open systems’ characterising all levels of an economy. We address this ‘systems thinking’ in the book, raising awareness of the way that, while the employment relationship is indeterminate (there is no algorithm for programming its outcomes), there is an interplay of forces and interests that seek to regulate it.

Irrespective of overall merits, New Pay thinking highlights that reward management is of strategic importance to all organisations; that it is a highly visible medium through which to communicate organisational values and priorities when seeking a return on investment in employing people. Where claims need particular testing is in relation to the proposition that ‘base’ pay (salary, wages) should focus on recognising the potential value an employee may contribute to an employer, whereas variable pay (commissions, bonuses, profit and other forms of ‘sharing’ plans) should recognise outcomes from the application of employee knowledge and effort. And that together these fixed and variable elements should act as an incentive to attract, retain and motivate high performance among the kinds of workforce members an employer requires to realise corporate strategic goals.

Contract employees, also called independent contractors, contract workers, freelancers or work-for-hire staffers, are workers hired for a specific project or length of time by a company for a set fee. Often, contract employees are hired due to their expertise in a particular area, like writing or illustration, that internal employees at the company do not have. Contract employees are usually hired for projects that require niche expertise for a short-term project. Rather than hire a full-time, long-term employee with that expertise, the company chooses to hire a contractor for the duration of the project.

Contract employees

• Tax form: Contract employees receive a 1099 tax form, and their taxes are not automatically deducted from their paychecks.
• Work duties: Contract employees perform a specific task or role on a short-term project.
• Training: Contract employees receive training and instruction exclusively for their projects.
• Work hours: Contract employees can typically choose the days and hours they work.
• Pay: Contract employees are often paid after a project has been completed rather than on a set payment schedule.
• Travel: If travel is required for work, the contract employee is usually responsible for their travel expenses.
• Benefits: Contract employees typically do not receive benefits like health insurance or life insurance.
• Time off: Contract employees do not receive paid time off.

Duties of the Contractor and a Principal Employer

The law looks at contractual workers differently from regular employees. Hence, the duties of a contractor are different than that of a principal employer.

Wages

• The contractor is responsible for the worker, his conditions of employment, and payment of wages. The wage period is to be fixed by the contractor and must not exceed one month.
• If the establishment has less than 1000 employees, payment must be done before the 7th day of the last day of the wage period. If the worker’s last day is the 30th of June, the payment must be done by the 7th of August.
• If there are more than 1000 employees, payment can be done before the 10th day of the expiration of the wage period.

Duties of a Principal Employer

While hiring contractual workers, the employer has to:

• Register the establishment to hire contractual workers.
• Hire workers only from licensed contractors.

In a situation where either of these two conditions is not satisfied, the workman employed will not be considered a contractual labourer and will be considered to have been employed directly by the employer. The employer also has a duty to ensure that the Contractor complies with applicable labour laws.

Rights of the Contractual Employee

Working Hours

A contractual employee can be made to work for only 48 hours a week, and 9 hours a day. In case of overtime, he/she is entitled to a wage twice the ordinary rate. The period of work hours must be notified to the workers. If a contractual worker has worked for a period of 240 days or more, he/she is entitled to annual leave with wages, with one day leave for every 20 days of work.

Safety and Health

In line with the duties of the employer, contractual factory workers have the right to i) obtain information relating to health and safety at work ii) receive training given for health and safety at work.

Social Security

Contractual workers are covered under the Employees’ State Insurance Act, 1948 and entitled to social security cover if they draw up to Rs.15,000/- in monthly wages. The employer has to register with the Employee State Insurance (ESI) corporation and is responsible to insure the workers. In the ESI scheme, the employer contributes 4.75% of the wages payable to employees, while the employee contributes 1.75% of his/her wages. Workers earning less than Rs. 137/- a day as daily wages are exempted from payment of their share of contribution. Workers under the scheme can avail medical benefits, sickness benefits, maternity benefits, disablement benefits and dependant benefits. The Unorganized Workers’ Social Security Act, 2008 provides contractual workers in the unorganized sector with the benefits of Social Security Schemes like Indira Gandhi National Old Age Pension Scheme, Janani Suraksha Yojana, etc. However, registration under the Act is not mandatory and hence the Act hasn’t been implemented properly.

Retirement benefits

After retirement, contractual workers are entitled to provident fund benefits under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 ; if they completed five years in employment under a single employer, they are eligible for gratuity under the Payment of Gratuity Act, 1972.

Other benefits

In case a worker is injured in the course of employment but not covered under the ESI scheme, he/she can claim compensation under the Workmen’s Compensation Act, 1923. Similarly, if a female contractual worker is not covered under ESI, she can claim maternity leave (26 weeks for birth of first 2 children) with wages under the Maternity Benefit Act, 1961 (provided she worked in an establishment for not less than 80 days in a year prior to the date of her expected delivery).