Page 178 - DMGT406_HUMAN_RESOURCE_MANAGEMENT

Unit 10: Compensation and Benefits

worker's productive capacity. In India, the Factories Act, 1948, stipulated certain Notes
requirements regarding working conditions with a view to provide safe working
environment.
4. Workmen's Compensation: In addition of safety and health measures, provision for the
payment of compensation has also been made under Workmen's Compensation Act, 1923.
The Act is intended to meet the contingency of invalidity and death of a worker due to an
employment injury or an occupational disease specified under the Act at the sole
responsibility of the employer.
5. Health Benefits: Today, various medical services like hospital, clinical and dispensary
facilities are provided by organisations not only to employees but also to their family
members. Such as sickness benefit, maternity benefit, disablement benefit, dependent's
benefit and medical benefit.
6. Voluntary Arrangements: However, most of the large organisations provide health services
over and above the legal requirements to their employees free of cost by setting up
hospitals, clinics, dispensaries and homeopathic dispensaries.
7. Welfare and Recreational Facilities: Welfare and recreational benefits include: (a) canteens,
(b) consumer societies, (c) credit societies, (d) housing, (e) legal aid, (f) employee
counselling, (g) welfare organisations, (h) holidays homes, (i) educational facilities,
(j) transportation, (k) parties and picnics and (l) miscellaneous.
8. Old Age and Retirement Benefits
(i) Provident fund: Provident Fund Scheme of the act provides for monetary assistance
to the employees and/or their dependants during post retirement life. Employees
in all factories under Factories Act, 1948, are covered by the Act. Both the employee
and employer contribute to the fund. The employees on attaining 15 years of
membership are eligible for 100% of the contributions with interest. Generally, the
organisations pay the Provident Fund amount with interest to the employee on
retirement or to the dependants of the employee, in case of death.
(ii) Pension: Employee's Family Pension Scheme, 1971, provides for a Family Pension to
the family of deceased employee at specified rates.

This scheme also provides for the payment of a lump sum amount of 4,000 to an employee on
his retirement as retirement benefit and a lump sum amount of 2,000 in the event of death of
an employee as life insurance benefits.
1. Deposit Linked Insurance: Under this scheme, if a member of the Employees Provident
Fund dies while in service, his dependents will be paid an additional amount equal to the
average balance during the last three years in his account. (The amount should not be less
than 1,000 at any point of time).
2. Gratuity: It is payable to all the employees who render a minimum continuous service of
five years with the present employer. It is payable to an employee on his superannuating
or on his retirement or on his death or disablement due to accident or disease. The gratuity
payable to an employee shall be at the rate of 15 days wage for every completed year of
service on part thereof in excess of six months. Here, the wage means the average of the
basic pay last drawn by the employee. The maximum amount of gratuity payable to an
employee shall not exceed 20 months' wage.
3. Medical Benefit: Some of the large organisations provide medical benefits to their retired
employees and their family members. This benefit creates feeling of permanent attachment
with the organisation to the employees even while they are not in service.
Fringe benefits are one of the means to ensure, maintain and increase the material welfare of
employees.

LOVELY PROFESSIONAL UNIVERSITY 171