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Lecture 2

Week 21

4 Pages

Course Code
Reid/ Curran

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Textbook: Week 21 Chapter 11 Basic Considerations in Determining Pay Rates Four basic considerations influence the formulation of any pay plans: legal requirements, union issues, compensation policy, and equity. Legal Considerations in Compensation All of the 14 jurisdictions regulating employment in Canada have laws regulating compensation. EmploymentLabour Standards Acts (Canada Labour Code) o Employmentlabour laws set minimum standards regarding pay, including minimum wage, maximum hours of work, overtime pay, paid vacation, paid statutory holidays, termination pay, and more. Pay Equity Acts o Providing equal pay for work of equal (or comparable) value performed by men and women. o Employers are required to identify male- and female-dominated jobs, and then use a gender-neutral job evaluation system based on specific compensable factors (such as skill and effort) to evaluate the jobs. Human Rights Acts o All jurisdictions have enacted human rights laws to protect Canadians from discrimination on a number of grounds in employment and other areas. CanadaQuebec Pension Plan o All employees and their employers must contribute to the CanadaQuebec Pension Plan throughout the employees working life. Pension benefits based on the employees average earnings are paid during retirement. Other Legislation Affecting Compensation o The objectives of these laws is to provide a prompt, sure, and reasonable income to victims of work-related accidents and illnesses. o Employers and employees both contribute to the benefits provided by this act. o This act also provides up to 45 weeks of compensation for workers unemployed through no fault of their own. Union Influences on Compensation Decisions Unions and labour relations laws also influence how pay plans are designed. Many union leaders fear that any system used to evaluate the worth of a job can become a tool for management malpractice. They tend to believe that no one can judge the relative value of jobs better than the workers themselves. One way to evaluate the worth of jobs is to get involved into the process and assign fair rates of pay to these jobs. Compensation policies An employers compensation policies provide important guidelines regarding the wages and benefits that it pays. A number of factors are taken into account when developing a compensation policy. o Whether the organization wants to be a leader or a follower regarding pay, business strategy, and the cost of different types of compensation. o Important policies include the basis for: Salary increases, promotion and demotion policies
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