COMPENSATION &

WAGES
Prepared by:
SHELLAMAE F. AMANTILLO
LEARNING COMPETENCY:
EXAMINE THE FUNCTIONS AND IMPORTANCE
OF COMPENSATION, WAGES AND
PERFORMANCE EVALUATION, APPRAISAL,
REWARD SYSTEM,
EMPLOYEE RELATIONS AND MOVEMENT .
Rearrange the jumbled letters to form the correct word(s) that
correspond to the meaning of the statement for each number.

DRAWER
1. Gift, prize or recompense for merit, service or
achievement, which may have a motivating effect on
the employee.
Rearrange the jumbled letters to form the correct word(s) that
correspond to the meaning of the statement for each number.

TRIDEC PENCOMNATI
ONS

2. This includes workers’

salaries, incentive pays,
bonuses and commissions.
Rearrange the jumbled letters to form the correct word(s) that
correspond to the meaning of the statement for each number.

CENTIIVSE

3. Rewards that are based upon a pay-for-performance

philosophy; it establishes a baseline performance level
that employees or groups of employees must reach in
order to be given such reward r payment; examples:
bonuses, merit pay, sales incentives etc
 Compensation
◦any tangible equivalent
or reward for services
rendered or for the
performance of a task
performed in the
organization.
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TYPES OF
COMPENSATION
Direct Compensation– monetary
in nature and given in the form of
salaries, wages, commissions,
bonuses, and allowances.
TYPES OF
COMPENSATION
Indirect Compensation– given in
the form of services and non-
monetary benefits such as
hospitalization, summer outings,
vacation leaves, and sportfests.
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Salary vs Wage
Salary refers to compensation given to
professionals on a monthly or semi-monthly
basis, while wage refers to compensation
given on a weekly or daily basis and usually
applies to manual workers such as carpenters,
plumbers, electricians, and the like.
Source: iTacloban.com
Common Modes of
Payment
1. Payment for time worked
monthly-paid employees-paid each
day of a particular month including
unworked rest days, special days, and
regular holidays.
Common Modes of
Payment
1. Payment for time worked
daily paid employees-paid on the
basis of the days they actually worked
and unworked regular holidays
Common Modes of
Payment
2. Flat rates
Do not consider skills and seniority as
factors for giving compensation.
Companies pay their employees the
same amount regardless of rank.
Common Modes of
Payment
3. Compensation through incentives
-payment based on output.
a. Merit pay-given in recognition of
outstanding performance and based on the
results of a performance evaluation.
Common Modes of
Payment
3. Compensation through incentives
-payment based on output.
b. Piece rate pay-given to employees who
are paid on a fixed rate per product
produced.
Common Modes of
Payment
3. Compensation through incentives
-payment based on output.
c. Commission-based on an achieved
sales quota
Common Modes of
Payment
3. Compensation through incentives
-payment based on output.
d. Group incentives-given to a team that
has achieved a particular sales or
production target.
Common Modes of
Payment
4. Payment based on skills
-based on the number of skills the
employees gain while working for the
company.
Common Modes of
Payment
5. Payment based on knowledge
or credentials
-highly-skilled and specialized jobs
Common Modes of
Payment
6. Special Payment
a. Overtime pay- work done beyond
the normal schedule of eight hours a
day.
Common Modes of
Payment
6. Special Payment
b. Holiday pay- payment for an
unworked regular holiday based on
the employee’s daily rate.
Common Modes of
Payment
6. Special Payment
c. Premium pay- payment given to
employees who work during rest days
and special holidays.
Common Modes of
Payment
6. Special Payment
d. Night differential payment- additional
10 % of basic rate for each hour of work
performed between 10:00 pm to 6:00
am.
Common Modes of
Payment
6. Special Payment
e. Service charge- refers to fees charged to
cover services related to the production of a
product or provision of service.
85 % of which are given to employees.
Common Modes of
Payment
f. Severance or separation pay
-equivalent to half a month’s pay for
every year of service
Common Modes of
Payment
g. Retirement pay
-an employee who is 60 or 65 years old shall
receive one-half month salary for every year of
service provided that he or she has rendered
five years of continuous service to the company.
Common Modes of
Payment
h. Thirteenth month pay
-all employees are entitled to thirteenth
month pay provided that they have
worked for at least one month in a
calendar year.
Employee Benefits

1. SSS
2. Pag-ibig benefits
3. Philhealth benefits
4. Service incentive leave- five days leave
with pay
Employee Benefits
5. Maternity leave
6. Paternity leave
Voluntary benefits- freely given by the
company to its employees.
1. Vacation leaves
2. Sick leaves
 REWARD
SYSTEMS
Prepared by:
SHELLAMAE F. AMANTILLO

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Contingency Pay
-a pay scheme which is given on top of the basic
pay rate and is based on the employee’s
performance, competency, contribution, and
skills.
1. Pay for performance scheme
An employee is given a bonus based on
performance
 Contingency Pay
2. Pay for competency
Based on the knowledge, skills, and abilities that
employees have that they apply to the job.

3. Pay for contribution

Combination of employee competencies and
output levels
 Contingency Pay
4. Pay for skills
Depends on the skills acquired by the employee.
This requires a worker to undergo training and
gain certification for certain skills or
competencies.
5. Pay for service
usually paid yearly on the basis of an
employee’s continued service.
PERFORMANCE
EVALUATION &
APPRAISAL
Prepared by:
SHELLAMAE F. AMANTILLO
Performance Evaluation
Performance evaluation encompasses the entire
process of assessing an employee's job
performance, including the methods and tools used to
measure performance.
-involves ongoing feedback, coaching, and
communication between the employee and the
supervisor or manager throughout the year.

focuses on the continuous assessment of an

employee's work, progress, and development.
Performance Appraisal
-a specific event or process within the broader
performance evaluation framework. It usually
refers to the formal, periodic review of an
employee's performance, often conducted
annually or semi-annually.
-often results in a formal written document or
report that summarizes the employee's
performance and may be used for making
decisions related to compensation, promotions,
and professional development opportunities.
Benefits of Performance
Appraisal
1. Strategic Alignment
-Appraisals ensure individual goals align
with organizational objectives, fostering
a cohesive and focused workforce.
Benefits of Performance
Appraisal
2. Identifying Strengths & Weaknesses
-Appraisals help recognize employee talents
and areas for development, enabling
targeted training and growth opportunities.
Benefits of Performance
Appraisal
3. Enhancing Communication
Regular feedback sessions facilitate
open dialogue between managers and
employees, improving collaboration and
relationship building.
Key Components and Steps of Performance
Appraisal
 EMPLOYEE
MOVEMENTS
Prepared by:
SHELLAMAE F. AMANTILLO
Employee Movements
1. Vertical Movement
-entails the movement of an employee from
a lower position to a higher one.

2. Horizontal movement- involves the

transfer of an employee to another
department or position with similar
responsibilities or status.
Employee Movements
Promotion- movement to a higher level or
position.
Tenure- number of years in service of
an employee
Meritorious performance-
excellent or outstanding performance of an
employee
Employee Movements
Demotion- movement to a lower level or
position.
Transfer- movement to another position but
with the same level or scope of
responsibility.
Separation-an employee’s departure from
the organization
LABOR UNIONS &
COLLECTIVE
BARGAINING
Prepared by:
SHELLAMAE F. AMANTILLO
Employee Movements
Demotion- movement to a lower level or
position.
Transfer- movement to another position but
with the same level or scope of
responsibility.
Separation-an employee’s departure from
the organization
 Labor Unions & Collective
Bargaining
Labor Unions- labor organizations for the
purpose of collective bargaining or mutual
aid, interest, cooperation and protection.

Collective bargaining-process by which

the labor union negotiates a labor contract
with the management
 Employee Code of Conduct
-the acceptable behavior of employees
within the workplace.

-legal agreement between the company and

the employee that he or she will observe
ethical workplace conduct at all times.
 Due Process
Any disciplinary issue involving employee
violations of the code of conduct must go
through due process.

Ensures that the disciplinary process is

conducted in a fair and impartial manner
with due regard for the rights of the
employee.