Compensation Management Compensation Management provides a step- by- step approach for designing remuneration system that recognizes

job requirements: employee- related knowledge and skills; and performance related incentives that link individual, team, work unit, and organization performance. Establish a structure At this point you are ready to establish a compensation structure. The first element of any compensation structure is a compensation policy, which should be a general statement about what the organization's compensation program is intended to accomplish and where the organization wants to be compared to the market place.

1.BASE PAY Base pay is the fixed compensation paid to an employee for performing specific job responsibilities. It is typically paid as a salary, hourly or piece rate. In the State, employee base pay is first determined when hired. Changes to an employee's base pay can be made as he/she go through his/her career in these ways: 2. CHANGE IN JOB When an employee changes job responsibilities, he/she may receive a: 2.1 Promotion - a change in duty assignment of an agency employee in one job class to another job class in a salary group with a higher minimum salary rate. A promotion to a higher level job class requires higher qualifications such as greater skills or more experience and involves more responsibility. Employees promoted to positions in Salary Schedules A or B will receive at least a one increment increase in salary (or 3.4 percent) or the minimum salary rate of their new salary group, whichever is higher. 2.2 Demotion - a change in duty assignment of an agency employee in one job class to another job class that is in a salary group with a lower minimum salary rate. The salary of a demoted employee in Schedule A or B must be reduced at least one step (or 3.4 percent) below the employee's salary prior to the demotion. However, an agency is not required to reduce an employee's salary if the employee accepts a demotion in lieu of a layoff or is selected for a position in a lower salary group because of applying for the position. 2.3 Lateral transfer - a change in duty assignment of an agency employee that moves to another job class in the same salary group. 3. PAY FOR PERFORMANCE An employee may also receive a change in base pay for their performance in the same job: 3.1 Merit increase - a movement in a Schedule A or B employee's salary to a higher rate in his/her same salary group. The employee must demonstrate job performance and productivity that are consistently above what is normally expected or required. To receive a merit, employees must have been with the agency for six continuous months and six months must have elapsed since their last promotion, merit, or one-time merit. 3.2 One time merit increase - a lump sum payment to an employee in a classified position. The same rules for merit increases apply to these increases. 3.3 Salary reduction - an employee's salary can be reduced based on poor performance. The disciplinary reduction in pay can go no lower than the minimum rate of the employee's current salary group. Employees may have their pay restored to any rate in the same salary group, up to and including their prior rate, as their performance improves. 4. TIME BASED SALARY INCREASES The Texas Department of Criminal Justice is authorized to adjust salaries of certain correctional positions based on their career ladder system. These positions are: Correctional Officer; Sergeant, Lieutenant, Captain, and Major of Correctional Officers; Food Service Manager; Laundry Manager; Caseworker and Parole Officer; and Human Services Technician and Case Manager. These employee's salaries may be adjusted not less than 4 percent or Tk1,200 per year, whichever is greater.

The Texas Youth Commission is also authorized to adjust salaries of Juvenile Correctional Officers based on their career ladder system. These employee's salaries may be adjusted not less than 4 percent or Tk1,200 per year, whichever is greater. 5. DIFFERENTIAL PAY Differential pay is non-performance based pay usually given to accommodate a specific working condition. The State offers several types of differential pay to employees. There are both state and federal requirements on how to address employee overtime. 5.1 FLSA Overtime - federal guidelines for paying employees who work overtime. The Department of Labor Wage and Hour Division is a primary source for information on federal overtime requirements. The Fair Labor Standards Act of 1938 (FLSA) requires employers to compensate nonexempt employees for any hours worked over 40 in one work week at a rate 1.5 times the employee's normal rate of pay. Effective April 15, 1986, all state employees other than elected officials, their personal staff, policy advisors, and legal staff were subject to the provisions of FLSA. State government employers can choose to compensate their nonexempt employees for overtime in cash or in calculated compensatory time off in lieu of cash payments, as long as the time off was calculated at 1.5 hours for each overtime hour worked. Nonexempt employees must be compensated for any FLSA overtime hours at 1.5 times their current rate of pay, regardless of when the hours were earned. Exempt or Nonexempt? Generally, employees are exempt from the FLSA overtime requirements if they fall into one of these three categories: Executive An employee whose primary duty consists of the management of an enterprise or of a recognized department; and

regularly directs the work of two or more employees; has the authority to hire and fire other employees, does not devote more than 20% of time to nonexempt activities; and is compensated on a salary basis of not less than Tk1,150 a month.

Administrative An employee whose primary duty is office or non-manual work directly related to management policies or general business operations; and

regularly exercises discretion and independent judgment; performs only under general supervision; performs work that is specialized or technical requiring specialized training, experience or knowledge; and/or executes special assignments and tasks under only general supervision; and is compensated on a salary basis of not less than Tk1,150 a month.

Professional

An employee whose primary duty requires knowledge of an advanced type in a field of science or learning acquired through a prolonged course of intellectual instruction and study; and

performs work that is original and creative in character in a recognized field; performs work that requires discretion or judgment in its performance; performs work that is predominantly intellectual and varied in character and is of such character that the output produced cannot be standardized in relation to a given period of time; does not devote more than 20% of his time to nonexempt activities; and is compensated on a salary basis of not less than Tk1,150 a month.

Employees Subject to FLSA Overtime Employees subject to the FLSA are entitled to compensation for any hours worked in excess of 40 in one work week in one of the following ways:

the agency can allow or require the employee to take compensatory time off at the rate of 1.5 hours for each hour over 40 worked during the work week, or When granting compensatory time off is not practical, the employee can receive 1.5 times the regular rate of pay in effect at the time the work was performed for each hour worked over 40 during the week.

Paid leave or holidays taken during a work week are not counted as hours worked in determining FLSA overtime hours. Each nonexempt employee may accumulate an overtime credit up to 240 straight time hours (160 overtime hours converted to straight time). Employees Excluded from FLSA Legislative Employees: Employees compensated from Article X legislative funds of the Appropriations Act will have their overtime pay and compensatory time off determined by the agency administrator involved or by the employing office holder. Overtime pay and compensatory time off for House or Senate employees shall be determined by the presiding officer of the respective legislative body. Employees of the Legislative Reference Library do not fall within the statutory exclusion allowed by the Fair Labor Standards Act (FLSA). I. State Comp Time - state guidelines for paying employees who work overtime. FLSA Nonexempt Employees Employees are allowed compensatory time off if the total number of hours worked and paid leave or paid holidays exceeds 40 in a week. State comp time is "straight" time or one hour for one hour. State comp time off must be used within 12 months of the end of the work week in which it was earned. Employees will not be paid for any unused state compensatory time earned in this manner. Employees of institutions of higher education or employees engaged in a public safety activity may be paid for state compensatory time hours (non-FLSA overtime) on a straight time basis when the taking of compensatory time off would be disruptive to normal teaching, research, or other critical functions. FLSA Exempt Employees

An employee who is exempt from FLSA may, at the discretion of the agency, be allowed compensatory time off for any hours recorded in excess of 40 during one work week. Work hours may be a combination of paid leave, holidays, and actual hours worked. An exempt employee under FLSA may be allowed compensatory time off during the 12-month period following the end of the work week in which the excess hours accrued, provided the agency has an exempt compensatory time policy which grants such compensatory time off. II. Longevity Pay - state guidelines for paying employees based on state service time. Full-time employees are eligible to receive longevity pay after two years of accrued state service credit. Eligible employees are paid Tk20 per month for every two years of lifetime service credit and will receive longevity pay increases after each additional two years of service, up to and including 42 years of service. III. Longevity Pay Table Monthly Longevi ty Pay Years of Service Monthl y Longev ity Pay

Years of Service

Less than 2 years

Tk0

Greater than 22 and Tk220 less than 24 years Greater than 24 and Tk240 less than 26 years Greater than 26 and Tk260 less than 28 years Greater than 28 and Tk280 less than 30 years Greater than 30 and Tk300 less than 32 years Greater than 32 and Tk320 less than 34 years

Greater than 2 and Tk20 less than 4 years Greater than 4 and Tk40 less than 6 years Greater than 6 and Tk60 less than 8 years Greater than 8 and Tk80 less than 10 years Greater than 10 and Tk100 less than 12 years

Greater than 12 and Tk120 less than 14 years Greater than 14 and Tk140 less than 16 years Greater than 16 and Tk160 less than 18 years Greater than 18 and Tk180 less than 20 years Greater than 20 and Tk200 less than 22 years

Greater than 34 and Tk340 less than 36 years Greater than 36 and Tk360 less than 38 years Greater than 38 and Tk380 less than 40 years Greater than 40 and Tk400 less than 42 years Greater years than 42 Tk420

IV.

Shift Differential - state guidelines for paying employees that work shifts different than a normal schedule. The Department of Mental Health and Mental Retardation and the Department of Health are authorized to pay an additional night shift salary differential not to exceed 15 percent of the monthly pay rate to Clinical and Support personnel who work the 3:00 p.m. to 11:00 p.m. or the 11:00 p.m. to 7:00 a.m. shift, or its equivalent. A weekend shift salary differential not to exceed 5 percent of the monthly pay rate may be paid to persons who work weekend shifts. The evening or night shift salary differential may be paid in addition to the weekend shift. The Department of Health, Department of Human Services, Department of Mental Health and Mental Retardation, Department of Protective and Regulatory Services, and Health and Human Services Consolidated Print Shop may pay an evening or night shift salary differential not to exceed 15 percent of the monthly pay rate to personnel in data processing or printing operations who work the 3:00 p.m. to 11:00 p.m. or 11:00 p.m. to 7:00 a.m. shift, or its valent. A weekend shift salary differential not to exceed 5 percent of the monthly pay rate may be paid to persons who work weekend shifts. The evening or night shift salary differential may be paid in addition to the weekend shift. The Building and Procurement Commission is authorized to pay an additional night shift differential to Print Shop, Environmental Services, and Building and Property Service employees. Any agency may pay a night shift differential not to exceed 15 percent of the monthly pay rate to registered nurses or licensed vocational nurses who work the 3:00 p.m. to 11:00 p.m. shift or its equivalent, or who work the 11:00 p.m. to 7:00 a.m. shift, or its equivalent. A weekend differential not to exceed 5 percent of the monthly pay rate

may be paid to nurses who work weekend shifts. This weekend differential may be paid in addition to the evening shift or night shift salary differential.

V.

Hazardous Duty Pay - state guidelines for paying employees based on performing work that could be hazardous to their health.

The following employees may receive hazardous duty pay after completing 12 months of state service: A commissioned law enforcement officer of the Department of Public Safety, the Building and Procurement Commission, the Texas Alcoholic Beverage Commission, the Parks and Wildlife Department, or the institutional division of the Texas Department of Criminal Justice A commissioned security officer of the Comptroller of Public Accounts A commissioned peace officer of an institution of higher education An employee or official of the Board of Pardons and Paroles, or the pardons and paroles division of the Texas Department of Criminal Justice if the employee or official has routine direct contact with inmates of any penal or correctional institution, or with administratively released prisoners subject to the Board's jurisdiction An individual who received hazardous duty pay before May 29, 1987, based on the terms of previous state law

Hazardous Duty Pay Table Years of Service Monthly Hazardous Duty Pay Years of Service Monthly Hazardous Duty Pay

Over 1 and less than 2 Tk10 years Over 2 and less than 3 Tk20 years Over 3 and less than 4 Tk30 years Over 4 and less than 5 Tk40 years Over 5 and less than 6 Tk50 years Over 6 and less than 7 Tk60 years Over 7 and less than 8 Tk70 years Over 8 and less than 9 Tk80 years Over 9 and less than 10 Tk90 years Over 10 and less than 11 Tk100 years Over 11 and less than 12 Tk110 years Over 12 and less than 13 Tk120 years Over 13 and less than 14 Tk130 years Over 14 and less than 15 Tk140 years Over 15 and less than 16 Tk150 years

Over 16 and less than 17 Tk160 years Over 17 and less than 18 Tk170 years Over 18 and less than 19 Tk180 years Over 19 and less than 20 Tk190 years Over 20 and less than 21 Tk200 years Over 21 and less than 22 Tk210 years Over 22 and less than 23 Tk220 years Over 23 and less than 24 Tk230 years Over 24 and less than 25 Tk240 years Over 25 and less than 26 Tk250 years Over 26 and less than 27 Tk260 years Over 27 and less than 28 Tk270 years Over 28 and less than 29 Tk280 years Over 29 and less than 30 Tk290 years Over 30 years Tk300

I.

On-Call Pay - state guidelines for paying employees for being on-call. The Texas Building and Procurement Commission and the Department of Transportation may pay employees for on-call time. Credit will be awarded at a rate of one hour for each day on-call during the normal workweek and two hours for each day on-call during weekends and holidays. This credit is in addition to any hours actually worked during the normal workweek or during on-call status. FLSA nonexempt employees who work a 40-hour week and also work on-call duty will receive time and a half overtime rates for the on-call duty.

II.

Benefits Replacement Pay - state guidelines for paying employees the employer's portion of Social Security taxes. This pay replaces the employee's portion of Social Security that the State had been paying prior to September 1, 1995. State employees hired before September 1, 1995 receive this pay. The employee continues to receive the BRP until the maximum calendar year BRP amount of Tk1,026.86 (plus an additional 6% retirement contribution) is received.

6. VARIABLE PAY Variable pay is compensation that is contingent on discretion, performance or results. It may be referred to as "pay at risk." 6.1 Enhanced Compensation Award - Agencies that meet certain performance criteria may grant awards to employees who directly contribute to these performance successes. An agency or institution that has successfully met or exceeded performance expectations outlined in the General Appropriations Act may enhance compensation for employees who directly contributed to such improvements. Only classified employees are eligible for enhanced compensation, and this award shall not exceed 6.8 percent of an employee's annual base pay. 6.2 Retention Bonus - Bonuses paid in order to retain employees in state government. A state agency may pay a bonus of up to Tk5,000 to an employee in a classified position under Texas Government Code, Chapter 654 to enhance the retention of employees necessary for agency operations. The employee must remain with that agency in a classified position for 12 months after the date of execution of a bonus contract. A bonus contract may be executed only after 12 months of employment in a classified position. The lump-sum bonus amount may be included in the classified employee's paycheck the month after the end of the 12-month bonus period. Before a contract may be made, the need to retain the necessary classified employee must be adequately documented by letter from the agency's chief administrator to the Comptroller of Public Accounts. A state agency may use appropriated money to purchase service awards, safety awards, or other similar awards to be presented to its employees for professional achievement or outstanding service under agency policies. The cost of awards purchased under this section may not exceed Tk100 for an individual employee. These awards are not the same as the Tk100 employee recognition awards provided through the State Employee Incentive Program.

6.3 Employee Recognition Award - Awards given to employees for recognition. A state agency may use appropriated money to purchase service awards, safety awards, or other similar awards to be presented to its employees for professional achievement or outstanding service under agency policies. The cost of awards purchased under this section may not exceed Tk100 for an individual employee. These awards are not the same as the Tk100 employee recognition awards provided through the State Employee Incentive Program. 7. PAY FOR TIME AT WORK 7.1 Breaks -Rest periods of short duration, running from 5 minutes to about 20 minutes. They are used to promote the efficiency of the employee and are customarily paid for as working time. They must be counted as hours worked. Within the State of Texas, these benefits are a matter of agreement between the employer and the employee. 7.2 Agency Events - Special events or programs planned by an agency to foster and develop an agencys culture planned during an agencys work hours. 7.3 Training Hours - The time that employees are allowed for training activities and for which they receive pay.

8. PAY FOR TIME NOT AT WORK 8.1 Vacations - days off with pay for employee rest and relaxation. State employees receive vacation leave based on length of state service. Vacation Accrual Rates for Full-Time Employees Length of State Service Less than 2 years At least 2 but less than 5 years At least 5 but less than 10 years At least 10 but less than 15 years At least 15 but less than 20 years At least 20 but less than 25 years> At least 25 but less than 30 years At least 30 but less than 35 years At least 35 years or more Hours Accrued Days Accrued Per Month Per Year 8 9 10 11 13 15 17 19 21 12 13.5 15 16.5 19.5 22.5 25.5 28.5 31.5 Allowable Carry-Over (Hours) 180 244 268 292 340 388 436 484 532

8.2 Sick Leave - days off with pay that an employee is granted when an employee is prevented from performing duties because of sickness. State employees are entitled eight hours of sick leave per month. Sick leave with pay may be taken when an employee is prevented from performing duties because of sickness, injury, or pregnancy and confinement. Sick leave may also be taken if an employee needs to care for a member of his or her immediate family who is actually ill. Sick leave may be taken to care for members of an employee's family who do not reside in the same household only if the time taken is necessary to provide care to a spouse, child, or parent of the employee who needs such care as a direct result of a documented medical condition. To be eligible for accumulated sick leave with pay for a continuous period of more than three working days, an employee must send the administrative head of his or her agency a doctor's certification, or an acceptable written statement of facts, showing the nature of the illness. Agency heads may grant employees extended sick leave if they believe it is warranted. Each agency may establish a sick leave pool where employees donate hours to the pool to be used by other employees who experience a catastrophic illness or injury that forces an employee to use all of their sick leave time.

EXTENDED SICK LEAVE GUIDELINES DEFININTION OF EXTENDED SICK LEAVE Extended sick leave is a benefit for state employees to be used when eligible employees have exhausted all other forms of paid leave including the sick leave pool, if applicable. Specifically, Texas Government Code 661.202 (i) states: The administrative head of an agencymay authorize an exception to the amount of sick leave an employee may take after a review of the individual's particular circumstances. A statement of all authorized exceptions and the reasons for the exceptions shall be attached to the to the state agency's duplicate payroll voucher for the payroll period affected by the authorized exceptions. EXTENDED SICK LEAVE POLICY/PROCEDURE RECOMMENDATIONS Must agencies/universities have an extended sick leave policy in place? Each agency/university that grants extended sick leave is required to have an extended sick leave policy in place. All policies MUST be forwarded to the State Auditor's Office and made available to all employees in accordance with Government Code 661.202 (j). Who is eligible to apply for extended sick leave? Each agency/university has the discretion to determine who is eligible for extended sick leave; however, each agency/university should ensure consistency in its application.

Agencies/universities can consider factors such as length of service, type of employee (e.g., temporary vs. regular), and work performance. When is an employee eligible to apply for extended sick leave? An employee is eligible to apply for extended sick leave when all other forms of accrued paid leave are exhausted, including any sick leave pool time granted, if applicable. How much time may be given to the employee? There is no specific minimum or maximum amount of time that each agency/university may give an employee. While an employee is out on extended sick leave, each agency/university should request a periodic status report from the employee to determine if additional time is needed beyond the time that was initially granted. An agency/university may want to consider the employee's period of employment with the agency or the type of illness when determining how much time to give employees who qualify. May extended sick leave be used to care for an employee's family member? Each agency/university can determine whether extended sick leave may be used by the employee to care for a family member who is ill only for the employee's own illness. Must the employee have a catastrophic illness to qualify? There is nothing in Government Code that requires an employee to have a catastrophic illness in order to be eligible to use extended sick leave. Therefore, it is possible for an employee who is not eligible for the sick leave pool to be eligible for extended sick leave. Should agencies/universities require documentation for the illness during the application process? Each agency/university has the discretion to require a written notice from the employee requesting the use of extended sick including appropriate supporting documentation on the nature of the illness and expected recovery time. May extended sick leave be used on an incremental basis? Yes. Each agency/university may determine if they wish to allow extended sick leave to be used incrementally. May an employee be required to "pay back" extended sick leave? An agency/university may not require the employee to pay back the amount of sick leave used. 8.3 Holidays - days off with pay to commemorate certain events. State employees receive most federal and state holidays. A state agency must have enough state employees on duty during a state holiday to conduct the public business of the agency except for

those state holidays that fall on a Saturday or Sunday, the Friday after Thanksgiving Day, December 24th, or December 26th. Employees, who actually work on a national holiday or a state holiday, if the holiday does not fall on a weekend, will be allowed compensatory time off during the 12-month period following the date of the holiday worked.

State Holiday Schedule Fiscal Year 2011 Holiday Labor Day Rosh Hashanah Rosh Hashanah Yom Kippur Veteran's Day Thanksgiving Day Day Thanksgiving All agencies closed All agencies closed Agency Status All agencies closed Optional Holiday Optional Holiday Date 09-06-10 09-09-10 09-10-10 09-18-10 11-11-10 11-25-10 11-26-10 12-24-10 12-25-10 12-26-10 01-01-11 01-17-11 Day of Week Monday Thursday Friday Saturday Thursday Thursday Friday Friday Saturday Sunday Saturday Monday Wednesday Monday Wednesday

after All agencies closed All agencies closed

Christmas Eve Day Christmas Day Day after Christmas New Year's Day

Martin Luther King, All agencies closed Jr. Day Confederate Day Heroes' Skeleton required

crew 01-19-11 02-21-11

Presidents' Day Texas Day

All agencies closed

Independence Skeleton required

crew 03-02-11

Cesar Chavez Day San Jacinto Day Good Friday Memorial Day Emancipation Day Independence Day LBJ's Birthday

Optional Holiday Skeleton required Optional Holiday All agencies closed

03-31-11 crew 04-21-11 04-22-11 05-30-11 06-19-11

Thursday Thursday Friday Monday Sunday Monday Saturday

All agencies closed

07-04-11 08-27-11

8.4 Jury Service - time off with pay to serve on a jury. A state employee is entitled to serve on a jury without any deduction from wages. Officers or employees of the Senate, the House of Representatives, or any organization in the legislative branch of state government may establish an exemption from state jury service. 8.5 Administrative Leave - time off with pay to reward employees for outstanding performance. Agency heads are allowed to grant 32 hours of administrative leave per fiscal year to employees for outstanding performance. 8.6 Emergency Leave - time off with pay that an employee is granted for a death in the employee's family. State employees are entitled to time off with pay for a death in the family. An employee's family is defined as the employee's spouse, the employee's and the spouse's parents, and children, brothers, sisters, grandparents, and grandchildren of the employee. An agency head may also grant emergency leave for other reasons determined to be for good cause. Other Leave - the State offers various other employee leave. The State offers various other employee leave: 8.7 Family and Medical Leave - provides that eligible employees are entitled to a total of 12 weeks of leave during any 12 month period for the birth of and care of a newborn child; for the placement with the employee of a child for adoption or foster care; to care for the employee's spouse, child, or parent with a serious health condition; or because of a serious health condition that makes the employee unable to perform the functions of his or her job. 8.8 Parental Leave - Employees with less than 12 months of state service or less than 1,250 hours of work in the 12 months immediately preceding the start of leave are entitled to a parental leave of absence, not to exceed 12 weeks (480 hours), if the employee uses all available and appropriate paid vacation and sick leave while taking the parental leave. Such parental leave may only be taken for the birth of a natural child or the adoption or foster care placement with the employee of a child under three years of age. 8.9 Military Leave - State employees are eligible for the following types of leave for military service: 1) authorized training or duty for members of the state military forces and members of

any of the reserve components of the United States Armed Forces; 2) call to National Guard active duty by the Governor; and 3) national emergency active duty for a member of a reserve branch of the U.S. armed forces. 8.10 Certified American Red Cross Activities Leave - Any state employee who is a certified disaster service volunteer of the American Red Cross, or who is in training to become such a volunteer, may be granted a leave of absence not to exceed ten days each year to participate in specialized disaster relief services. The employee must have supervisory authorization in addition to a request from the American Red Cross and the approval of the Governor's Office. 8.11 Volunteers Firefighter Training Leave - Volunteer firefighters shall be granted a paid leave of absence not to exceed five working days each fiscal year for attending training schools conducted by state agencies. This leave of absence may also be granted to volunteer firefighters for the purpose of responding to emergency fire situations if the agency or institution has an established policy for granting the leave time. 8.12 Leave for Employees with a Disability - A state employee who is a person with a disability shall be granted a paid leave of absence not to exceed 10 days each fiscal year for the purpose of attending a training program to acquaint the employee with an assistance dog to be used by the employee. 8.13 Foster Parent Leave - A state employee, who is a foster parent to a child under the conservatorship of the Department of Protective and Regulatory Services is entitled to a leave of absence with full pay for the purpose of attending staffing meetings held by the DPRS regarding the employee's foster child. In addition, the employee may attend, with a paid leave of absence, the Admission, Review, and Dismissal (ARD) meeting held by a school district regarding his or her foster child 8.14 Parent-Teacher Conference Leave - An employee may use up to eight hours of sick leave each calendar year to attend parent-teacher conference sessions for the employee's children who are in pre-kindergarten through 12th grade. Employees must give reasonable notice of intention to use sick leave to attend such conferences. 8.15 Leave Without Pay - Agencies may grant employees a leave of absence without pay. Except for certain situations, employees must have first exhausted all accumulated leave entitlements. Leave without pay cannot exceed 12 months. 9. MANDATED INCOME PROTECTION PROGRAMS There are some federally mandated income protection programs. Workers' Compensation - A benefit paid to an employee who suffers a work-related injury or illness. The State offers workers' compensation to state employees when injured on the job. Please refer to the Texas Department of Insurance - Division of Workers' Compensation for more information. Unemployment Insurance - A program designed to provide a financial safety net for individuals who become unemployed through no fault of their own. Unemployment compensation is offered to state employees. For more information, refer to the Texas Workforce Commission for information. Social Security and Medicare Taxes (FICA) - Taxes intended to help the elderly with retirement and health care costs. FICA is also known as the Social Security tax. It is composed of OASDI (Old Age, Survivors and Disability Benefits) and Medicare. The OASDI rate is 6.20% of a base

amount that changes each year due to a rise in the Consumer Price Index. The Medicare rate is 1.45% and currently has no income limit. All employees are subject to both FICA taxes. 10. VOLUNTARY INCOME PROTECTION PROGRAMS The State of Texas also offers some income protection programs for state employees: Health Insurance - insurance against loss by illness or bodily injury. The State of Texas offers a health insurance program to state employees. Please refer to the Employees Retirement System for more information. Life Insurance - insurance to be paid to a beneficiary when the insured dies.The State of Texas offers optional life insurance for state employees. Please refer to the Employees Retirement System for more information. Retirement - program designed to provide an income for your retirement and other future financial needs. Deferred Compensation Plans - employer deduction from pay where employee does not pay tax until they receive the distributions at a later date. 11. Pay and Social class Today with the continued prosperity, let alone survival of the nation in perils it is important to recognize the relationship among pay, earnings and social structure within the country. 12. Social structure and Income For hundreds of years, those involved in the identification of social classes have used a variety of criteria for determining who should be in a particular social class. Today, in capitalistic democratic nations, one criterion can be used to the class of an individual or family unit and that is income. The topical upper, middle and lower class divisions can be separated further into seven subsets. Each of these subsets defines a significantly different standard of living based on family income. The three classes seven subset classes and annual income intervals are shown in below-

Class

Family of four annual incomes

Upper Middle

Ultra rich Wealth Upper Middle Middle -Middle Lower Middle

Over 1000000 taka 250000 to 10000000 taka 100000 to 2500000 taka 60000 to 100000 taka 35000 to 60000 taka 19000 to 350000 taka to 19000 taka

Lower

Working Poor Poverty

13. Life Style and Social class To appreciate the importance of employer provided pay, it is necessary to have under- standing of the lifestyle and standard of living dedicated by pay, earnings and income. The study found that the lower the income is the higher the stress level is. People who seemed to be best off had income between 45000 and 60000tk. If this study continues to be valid, the income a decade later should be between 55000 and 60000tk. To develop an effective compensation structure employer should be fair thats why employees can be treated fairly. Thus equity theory suggests that individuals determine whether they are being treated fairly by comparing their own outcomes inputs ratio with the outcomes input ratio of someone else. When an employee think he is not fairly treated dissatisfaction may obviously come from his mind ad due to this dissatisfaction his motivation level may also reduces which directly affect the organizations productivity. A dissatisfied employee may reduce his effort, seek job to another places and may quit the job for that reasons organizations productivity are hampering and decreasing day by day. So managers or employers should set an equitable pay rates for the employees based on their skills, abilities and requirements thats why organizations performance and productivity may increases.

Conclusion Now a days organization are getting more competition so if they want to get existence in the market they have to more competitive than others, and the human resource or labor is the one important sector how organization create competitiveness. For getting more competitive and also self-motivated employees organization have to provide more competitive compensation program where employee equity being existence and that support to achieve organizational goals.