Sure! Here are the explanations of the compensation system constraints in simple English:
a) Ability to pay: This refers to how much a company can afford to pay its employees. Factors like the company's profits, budget, and financial health influence this ability. If a company is struggling financially, it may not be able to offer high salaries.
b) Legal constraints: These are laws and regulations that affect how companies can pay their employees. For example, there are minimum wage laws that set the lowest amount a worker can be paid, as well as laws against discrimination in pay.
c) Collective bargaining: This is a process where employees, usually through their unions, negotiate with their employer about wages, benefits, and working conditions. The agreements reached during this process can limit how much and how companies compensate their workers.
d) Internal labour markets: This refers to the job opportunities and pay structures within a particular organization. Companies often have established pay scales and promotions based on an employee's role within the company, which can affect how compensation is determined internally.
e) External labour markets: This refers to the hiring and pay standards outside of the company, including what other companies in the same industry are paying for similar jobs. A company must consider these external rates to remain competitive in attracting and retaining talent.
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