shripsacharya Started The Discussion:
Dear all members,
Now a days most of companies offer their package in form of CTC (cost to company). Is there any guide line to compute CTC I mean which payments to an employee should include while computing CTC ? Here it is also informative to add that all companies calculate the same in their own way some of them even include all reumbersment like conveyance exp. etc. and a step more some includes FBT paid by the company on his expenses.
Now we if we take it from the employee's point of view at some place he gets cash in hand only 50-60% of monthly CTC what he was assured at the time of recruitment..Some time it gives a very bad impression to employee like a robbery over his salary.
All members are requested to post their views and guidance.
We cannot call it as robbery over his salary. It is what we are paying him indirectly.
To make it simple the monthly salary includes all his allowances along with basic and DA. This is used in calculating his gross salary for a year. Along with this there are other benefits such as LTA, Medical Domiciliary, Bonus etc which we include in his CTC thus making it a complete whole.
If an employee avails a LTA or avails reimbursement from his medical domiciliary we actually pay it. That is what we are projecting in the CTC.
So it would be better to explain this to a new commer if you think that you have to maintain a good impression.
Hope this could have cleared your doubt to some extent.
Comments from others are welcomed..
After a candidate qualifying all the interview formalities the HR can have a one-to-one meeting session to discuss in detail about the CTC.
The salary breakups can be properly given and take home salary can also be given to them. Indirect and direct emoluments can be discussed in detail.
In brief "SALARY OF AN UPCOMING EMPLOYEE SHOULD BE SHOWN IN BLACK AND WHITE."
This will fetch a good name to the organization and will help to maintain a wonderful employee relationship.
Comments on this topic has already been posted in this forum earlier but to quickly recap, any amount that the company spends for the benefit of its employee can be calculated under Cost to Company. This will include medical insurance, accident policy, subsidised lunch / food, any attire / apparel / furnishing / shoe etc. provided (outside of office), PF, Gratuity.
Once committed in writing the company should, for its long-term benefit, honour it and pay the employee at the time of full & final settlement in the event of the employee's resignation. Hence it will not be considered a robbery even though the employee is not getting the compensation in his monthly component.
During the time of the salary discussion / negotiation the company should explain the benefit of any component of the salary that is not part of the monthly component like tax benefit (LTA, Medical reimbursement etc.), retiral benefit (PF, Gratuity etc.).
All this said, it will be easier to attract new employees only of the monthly component of the compensation is high.
I think this issue will be cleared once the candidate gets his appointment letter. usually we give clear salary split-ups in appointment letter. at times of HR interview round we finalize the commercial part by getting his/her expected CTC and work out accordingly after negotiation.
I hope this would clear any doubts at the time of induction.
WE NORMALLY INCLUDE :
IN TO THE CTC BUT IF YOU GO DETAIL AS WE ARE INCLUDING APART FROM ABOVE IS
GESTATION PERIOD EXPENCES ( WHEN A EMPLOYEES JOINS IT TAKES
MINIMUM 2 MONTHS TO PERFORM
TO HIS FULLEST )
PLACE TO SIT / ( BECAUSE IT HAS SOME MARKET VALUE )
COMPANY'S SPONSER TOURS,
GIFTS AND INCENTIVES ( IF ANY )
CTC or Cost to Company is defined as "the amount spend by a company to maintain an employee for a period of one year.
My suggestion is:
Any person whose accepting a new job should breakup the CTC into two.
1. Monthly Fix
2. Monthly Variable
And also look at whats Yearly fixed.
I think then a person would have an idea as to what exactly comes in Hand.
Always better to explain in detail about the Cost 2 Company while job offering a prospective employee.
A prospective employee after recieving his offer letter the only question running in mind is ' What will be my Take home ? '. Its advisable to have Salary break up template more self explainatory viz; The Components of Gross, other Annual payments, Employers contribution PF, Deductions(both PA & PM) and thus giving no room for any robbery. So the impression is not lost rather gained more.
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