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Dear Pankaj,
What you are referring is retention amount(sometimes called as Retention Bonus) which is held and paid to the employee only if he completes a desired period of employment in the company.

Hi Madhu,
Have to commend you on your article because you did think on the concept.
The concept of CTC is just fair I believe.
CTC as the term implies is what the personnel is going to cost the company, as an employer he has the right to know it. Profit generation is important not just for the employers but for the employees too.
If the person was not beneficial to the company then he wouldnt be working in the firm in the first place.
Also with the present work culture prominent among employees who are ready to shift jobs for a meagre raise eventhough they are happy with the present company. Employers are forced not to consider human capital as an asset to the company, Human Capital today is just a tool that has been hired.
Just thought of putting in my views

Hi Neelima,
Bonus is a statutory requirement for employees who fall under a specific salary range. For the employees who earn more than the salary for the bonus limit, the organizations pay the bonus as Ex-Gratia or Incentive or Bonus itself.
It should be mentioned on the appointment letter unless its non contractual and discretionary.

Dear AJ,
I donot want to make my article sensitive or contravesial. But I only meant to convey the other side of the new theories of HRD. Practically and ultimately, our efforts are linked to profitability. I know that it is not at all practical to fix up wages according to marginal productivity theory of wages. We have travelled a long from subsistence theory of wages (the Iron Law of wages) through Karl Marks philosophy to the present system of recognising labour as capital. There has been drastic change in the attitude of both the employees and employers, but still can you say that an employee is safe and secured? My attempt was just to say the other side of the much highlited HR practices of today. It was presented in some what ironical manner. That's all. If we are to add up all the costs of getting things done attributed to a particular unit of employment, why do not we accept the benefits?

By adding the bonus to CTC or monthly salary we do invite troubles, there may come an amendment to the defenition of salary in the EPF/ESI Acts to include such special allowances hidden in the gross salary/ CTC. new intrepretation to the defenition is sufficient to force employer to follow it.

It sounds good to say huge figure of CTC, but can any body satisfy himself with just saying that 'my slary is so........?



Hi Madhu,
Well Said.
I do respect your comments and even I hope some day there are definite rules laid down for employees and employers alike.
Hence reducing the problems that we face today.
But till then...lets just hope.

Bonus payment is a mandatory if an employee is covered under the Payment of Bonus Act.In his case bonus could not be the part of CTC. But the employee is not covered under the purview of the payment of bonus act in his case bonus will be included in his CTC. Please see payment of bonus act and amendment on it.
Right now Bonus funda is not in market. The bonus amount is renamed as ex gratia which is fixed and have add in CTC. But that should not mention in Appointment oder. You can make it variable depends upon the profitability of the business. normally bonus is variable from 8.33 % to 20 % of Basic & DA's. ( Under Bonus act we can not give more than 20%, thats why we required to give this amount as Ex gratia).
No, Bonus should not be included in CTC. Unethical trade practise.... if you do it.... Best Regards M F Velati
Centre approves amendment in Bonus ActTuesday, October 30, 2007 The Centre has promulgated an ordinance approving changes in the Payment of Bonus Act, which would make workers drawing up to Rs 10,000 monthly salary eligible for annual bonus.
President Pratibha Devisingh Patil promulgated the Payment of Bonus (Amendment) Ordinance of 2007 on October 27, an official release said here today.
Hitherto, only those having a monthly salary of upto Rs 3,500 were eligible to claim bonus.
The Cabinet on October one had approved the amendment to Section 12 of the Act "to raise the eligibility limit for payment of bonus from the salary or wage of Rs 3,500 to Rs 10,000 per month".
The decision would benefit seven per cent of the total workforce in the country which is working in the organised sector.
The payout proposal is broadly in line with recommendations of the 41st session of the Indian Labour Conference (ILC) held in April this year, and is the result of a long-pending demand of the trade unions, particularly by the CPI (M)-affiliated Centre for Indian Trade Unions (CITU).

I am of the opinion that Bonus can be included in CTC as it is a major cost to the company. CTC itself means cost to company, that means it can include everything including bonus. As the company paying bonus to its employees, it has no problem to show it on appointment letter also. But take care not include it in minimum wages.
kumaran siva

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