Is salary in black and white components an accepted practice in the industry- legality? - CiteHR
H R Manager

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Hi friends,

In my experience I never came across this type of issue. Please provide your views on this situation.

The situation is...

The management asked HR to recruit a senior person in technical department (IT industry).

HR started its process and finalized some candidates. During the salary settlement discussions, interviewee said that his present salary is 70% white and 30% black. He submitted his salary slip also and said it contains only 70% of his salary part. And in the new job also he is expecting the same.

My questions are:

1. How we can confirm this ratio?

2. If it is possible, which salary headings shall come under 70%?

3. What about the benefits for 30% black money?

4. Moreover is it possible to give 70%+30% without any statutory issues?

5. How accounts department can manage the 30% money in their records?

6. If it is possible, is there any preferable percentage for white and black?

Your views are highly appreciable.



I would be very vary of this type of ratio application because today's Leadership should move towards Value-Centric Leadership.
I am sure you are well aware of what happened at Enron in USA which was a major Corporate scandle a few years ago. The VP , Baxter, ultimately committed suicide.
Transparency and forthrightness is what is needed I guess.
Hope it was of some help.

Dear Professor,
Thank you for your reply.
Recently we have rejected this proposal in our company on the same lines that expressed.
Just to know, if there is any situation like this, and how to deal it, I posted this. I am expecting our members views on this.

Hi Manju,
I have come across a similar situation recently. There are a couple of cos mostly domestic who has cash component in their salary especially when it comes to very senior profiles. How they do the tax evasion and unethical practise is their part of the game.
Since it was important for us to hire this person , we settled with the following terms.
After the negotiation , we decided that 80% will reflect in his appointment letter , 20% will be treated as cash component and re-imbursed on producing invoices. FBT would apply.
So no black and white ....

Hi Rekha, Can you please let me know the components you used for reimbursement? Regards, Manju
Hi Manju, We made a limit of 25k per month/ 3 lacs per annum wherein he could provide bills i.e Hotel Bills Telephone Bills Taxi Bills Food Bills Regards, Rekha
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