Its4me111
Hr Executive
Saravanan_d_
Senior Manager - Statutory Compliance
+1 Other

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Dear All,
I am new in HR. Please tell me what are reasons behind it that companies have different rate of percentage of basic in gross salary. Why should i choose 30% or 40% as basic of gross salary.
Thanks you.

Dear Friend,
The % of basic also depends upon wage structure applicable and policy of the company or the legal Long Term settlement signed for wages with the union. The Basic is linked up to other payments in wage structure so most of the employers would keep basic on lower side while finalising salary of employee. for example we have to pay 12% of (basic +DA) in PF as employer share so the employer cost of employment will be on higher side if the basics are high. so to maintain these employment related expenses on lower side the employer may choose to keep basic 40% or 30 % of gross salary depending upon benefits payable to employees such as PF, Gratuity, bonus etc
Hope this suffices your query. Other members can also guide you further. Please discuss this with any senior HR person in your vicinity so that you can understand this better.
Regards

PF Department is insisting the employers to calculate Basic (+ DA) as not less than 50% of gross salary. Otherwise, they think that we subterfuge the PF Liability.
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