Umakanthan53
Labour Law & Hr Consultant
Bijay_majumdar
Freelancer In Hr &indirect Taxes For

Please explain...if someone joined a company two years back that time there were no pt and pf deduction so we were getting gross - pt only after two years company implemented pf and esi and company wants to add everything employee and employer contribution in existing gross earlier that was CTC only.
Now everything effective from SEP 2019
Also, the employer's contribution will be 13%, is the admin charge also included in CTC?
Let me know will it be valid to add everything in CTC so automatically in hand will be very less..
Suggestions, please

From India, Mumbai
First of all understanding CTC is Must.
CTC in simple terms means cost to company, which includes every emolument which company spends on an employee.It includes
Salary whichincludes Basic DA,HRA, any other allowances etc.
The statutory elements fall under fringe benefits which include emoluments like epf, esic and Labour welfare fund contributions that employer contribute,
Other benefits under this would be bonus, gratuity, leave with wages, wages against national holidays etc.
All the above include your CTC.
What deductions will be applicable to an employee are PT, and or TDs if applicable.
While deductions under epf and esic contribution of employee are made in his erned salary but it is for their social security.
Hope this helps in understanding the salary and CTC.

From India, Vadodara
But when We have joined that time there was no pf /esi after 2-3yrs they have started and communicated verbally to us that employer' pf will bear by employer only.. but now when new CEO has come then he is said it's wrong and we should had adjusted everything from employees..
Let me know how to handle.
Reply.. please

From India, Mumbai
Dear Mamata Kumari,
After analysing the apt explanation given by our friend Bijay distinguishing salary and C.T.C, I hope certainly it would be clear to you that the contention that all subsequent contributions payable by the employer by the operation of certain laws to the establishment should be adjusted against the existing C.T.C is not only wrong but also illogical and illegal as well.
As C.T.C is the annual total cost incurred per employee by the employer in a year, let me try to explain the concept of gross monthly salary as follows:
Gross monthly salary is the sum total of the basic pay and all the other monthly allowances payable to the employee at the end of the wage period before all deductions as agreed in the contract of employment. All deductions here mean only those sums statutorily deductible from the agreed salary of the employee. That's why, all contributions both statutorily and contractually payable by the employer like contributions to ESI and/or EPF, bonus, gratuity fund, L.T.A, medical reimbursement etc., are not included in the statutory minimum wages. So is the case with the monthly gross salary or wages as agreed in the contract of employment. If the amounts payable by the employer subsequently due to applicability of ESI and EPF Acts are also deducted in order to keep the C.T.C the same, the gross monthly salary would automatically be reduced thus ending up in breach of contract on the part of the employer. If the employer like your new C.E.O is shrewd enough to coerce the employees to agree , it tantamounts to "contracting out " which is prohibited under the Labor Jurisprudence.
Better make a collective effort to bring this legal position to the notice of your new C.E.O.

From India, Salem
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