Tsivasankaran
Consultant
Svandana9
Manager - Hr
Aartianand
Hr Manager
+1 Other

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Hi to all,
can anybody guide me on the salary structure. I am not asking typical salary structure.
But I wanted to know about Fixed amount + variable amount.
What is fixed amount in salary and what is variable amount to be said?
Is variable amount is calculated on target achieved?
Incentive and variable amount is same thing or different?
I am looking for your support.
Thanks,
Vandana Sharma
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Hi Vandana
Which Industry??What categories you are referring to?
Many organisation follow different methodolgies
Fixed Component
This should have Basic HRA and other allowances and this is adjusted every year based on Market and Inflation.
Variable Component
This is paid based on performance Many follow different methods Some organisation pay a lumpsum every year based on rating
Some companies, mostly IT decide a variable pay every year and this amount is paid as monthly payment. Next year, this is withdrawn and they get an amount based on the rating
Some may not even get this payment
If you want nittigritties, then pl specify exact requirement
Siva
Dear Mr. siva
Thanks for your endeavour to reply my queries.
We are a service industry. Which provides training & Education programs related to retail economics and finance.
Yes company wants to give variable amount is on performance basis.
But is it related to incentives? or it is different.
what you explain about variable amount i could not understand much.
Please give some more light on it.
Thanks & Regards,
Dear Vandana

I wont dwell here on the base minimum salary that you should pay to your employees based on market conditions and inflation.

Now on the subject of Variable pay many methods are followed will give here a few methods

1. Lumsum

Very traditional method and was followed for very senior executives as Commission but now extended to all categories. Linked always with profit and based on the profit, decide the percentage. For example, your target of profit is say 1 crore and u achieve 75 lakhs, then the commission or bonus payable is only 75% of he agreed amount

Many organisations used to say that the executives are eligible for 100% of their basic as Profit sharing bonus or commission based on the appraisal Then they decide at the end of the year based on Profit he percentage to be paid In any case it wont exceed 100% of agreed amount This is very old conventional but still simple method

2. Lumpsum on appraisal

Organisations every year revise salaries based on market and inflation and here they can not differentiate between employees So they do this exercise every year But they also appraise employees every year and categorywise decide the lumpsum payabale for different rating Here is an example

Grade 1

Rating A Rs 10000 as lumpsum

Rating B Rs 7500 as lumpsum

Rating C Rs 5000 as lumpsum

Grade 2

Rating A Rs 75oo as lumpsum

Rating B Rs 4000 as lumpsum

Rating C Rs 2000 as lumpsum

It goes on This is only illustration and it goes in lakhs

3. Monthly Variable

Som orgnisations mostly IT Companies based on Rating decide the monthly variable amount payable for different levels and sometimes the rule is so flexible, they decide for the individual as well. This is being paid as Variable pay everymonth with the condition that this amount will be withdrawn at the end of the year. This is again like the lumsum but the financial burden is spread over a year And again a with the attrition so high in the Industry they would like to make the payment as long as the employee is in the organisation.

4 Incentives

Mostly Sales people are given this based on target

This is a big subject and this, I hope would have given you some idea.
Hi Guys!
Needed to understand two components of the salary namely LTA and medical reimbursements.
Could somebody throw some light as to how the LTA(which a part of the employee's salary but is shown as annual component) is paid in case if the employee leaves the organization say within three months.
-Are these components paid in the full & final settlement?
-Any bills required?
-The tax liability if any?
Its a little urgent
Warm Regards,
Aarti
Aarti
It is paid on prorata basis say an employee has worked for three months and resigned and his eligibility per year is 12000 rupess, then for three months he gets paid Rs 4000 as LTA on prorata basis.
LTA is not taxable twice in a block of four years Have a consulatation with ASccounts If you want more info on tax I can give with examples
Siva
Thanks for the Info.Siva! But does that person has to provide some supportings or its paid in the full & final? Please throw some light on the medical reimbursement as well. Warm Regards, Aarti
Hi He is paid full and final If he provides support documents dont deduct tax as applicable Follow the same principles and methods in case of Medical reimbursement as well Siva
Dear Mr. Siva Thank u very much for helping me to understand this issue in detail. You knowledge will help me in designing this variable amount. Thanks again for your help. Regards, Vandana
We are into hostels business, Can you please help me out regarding incentive policy
Key Indicators:
  • Revenue Number
  • City wise profitability
  • Occupancy
  • Date for new Hostel
  • Customer Relationship
Please help me out i need it on very urgently.
Thanks
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