Need Help Designing a Compensation and Benefits Plan for My MBA Project – Any Advice?

KalyaniJoshi
Hello Friends!

I am a student pursuing my MBA in HR. I have to design a compensation and benefits structure for a hypothetical company. If anybody has any relevant information that will assist me in designing, please forward it to me.

Thanks
Amitmhrm
Dear Kalyani,

You may follow this structure as well.

Anyways, the Basic would be approximately 40-50% of gross, and 40-60% of that would be HRA. Conveyance Allowance is fixed at 800/- and is exempted from tax. Educational Allowance is 200 per child and restricted to a maximum of 2 children. Medical allowance is 1250/-, also exempted from tax. Other allowances make up the remaining amount to complete the Gross salary, i.e.

Other Allowance = Gross - (Basic + HRA + CA + Medical + Edu Allowance)

So, we can say Gross Salary = Basic + HRA + CCA + Edu + Other Allowance

Medical allowance, if provided as reimbursement, shall be exempted from taxes, and the ceiling is Rs. 1250 per month.

Out of this, only two components may be deducted: one is PF, which would be 12% of Basic, and ESI, 1.75% of gross if the Gross is below 10,000/-.

I have explained only regarding the Gross/Month. Regarding CTC, you have to do some more exercise. First, Calculate Gross/Annum = 12*Gross/Month, then add Ex-Gratia or Bonus in a lump sum. It will now become AFGC (Annual Fixed Gross Cost). Then add PF contribution and ESI, 4.75% of Gross if applicable from the employer side per annum, then it comes to your CTC or ATC.

It means CTC = Gross/Annum + Ex-Gratia + PF & ESI contribution.

If any other benefits are being provided from the company side, then you should also add them to conclude your CTC.

I hope it is much clearer for you now. If you have any queries, feel free to revert.

Regards,

Amit Seth.
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