How to Create a Salary Breakup Without a Policy: Seeking Guidance on Percentages and Structure

Dear all,

Hi, dear. Where I am working, there has been no salary breakup for the last 2 years. They are calculating the salary based on the basic salary. For example, if the basic salary is 7000/-, then they calculate ESIC and PF based on this basic salary, assuming it as the gross salary. However, starting from the 1st of April 2009, the management has decided that the salary should be bifurcated into Basic, HR, Conveyance, etc. We don't have any policy regarding employee remuneration.

Kindly let me know how to create the salary breakup for employees. What is the percentage of Basic, HR, Conveyance, etc. (all parts of the salary) as per the act? How should we create the salary breakup if we don't have any policy regarding that? Kindly provide detailed information about the salary breakup.

Thanks,
Nirmala

Dear,

Salary is bifurcated on the basis of the employee's gross/CTC salary, and the basic assumption is that no basic salary is reduced.

For more information, you can directly contact me on my mobile.

Regards,
Yogendra Raj Singh
9214000855

Hi Nirmala,

Please find the attachment for the calculation of salary with ESI, HRA, conveyance, etc. for your information.

Hope this will help you.

Kindly let me know all the percentages of salary components including conveyance, medical allowance, and other allowances, as well as the overall CTC.

Dear Nirmala,

It varies from organization to organization. Generally, most organizations keep the basic salary at a low rate. For example, if your CTC is 100 Rs., then you can bifurcate it as below:

- Basic+DA: 40 to 50 percent
- HRA: differs based on the grade (you can make it 15 - 20 percent of Basic)
- CCA: It would be better if it does not exceed 1000 Rs.
- PF: 12% of Basic+DA or Rs 6500/-, whichever is less; according to the employer's convenience
- ESI: Should be calculated on Gross Salary (4.75% from Employer & 1.75% from Employee)

You can adjust the remaining amount in terms of conveyance or other allowances. Hope this is clear.

For more doubts, reach me at phaniacp@gmail.com.

Regards,
Phani Medavarapu

Dear All Cite Friends,

Herewith, I am attaching the HR Manual. Please check and give your feedback.

Thanking you.

Waiting for a lot of remarks.

Debajit Roy

There is no fixed percentage of the Basic component. However, for the purpose of uniformity, you can keep the Basic component as a fixed percentage of the total CTC. For example:

- Basic: 40% of CTC
- HRA: 50% of Basic for metros (40% of Basic for non-metros)
- Transport Allowance: Rs 800 per month (as anything more than this is taxable)
- PF: 12% of Basic component
- Special Allowance: CTC - (Basic + HRA + Transport + PF)

Hope this information helps!

Dear Nirmala,

You cannot break up salary that is in basic or consolidated form as this will affect the benefits of the employees. Salary should be as per the terms & conditions of appointment. If the employees are covered under the Industrial Disputes Act, 1947, then you have to serve a notice of change under section 9A of this Act, giving a 21-day notice; otherwise, the consent of employees is required. If you make changes at your level, it will constitute a breach of contract.

Opinion submitted as requested.

Regards,

R.N. Khola
Skylark Associates, Gurgaon
(Labour Law & Legal Consultants)
09810405361

Dear Nirmala,

As per your query, you would like to know the salary break procedure. Please find the same as under:

Basic Salary: 50% of Gross Salary of the month

HR: 50%-60% of Basic salary of the month

Conveyance: Rs. 800 only

The rest is based on the eligibility of the employee mentioned in his/her Appointment letter and Compensation Structure.

I hope it will help you to understand the same.

Regards,

Dear Nirmala,

The current basic salary cannot be reduced for any employee, as your case is different since you are providing the total salary and calculating other benefits based on the total salary. In that case, if all employees agree, then you can bifurcate.

Jai Bakshi

Dear Nirmala,

Every company has different policies, so please, before implementing salary structures in the company, contact your Finance department or your Head of Department. The following components are:

- Basic
- HRA
- Education Allowance
- Conveyance Allowance
- Personal Allowance
- Other Allowances

You can bifurcate the gross salary as follows: 40% is Basic, 20% is HRA, and the rest is the balance amount.

Regards,
Mukesh
mukeshtalgaonkar@gmail.com

Dear Dbojit,

Please don't mention any company name whenever you post anything in a forum because it is dangerous for you.

Hello HR Specialists,

The company wants us to launch Employee Engagement Programs. Could you please share what programs you are organizing in this regard in your company?

Thanks,
Venkat

Dear Sir,

Please let me know the rates of basic salary, HRA, and conveyance. If my total salary is $15,000, could you provide me with the applicable rates for basic salary, HRA, and conveyance?

I would appreciate an early reply.

Thank you.

Dear Nirmala,

It would be illegal if you bifurcate the basic salary, and the ESI/PF amount will go down with this formula. You can receive a notice from the ESI/PF inspection even if employee consent is also taken. If your management really wants to provide other allowances, then it should be in addition to the other parts of your earlier salary, and you can implement this policy for new joiners.

Best Regards,

Sajid Ansari
Delhi