Dear CITE HR friends,
I read some comments on the topic, and it is shocking to see that, we started giving our opinions “What we Feel” but not what law says. It is not important in corporate world or to a Professional HR, “what we feel, but we need to abide by the Law”.
CTC means Cost to The Company which includes, All salary components paid every month (Basic, DA, Med Allowance, Lunch Allowance, Edu Allow, Attire Allow Special Pay ETC…) and monthly expenditures (monitory) incurred to an Employer’s by hiring an employee (All Statutory payments).
If one’s salary is fixed on the basis of “gross” then PF or ESI, OR Gratuity; then contribution will not be deducted by employer from employee’s monthly salary.
If one’s salary is fixed on the basis of “CTC” then PF or ESI, OR Gratuity contribution will be deducted by employer from employee’s monthly salary. It is absolutely right.
We need to check before commenting “Fair/unfair” what was discussed in the interview and mentioned in the offer letter/appointment letter- “Gross or CTC”
Gratuity is also part of CTC, but not the Bonus. Bonus calculation appears only after knowing “Allocable surplus/Profit” of the company in a fin year.
If you keep Gratuity away from CTC, then while you pay Gratuity in a particular year – in annual balance sheet of the company where you can show that “Gratuity amount”? Is it not expenditure to the company?
Apart from that, employer can not deduct bonus from employees’ salary, because it is offence. If such practice is happening in your company, educate the employer, we are hired and paid in HR to ensure labour law is executed and to tell what is right as per labour law to the management.
Bonus is not the part of CTC, and on bonus component no statutory deductions can happen other than Income tax.
If bonus is considered as “part for CTC, it attracts PF and may be ESI”. It is illegal.
Sincere request with all CITEHR friends, If we are not clear on the subject, let us study the subject and let us take this CITEHR as a platform to learn, but not to misguide anyone just to see our name appearing in Citehr.,. Please..
Regards,
Dr. Sandeep K.