Understanding Salary Hikes: What Do New Employers Consider When You Switch Jobs?

If anyone can update me on that when an employee (starting from an Executive to the Top Management) joins a new company after leaving the old one, then what components of his salary are considered by the new company while giving him a raise/hike in his salary?

Are the concepts of CTC & Gross salary the same or are there some underlying differences between them?

Thanks. 🙄

Hi Prashanth,

I am sorry, but I did not get the link between a new joinee and his increment. By the time the joinee falls in line for the increment, he would have become old for the company, and his previous company's salary is in no way related.

Please let me know if I have understood your question wrong.

There is a difference between CTC and Gross salary. In simple terms, what I have understood of them is:

NET SALARY
+ Employee Deductions like PF, ESI, Professional Tax, etc.
___________________________
GROSS SALARY
+ Employer Contributions like PF, ESI, etc.
___________________________
COST TO COMPANY

I hope you have understood the difference.

Regards,
Soumya Shankar

Employee salary will be negotiated after the completion of the interview formalities. Usually, the salary will be negotiated in terms of Cost to the company. CTC has two major parts, i.e., Fixed and flexible. Fixed components are Basic salary (Some % of CTC), HRA (Some % of Basic), PF (employer), and Gratuity. Flexible components are Medical reimbursement (limit 15000/- per annum), conveyance (9600 per annum), Children's educational allowance, House rent allowance, etc.

Aditya

Hi Soumya,

Thanks for the answers, but I still think that there was some confusion that remained. I will try to help you understand with the help of an example.

Let's say, for example, you are an employee of XYZ Co. as an IT Manager. You had an interview with another IT Co, let's say ABC, and they liked you and want to hire you. Now, my question is, when ABC offers you to join their company, they would definitely propose a particular hike or raise in your current salary so that you might be interested in joining them. What I want to know is, while calculating that hike/raise in your salary that they would be proposing, what components of your current salary would they take into consideration? Would it be just (Basic Pay + HRA) or would more things be included as standard items to calculate a raise/hike?

By the second question, I meant, what are the components that would be included in the salary while calculating CTC, and similarly, what would be the components that would be included in the salary while calculating a Gross Salary?

Hope this is clearer now.

Looking forward to hearing from you.

:roll: