For calculating retirals such as provident fund, gratuity and pension, basic salary is important. For employees earning dearness allowance, which is also considered for retirals, the basic salary is pretty low since dearness allowance is a substantial amount. Employers would like to keep this part of the remuneration lower since they have to contribute to the retiral funds, and this becomes part of employment cost escalation.
For employees - mainly managerial and supervisory staff - who donot get dearness allowance, the thumb rule for large, well established companies, basic salary forms 30 % of CTC since increasingly variable pay has taken a significant part of annual remuneration.
A K Basu
For employees - mainly managerial and supervisory staff - who donot get dearness allowance, the thumb rule for large, well established companies, basic salary forms 30 % of CTC since increasingly variable pay has taken a significant part of annual remuneration.
A K Basu