Should Paid Leave Be Counted in CTC? Seeking Insights from Experienced HR Peers

Dear All,

A few days ago, I was consulting a consultant regarding CTC. He presented a unique argument stating that leave granted (whether PL, CL, or SL) should be considered as part of one's CTC. The reason he attributed to this was that each day's leave has a cost, which is to be computed based on the ratio of one's earnings.

It would be very useful to hear the opinions of more experienced fellow members on this subject, as I have yet to come across a CTC breakup that includes leaves as part of one's CTC.

Many thanks in advance.

Fj.

Dear fruitjam,

Welcome to CiteHR.com!

I hope you are aware that, in law, a particular object or concept is interpreted as one that is "commonly understood" (or 'considered as such') by that term. At times, it may vary with usage or context.

For a recruiter or recruitment purpose, CTC is the Cost To Company in terms of salary and other perquisites actually paid (or spent on behalf) to the prospective employee.

For a company, anything that is spent on employees is a definite cost to the company.

The ambient lighting in the office, cost of air-conditioning, security, lifts, water coolers, office maintenance costs like paints, furniture; canteen fixed costs like light, fuel, furniture, etc. are all costs to the company.

A good cost accountant can easily calculate these costs and apportion them per employee to arrive at such Cost To Company.

Would you like to add all these costs and present it to the prospective candidate as his Cost To Company?

Since there are no laws or definitions for CTC, the choice is entirely yours - whether to agree with the consultant and keep adding more to CTC or to go along with the accepted norms and practice.

Warm regards.

Exactly explain by Rajkumar, no need to say anything. But adding a little bit.

In fact, this "cost to company" (CTC) term originated from Western countries, and in the Indian context before the arrival of these MNCs, there was no such kind of idea; there was a flat rate of remuneration. This is a fairy term, to cheat the employees in the show off high CTCs.

The breakup of the salary structure is only for getting some tax benefits, which are beneficial for the employer and employee. Otherwise, there is no definition of CTC, no formula for the breakup of CTC as per the law. No provision, no statute describes this CTC.

Whatever you can add to your concept of CTC, nobody is going to stop you, and no employee is going to object because of the high rate of unemployment; if one objects, then you can get another one.

This is total social, economic, and mental harassment of an employee. They are bought with a CTC like 6L/A but in actuality, paid only 3.5L/A; the rest is spent on them in the name of CTC.

Most companies add Gratuity as a cost to the company and other factors. These are illegal means, and I must say, unfair labor practice.

Hello Fruitjam,

My response is ditto like Raj Kumar & essykkr. It's entirely up to you how to figure out your CTC. And like essykkr mentioned, this norm came into India along with the IT boom [not exactly the MNCs] since much of the overseas IT business initially came from the USA.

Like with any choice, this too has the 'other side of the coin'. No wonder many candidates/applicants now ask for the actual take-home figures before accepting or rejecting offers. This only subtly points to a sort of distrust/mistrust right from Day 1. If you care to analyze the reasons for the attrition rates we see today [compared to about 10-15 years ago], this is one major factor - and we see this phenomenon more in the IT sector.

Frankly, I don't think this is a 'right/wrong' issue - and definitely not illegal. At most, we can say it's a 'fair/unfair' choice [vis-a-vis how the HR explains this CTC to the prospective employee]. It's more to do with which option suits you or your organization - and one needs to be prepared to take BOTH the pros & cons of the choice.

Regards,
TS