New to HR: How Can I Improve Our Small Team's Salary Structure Quickly?

Hi All,

Very recently, I have joined a small financial organization as an HR-Admin with an employee strength of 18. The HR role is new to me. The present salary structure is furnished below:

- Basic
- HRA
- Conveyance
- Other Allowance
- Professional Tax

My boss wants a better structure. So please, friends and seniors, help me. I need speedy replies as I need to submit it today.

Thanks and regards,
Rima Mitra
HR-Admin
rima@sksspl.com
033-22831835

Dear Rima,

Every company has its own rules and regulations. Just like the salary structure, it is also different according to the company.

Dear Rima,

Please try this:

(A) FIXED PAY (Includes Basic, HRA, Conveyance, Special Allowance, & benefits like Medical, LTA, Uniform Allowance, Telephone allowance, etc.). This may be up to 70% of the CTC. (CTC is the total sum of salary, allowances, and benefits agreed to an employee at the time of appointment).

(B) VARIABLE PAY: 30% of CTC (Includes Performance Incentive/Bonus; Food Coupons; Gratuity, etc.)

Fixed pay is payable on a monthly basis. Out of the fixed pay components, except Basic salary, tax rebate is applicable if these are made as reimbursement as per the limit fixed under IT Rules. You may refer to the IT Act/Rules.

Again, you may bifurcate the CTC as follows:

Basic salary = 40/50% of the CTC

HRA @ 40% of the Basic

Conveyance = 800 p.m.

Special Allowance = CTC - (Basic + HRA + Conv + Medical + LTA + Uni.All + Tel All + V.P)

Medical = 1250 p.m.

LTA = 10% of Basic p.m.

Uniform Allow = 2500 p.m. (Max)

Telephone Allow = 1000 p.m. (max)

Variable Pay = 30% of CTC

The above structure may be relevant to senior positions or those who draw a CTC of 5.00 lacs and above. For others, you may fix Basic, HRA, Conv. & Special Allow + a certain portion of CTC as Variable Pay.

In certain organizations, PF - Employer contribution (12% of Basic) is treated as part of CTC. Again, certain org only pays 780 towards employer contribution (please refer to PF rules). Gratuity equivalent to 4.81% of Basic is also considered as part of CTC.

While fixing the salary structure, one needs to refer to the statutory compliance part + IT rules.

Hope the above clarifies your query.

Dear Rima,

First, decide if your company will increase the salary according to the new structure or will have to be managed within the overall budget set out for pay and allowances. Please work out from the accounts how much is paid to the staff (including bosses) on account of salary (gross - including allowances like CCA, HRA, DA, others), employer contribution towards EPF & ESI, food, OT, conveyance, telephone, liveries, LTA, healthcare, refreshments, taxes (paid on behalf of employees), and all other such allowances. Add some percentage for unforeseen expenses. Sum them up and work out the annual expenditure on all these. Thereafter, you know how much to incur.

Make attractive CTC (Cost to company) packages. Please ensure the Carry Home Salary may not come down from the present level.

Dear Rema,

I am sending the new salary structure. Please review it at your earliest convenience.

Thank you.