How Should We Redesign Our Base Salary Bracket to Align with Indian Market Standards?

Redesigning Compensation Structure

We are thinking of redesigning our compensation structure and need to make a final decision on the Base Salary % bracket. The options are to keep it at 30-40%, 40%-50%, or 40%-60% of CTC. Please provide support and assist me in making this decision according to Indian market standards and benchmarks.

Please note that an increase in the basic salary will automatically increase the company's costs, such as an increase in PF, Gratuity, ESI, PL encashment, etc.

Thank you.

Many corporates are setting 40% as the base pay. The higher the base pay, the more benefits employees receive, as it covers some terminal benefits.

Regards,
Pon

Mr. Sivani,

The pay structure of a company should satisfy the law of the land and minimize the company's variable payments. At the same time, it should be tax-friendly for both employers and employees.

Considerations for Preparing Pay Structure

When you are preparing the pay structure, you should consider the following acts:

1. Minimum Wage Act
2. EPF Act
3. ESIC Act
4. Payment of Gratuity Act
5. Payment of Bonus Act
6. Income Tax Act

All the best!