Salary Structures: Are They Employer-Driven or Legally Mandated?

Ideal Salary/Wage Structure for an Organization

What is the ideal salary/wage structure for an organization? Is it the employer's choice, or is it governed by statute?

Regards

There is no ideal pay structure for an organization. It is based on industry trends and tax savings. You can also adopt a flexible pay structure.

Regards,
Rajiv

Indeed, I agree that there is no definite structure that can be considered as "the ideal" salary structure for an organization in any industry anywhere in the world. However, there are four (4) basic compensation principles that organizations must consider in the design and adoption of a good salary or pay structure. These are: Internal Equity, External Competitiveness, Affordability, and Sustainability.

The first two (2) relate to employee and market matters, while the next two (2) relate to organizational financial capability/resources. Choices and decisions must balance the two sides if the organization wants to avoid operational problems.

A good salary structure is best done by professionals!

Best regards,
Ed Llarena, Jr.
Managing Partner
Emilla International Consulting Services
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If your question is on the quantum of salary, you have received the best advice from Ed Llarena, Jr. Insofar as statutory provisions in India are concerned, the Government prescribes a minimum quantum of salary payable to different kinds of skills and education levels from time to time, which is supposed to be adhered to by every company. There are, of course, many companies that do not strictly adhere to these stipulations.

I presume that your question is on the components of salary. If yes, please be aware that there are two components a salary should be structured on - fixed and variable. While the former is something like a retainer, the latter is dependent on performance. From a taxation point of view, salary (CTC) should be divided into basic pay, house rent allowance, conveyance (transport) allowance, and other allowances. HR consultants will be able to help you arrive at a proper structure.

Regards,
K Raajaram