Salary Components for Startups: How Can We Benefit Both Our Company and Employees?

Hi, we are a startup company. We need to pay two different employees 6 lakhs and 5 lakhs respectively. So, what kind of salary components would benefit both the company and the employees? Please help us in evaluating the best salary components. Thanks for your help in advance.

Regards,

Proposed Structure for CTC of 5 Lakhs

Find enclosed a proposed structure for a CTC of 5 lakhs. More options can be explored for optimal results.

Source: hr.rajivchawla.com

Regards

Thank you for the valuable suggestion, Sir. As we are a startup company, could we implement a payment structure where we initiate the employee's salary at a lower rate and increment it upon completion of the year to ensure that the CTC remains at 5 lakhs? Please assist in resolving this query.

Thank you for your help, Sir.

Strategies for Structuring Salary Components

Increase the annual portion in the structure. For example:

1. Include performance-linked pay or incentives as a major component of CTC, which will be payable after the year-end.
2. Keep Basic at a high percentage so that Bonus, Gratuity, and Leave encashment grab a significant amount.
3. Pay Bonus on the full basic (sometimes companies pay Bonus on the maximum statutory ceiling, i.e., 3500/-).
4. Provide for Gratuity.

This way, the monthly payout will be reduced, and a major liability will be shifted to year-end or thereafter. Another way could be to hire at a lower CTC with an interim hike commitment, i.e., to hire at a lower salary but increase it after, say, 6 months based on performance. However, this solely depends on the mutual understanding of the employer and employee.