Is My Company's Bonus and Wage Policy Fair and Legal? Seeking HR Insights

Dear Associates,

I am working as an HR Officer in a pharmaceutical company. My company has a policy of including a bonus of 10% in the salary as CTC, but they do not show it in the deductions. Is this practice correct?

Secondly, my company gives Rs. 3500 to temporary workers per month as fixed wages for 8 hours. Is this amount below the ceiling of the Minimum Wages Act? Or should it be Rs. 184 per day?

Please help.

Thanks & Regards,
Indu Nair

Understanding Salary and CTC

Salary is a distinct component, while CTC (Cost to Company) is another. CTC represents the total expense a company incurs for a particular employee. It can include any facilities that a company wishes to offer its employees, such as gratuity, bonus, etc.

Salary, on the other hand, is the fixed part. It is not ethical to add gratuity, bonus, etc., to the salary, as it is solely the employer's liability, payable to the employee as a reward for their contribution to the company.

Regards

Understanding CTC: Cost to Company

CTC = Cost to Company → Arises when? → A person is employed → The company calculates and identifies what needs to be given/paid to the employee. Therefore, how much do I have to spend on this new person? Hence, (Salary = Monthly Commitment; Perks = Periodical or Annual Commitment/Statutory Commitment). This clearly helps one understand that all expenses, whether salary or perks, spent on maintaining that employee on the payroll, are part of CTC. Therefore, adding a bonus to CTC is entirely correct.

Regards,
Suresh K