Sharing My Basics of Compensation Course – How Can It Help You or Be Improved?

Hi people,

I conducted a recent course on Basics of Compensation for Goa University and have attached the PowerPoint presentation for your reference. I sincerely hope that it benefits somebody. Your comments are also invited for improvement.

Regards,
Monarch

Hi Monarch,

No doubt, it is a good contribution. Thanks a lot. Since you have conducted the same at GOA University, perhaps you have more details on MS-Word format which are linked with this PPT format. If you could please share that, it will be more helpful for everybody. Waiting for that... Thanks in advance.

Asad

Hi Asad,

I have gone through various reading materials and books to create this presentation. You will find all the necessary information in compensation books. I made it directly on PowerPoint without using any Word document. However, if you have any specific questions about this, I would be more than happy to help.

Thank you!

Hi,

I am doing compensation and benefits study in one of the companies and I have a small query. Instead of providing a special allowance, can an employee choose their own benefits (such as entertainment, gym, etc.) and pay for the fringe benefits themselves? This could be a win-win situation for both parties:

Employer - easier to retain talent with no additional tax burden
Employee - a special allowance would incur more tax burden than paying Fringe Benefits Tax (FBT) on other benefits

Thank you.

Hi Friends,

Here is the Salary Breakup Calculator. Please see the attachment. Enter the Annual Cost in the top left-hand side marked (YELLOW) only.

Keep Smiling......

Mahesh K Prasad

We deliver HR software and payroll outsourcing services and find that many payroll professionals are not clear on whether they should be using 30 days, 26 days, or the actual calendar days as the basis of pay calculation each month. We believe that the actual number of days should be used each month for pay calculation rather than using 30 days or 26 days. Please find attached a note detailing why using 30 days as the basis can lead to problems in pay calculation.

I welcome comments on the note. If you wish to know about software or payroll services, please get in touch with me at [Login to view].

Regards, T E Gautham

Please check your calculations for both 26 and 30. The difference is not as significant as it should be. Please double-check your work.

Dear Tegautham,

What I gathered from your email is that you are considering days as the basis for salary calculation, which should not be the case. It should be the actual salary, regardless of the number of days.

For example, if an individual's salary is Rs. 30,000 per month, it should remain the same whether there are 28 days, 30 days, or 31 days in a month.

Regards,
Ravindra

Agreed. Of course, it should be the same amount irrespective of the number of days a month has.

The problem I am trying to illustrate is for the pay calculation in the first month (or the last month) of a person's stint in a company.

New here...

Can you tell me an ideal breakup for Rs. 9,00,000/annum? This is in a tiny company, so no PF. They have asked me to come up with a suitable breakup based on my tax needs. I am a single parent with one child. So I need to maximize my tax savings. I live in a metro.

Would appreciate any assistance you can provide me. Thanks,
Deepa

Mr. Prasad ji,

It's very useful and easy preparation of salary breakup. Additionally, being simultaneously connected with the paysheet, PF return, and ESI return is an added advantage.

Regards,

PBS KUMAR

MANAGER-HR

9848499629

Dear Mr. Prasad,

Can we have a salary breakup that can minimize tax outgo considering common tax-saving schemes resorted to by many, such as Sec 80C, HRA, House loan, etc.?

Dear Deepa,

I just tried to structure a plan for you:

Total income: Rs. 75,000/month
Basic salary: Rs. 47,420/month
HRA: Rs. 14,230/month
Conveyance Allowance: Rs. 800/month
Special Allowance: Rs. 5,000/month
Sodexo pass: Rs. 2,000/month
LTA: Rs. 24,000/year
Books & periodicals: Rs. 6,000/year
Mediclaim reimbursements: Rs. 15,000/year
Phone reimbursement: Rs. 1,800/year

Total: Rs. 75,000/month

To optimize your tax savings, you will need to show investments of Rs. 100,000 and provide receipts for LTA, Books & periodicals, Medical, and phone reimbursements. Additionally, consider purchasing mediclaim insurance policies for both you and your child (each with an annual premium of Rs. 15,000). Make sure to retain house rent receipts for Rs. 16,000/month.

After factoring in the fixed and reimbursement components along with your investments, the net monthly tax amount will be approximately Rs. 4,317.

Regards,
TIM (araktimz@yahoo.co.uk)

Dear Gautham,

The correct method of calculating wages as prescribed by the Tamil Nadu Government is as follows: Basic Wages - P/(N-S+H) x Number of days present.
P = Monthly pay; N = Number of days in a month; S = Number of Sundays; H = Number of holidays.

Example:
Monthly pay: Rs. 3500/-
Number of days in the month: 31
Number of Sundays in the month: 5
Number of mandatory holidays in the month: 1
Number of days present: 24 (absent 1 day) (if it is a casual leave then it is 25)
= 3500/31 - (5+1) x 24
= 3500/25 x 24
= Rs. 3360/-

If the number of days present is 25:
= 3500/25 x 25
= Rs. 3500

I trust that this meets your needs.

Regards,
S. Krishnamoorthy

Hi Tim,

Thank you for the breakup. I am an HR professional in a small company in Mumbai. I am currently reviewing the salary break-up structure in place, which is resulting in employees paying a substantial amount towards PF, leading to lesser take-home pay. Below is the current structure we are using:

- Gross: (CTC - employer's PF)
- Basic pay: 50% of gross
- HRA: 25% of gross
- Medical: 10% of gross
- Conveyance: 9% of gross

The issue lies in the basic pay constituting 50% of the gross amount, resulting in higher PF deductions. I seek your assistance in restructuring the salary components to reduce PF deductions and increase the amount employees receive in hand. Please advise if we should consider adding other components such as FBP, special allowance, LTA, etc., to achieve this goal.

I look forward to your response.

Thank you.

Dear All,

Is there any system in Payroll Structuring where an employee can be allowed to customize his/her own pay while keeping the same CTC, or can a company have a flexible salary structure to accommodate different sets of employees?

Requesting all members to help me with their valuable suggestions.

Thanks,
Preeti

Hi,

You can surely have something like flexible components in the salary structure. This could be possible if you can add the following reimbursements:

1. Food Vouchers - Employees can decide on the amount depending on the usage.
2. Medical: Employees would need to submit the bill of their medical expenses.
3. Attire
4. Professional Pursuits
5. etc

These components would be tax-free for the employees, but the company would have to pay FBT for them.

Medical:

Hi Monarch,

Excellent material on compensation management. I had a question, if I may ask. If a Job Analysis exercise is completed, how does one go about doing Job evaluation and then linking it with the salary ranges/slabs? I am not referring to the techniques that you have mentioned in the PPT, but my question is on an operational/execution front.

Best regards

Hi Monarch,

Can you help me create an employee benefits scheme? You have provided very useful information. Thank you. I hope to receive a reply from you.

Thank you.

Thank you for sharing. I am curious about which method of job evaluation the Hay system belongs to in your PowerPoint presentation. Additionally, could you assist me in comparing the Mercer system with the Hay system?

Very nicely put across and really comprehensive. You are worth a great "thanks." Also, suggest if you could put in some practical examples, for example, the difference between a job and position, etc. It would really make this theory more absorbable.

Vaibhav

Thank you for providing very useful information. Could you suggest some additional information about compensation management?

Thank you. I am looking forward to your response.

Krupa

Hi,

I am new to this site and I am a nurse pursuing my Master's in Nursing, majoring in Nursing Administration. I am seeking information on Wages and Salary Administration. I need help. Please send links.

Thanks