Salary Negotiation Dilemma: Should We Discuss Each Component or Just the Total Package?

Dear Colleagues,

Whenever we negotiate salary for a new position, should negotiation be done component-wise (Basic, HRA, Medical, etc.) or should it be done directly on gross or CTC? Kindly guide.

Thanks

Hi,

Generally, it's been done on CTC, but sometimes it's done on take-home salary or Gross also. Candidates do ask that they need this much amount as take-home salary, so we prepare salary accordingly. But CTC negotiation is the most in application these days.

Regards,

Amit Seth.

I am new to this site. I would like to know what the full form of CTC is as this is not the terminology used in the UAE.

Isak
Job Analyst
+971505458619

Hi,

CTC stands for "Cost to the Company." This is calculated taking into account all the expenses borne by the company towards an employee, like employer contributions to PF, gratuity, medical insurance, etc.

In India, the salary has mainly two parts: one is Gross Salary, i.e., payable to the employee directly and can be a fixed or variable component. Major components of this comprise Basic, HRA, Conveyance, Food Allowances, Performance Allowances, incentives linked to performance or company's performance. The other part consists of all expenses that the employer incurs for the welfare of the employee (mentioned above, like PF, gratuity, etc).

Example is mentioned below:

Basic: 120000

HRA: 96000

Conveyance: 9600

Employee contribution to PF: 12000

Medical Reimbursement: 15000

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Fixed Gross: 252600

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Performance Bonus: 18000

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Total Gross Salary: 270600

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Gratuity: 57600

Employer contribution to PF: 12000

LTA: 30000

Medical Insurance: 20000

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Cost to the Company (CTC): 390200

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NOTE: All the numbers used above are just approximations, just to explain the logic.

Thanks,

Neeti