Is It Fair for Companies to Include Employer PF Contributions in Your CTC Offer? How Would You Handle This?

I wanted to know if it was right on the part of the company to include the contributions made by the employer to the PF account in the employee's CTC. I was offered a CTC, and in the break-up, all the contributions made by the employer are also included in it (Gratuity, Medic premium, and PF too). Can I question them regarding this?

Yes, it is right. The contributions made by the employer to your PF account, as well as gratuity, mediclaim, etc., are all costs to the company. The company is spending towards these heads on you. CTC = Cost to Company. It is inclusive of everything that a company is spending on you.

Regards,
Rajeev Dixit

Agreed with Rajeev, only the employer's share should be counted while designing CTC: Salary + EPF (Employer) + ESIC (Employer) + Gratuity contribution + Leave encashment + Mediclaim + any other expenses on the employee's head.

Thanks & Regards,
Sumit Kumar Saxena

Understanding Employer Contributions in CTC

The contributions made by the employer to your PF account, as well as Gratuity, Mediclaim, LTA, Bonus, ESIC, and any other expenses on the employee's head, are typically included in the CTC (Cost to the Company).

Note: Travel Allowance submitted by employees against a travel bill is not mentioned in your appointment letter because it is not certain. However, all the statutory expenses along with salary components spent by the employer on the employee's head are known as CTC.

Note: Dear Mr. Dixit, thanks for the good suggestion and for using simple words.

Regards,
Kumar Malay Kishor

I also endorse the responses by Rajeev Ji, Chill HR, and Sumit Ji. Further, I would suggest that when an interview candidate negotiates with the prospective employer for their package, and the prospective employer talks about the package in terms of CTC (Cost to Company), which includes the PF (Provident Fund) ER (Employer) share, Gratuity, etc., the interview candidate should also discuss their current emoluments in terms of CTC, which includes the PF ER share, Gratuity, etc.

I am in the process of determining the salary breakup. What amount should I consider for gratuity if the basic is fixed at Rs. 22,000/- per month? Is there a specific formula for calculating gratuity, superannuation, etc.?

Thanks,