Is a Joining Bonus Part of CTC or an Extra Incentive to Attract Candidates?

Hi Seniors, is a joining bonus a part of CTC, or is it given over and above the CTC to make a candidate join as soon as possible?

Thanks,

Shy

To get the service of a selected person as soon as possible, some companies may offer such a candidate the option to pay his/her unserved notice period with their previous employer. This allows the candidate to join the new company by paying an amount in lieu of the notice period.

Consideration of Notice Period Payment

Under these circumstances, we should not treat this amount as part of the CTC, as it will be incurred by an employer prior to the joining of a new employee. Therefore, it may be considered as recruitment expenses along with other general expenses but not as CTC of such an employee. This is my opinion only, and I do not have detailed information on this matter.

Regards

What if we are okay with his one-month notice period and, just to make an alluring offer, we are giving him a joining bonus, which will be paid to him along with his one-month salary? In that case, should it be a part of the CTC? I just want to know what the general trend in companies regarding this is.

Thanks,
Shy

No, we cannot include it as part of CTC. This is because certain allowances/contributions of the employer, which are payable to an employee as part of their salary or wages, such as PF, ESI, and Gratuity, are considered part of the CTC of an employee as they are of a recurring nature. For example:

Salary CTC Components

- Basic
- VDA
- HRA
- Conveyance Allowance
- Washing Allowance
- Any other Allowance
- Gross payable
- Employer contribution of PF
- Employee Contribution of ESI
- Gratuity
- Ex-gratia/Bonus
- Total CTC

Therefore, expenses incurred by an employer upfront before the joining of such an employee cannot be classified as part of the CTC.

Regards

It is a one-time lump-sum payment that can't be included in the CTC structure.

Regards,
Pon

Joining bonuses cannot be included in CTC calculation. It's a one-time payment.

Understanding Joining Bonuses

Some companies are offering joining bonuses, which are a one-time payment not included in the CTC. Joining bonuses are typically offered when a candidate is exceptional, and the company wishes to recruit them without disrupting the existing structure and current employees of the organization.

Regards,
J.L. Trivedi
Ahmedabad