Salary Increments: Are They Based on Gross or Base Salary, and What Does the Law Say?

Hello Friends,

My query is: Is an increment calculated on an employee's gross salary or on base salary? Is there any law regarding the calculation of annual increments?

Thanks for the help!

Dear Aparna,

Generally, these days, people tend to calculate it not based on basic or gross salary but on CTC, to see how much change has been made in one's CTC structure. As far as I know, there are no legal boundaries that justify following the same process.

Regards,

Amit Seth.

There is no law for increments. We do it on the basis of CTC, i.e., 12% of CTC, 15% of CTC, 20% of CTC, etc. In such cases, there are existing bifurcation formulas to allocate increments in basic, allowances, reimbursements, etc. I have seen that in the unionized sector, increments are calculated based on mutually agreed ratios.

Hope this helps you.
- Hiten