Can We Adjust Basic Pay Percentage in CTC to Cut Unnecessary Costs?

Hi, I wanted to understand if I can have the basic pay percentage as a part of CTC different for some employees. We now have a basic pay of 70%, which is a lot of unnecessary cost to the company, and we wanted to check how to reduce it?

Yes, you can set different percentages of basic salary with respect to CTC for different employees. For administrative convenience, it would be better to maintain the same percentage of basic salary for employees in the same category.

Establishing Basic Pay Percentages

You may establish the basic pay between 45% to 55% of CTC for various categories of employees.

Regards, S K Bandyopadhyay
CEO - USD HR Solutions
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Hi, some factors to consider are the specific job requirements, market competitiveness, and the overall compensation philosophy of the organization. It's important to balance the need for cost control with ensuring that pay levels remain competitive and aligned with the value that each employee brings.

I would suggest conducting a thorough analysis of your current compensation framework, benchmarking against industry standards, and exploring alternative structures that could strike the right balance. This may involve lowering the basic pay percentage while potentially increasing variable or performance-based components.

Thanks

Okay. I did not know that I could have different basic percentages for different categories of employees. Thank you for this.

For comparison with our peers, we have been offering a very high basic percentage. Our consultant advised us that we need to ensure all our employees are comfortable with this first by obtaining their approval. Is this the only way we can modify the entire firm's basic pay percentage?