I have had the opportunity to look at the compensation structures of various MNC's like Tech Mahindra, Capgemini etc. I noticed that their compensation structures as not compliant as per the Minimum Wages Act or Shops & Establishments Act . Their structures show the basic around 20-30% of the total CTC (which should be 50% as per the rule) nor are they compliant to the minimum wages. In a peculiar case the CTC is 780,000/Annum while the basic is 234,000/Annum which is around 30%). Can anyone tell me how is it possible and why no action is taken.
From India, Bengaluru
From India, Bengaluru
Dear Ms.Mridula,
The minimum compensation structure fixed by the Govt. of Karnataka for employment in Shops and Establishments under the Minimum Wages Act,1948 comprises of only two components viz., basic and variable dearness allowance. It is the same method adopted in respect of other scheduled employments too. Basic is fixed in absolute terms and V.D.A is linked to the Cost of Living Index revisable every year according to the average change in the points. Thus, the two components are expressed in absolute terms only and they do not have any proportionality to each other or the total compensation package in terms of any percentage. In fact, even in the example you cited, they are jointly and severally more than the minimum rates of wages. Therefore, I don't understand your point that the compensation structures are not minimum wages compliant.
CTC is a mere projection of the total annual cost per employee incurred by the organization from the employer's perspective and as such it does not have any statutory flavour attached to it. The takeaway is all that items shown in the CTC are not part and parcel of the salary structure of the employee. Therefore, if you cite the rule according to which the basic should be 50% of the CTC, it would be enlightening the forum.
My response is based on the prevailing confusion in the minds of some employees that whatever projected in the CTC should actually come to their hands.
From India, Salem
6016The minimum compensation structure fixed by the Govt. of Karnataka for employment in Shops and Establishments under the Minimum Wages Act,1948 comprises of only two components viz., basic and variable dearness allowance. It is the same method adopted in respect of other scheduled employments too. Basic is fixed in absolute terms and V.D.A is linked to the Cost of Living Index revisable every year according to the average change in the points. Thus, the two components are expressed in absolute terms only and they do not have any proportionality to each other or the total compensation package in terms of any percentage. In fact, even in the example you cited, they are jointly and severally more than the minimum rates of wages. Therefore, I don't understand your point that the compensation structures are not minimum wages compliant.
CTC is a mere projection of the total annual cost per employee incurred by the organization from the employer's perspective and as such it does not have any statutory flavour attached to it. The takeaway is all that items shown in the CTC are not part and parcel of the salary structure of the employee. Therefore, if you cite the rule according to which the basic should be 50% of the CTC, it would be enlightening the forum.
My response is based on the prevailing confusion in the minds of some employees that whatever projected in the CTC should actually come to their hands.
From India, Salem
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