I am working with a newly opened Pvt Ltd company with less than 20 employees, and I am facing some problems in understanding certain salary break-ups. I would appreciate it if you could help me in getting a better understanding.
Monthly Bonus as Part of Variable Salary
Please tell me, is it compulsory for any company to provide a monthly bonus to the employees as a part of the variable salary?
Criteria for Deciding Basic Salary
Another thing that confuses me is the criteria for deciding the basic salary of any employee. For example, if an employee is getting 17,000 in hand, how should I decide his basic salary? Are there any statutory guidelines on deciding the basic salary?
Please suggest and help.
Thanks in advance.
From India, Jaipur
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11Monthly Bonus as Part of Variable Salary
Please tell me, is it compulsory for any company to provide a monthly bonus to the employees as a part of the variable salary?
Criteria for Deciding Basic Salary
Another thing that confuses me is the criteria for deciding the basic salary of any employee. For example, if an employee is getting 17,000 in hand, how should I decide his basic salary? Are there any statutory guidelines on deciding the basic salary?
Please suggest and help.
Thanks in advance.
From India, Jaipur
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First of all, you have to refer to the Minimum Wages notification. According to that, you need to determine the Basic and DA components, and then divide the remaining amount. This is because PF is deducted based on the Minimum wages amount. Therefore, you must prepare the bifurcation in accordance with your state's Minimum Wages notification.
From India, Bangalore
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From India, Bangalore
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thanks a lot for your help I have gone through the minimum wage act for my state. One more thing I want to ask is whether the monthly bonus is also a mandate?
From India, Jaipur
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From India, Jaipur
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Bonus Payment Regulations
It is compulsory to pay a bonus within 8 months from the end of the financial year if it is not a new establishment. In the case of a new establishment, the payment of a bonus is exempted for up to 5 years.
Regards,
Vijay Mishra
Officer HR & Admin
From India, Ahmadabad
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It is compulsory to pay a bonus within 8 months from the end of the financial year if it is not a new establishment. In the case of a new establishment, the payment of a bonus is exempted for up to 5 years.
Regards,
Vijay Mishra
Officer HR & Admin
From India, Ahmadabad
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Upto 6500 Rs salary is all basic.When salary exceeds 6500 it has to broken into other components. Basic can be anything between 30-50% of the gross salary.
From India, Mumbai
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From India, Mumbai
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Please clarify one more doubt if the mediclaim contribution has to be done by the employer and employee both???
From India, Jaipur
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From India, Jaipur
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Please follow the Minimum Wages Act of your place to determine the basic amount you will offer your employees. Generally, the Dearness Allowance (DA) and House Rent Allowance (HRA) vary in different companies. Nowadays, DA is not seen in many company compensations, provided they have much more lucrative alternatives to compensate for the absence of Dearness Allowance. Regarding the percentage of HRA, it is normally 40-50%, higher in urban areas and lower in rural regions.
Regards.
From India, Calcutta
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Regards.
From India, Calcutta
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HRA will depend on Metro or on Metro, Metro is 50% of Basic and for Non Metro its 40% of the basic.
From India, Mumbai
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From India, Mumbai
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FOR HRA IT’S 50% FOR METRO CITIES AND 40% FOR NON METRO CITIES ON BASIC SALARY . Regards SATYAJEET PADHEE
From India, Madras
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From India, Madras
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Understanding Salary Break-ups and Statutory Requirements
First, you need to refer to the Minimum Wages Act of the respective state.
Bonus Calculation
For bonus calculation, you can refer to the Payment of Bonus Act, 1965. It is applicable across India. Please refer to the attachment below.
House Rent Allowance (HRA)
For HRA, it is 50% of Basic + DA in the case of Bombay, Delhi, Calcutta, and Madras, and 40% of Basic + DA in cities other than metropolitan cities.
Medical and Insurance Policies
If the employee's salary is more than Rs 15,000, the employer provides a medi-claim policy. If it is less than Rs 15,000, the employee is covered under the ESI Act.
Firstly, you need to establish HR policies for your company. Please let me know if you need any further information.
Regards,
V.V.N. Suresh
From India, Hyderabad
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First, you need to refer to the Minimum Wages Act of the respective state.
Bonus Calculation
For bonus calculation, you can refer to the Payment of Bonus Act, 1965. It is applicable across India. Please refer to the attachment below.
House Rent Allowance (HRA)
For HRA, it is 50% of Basic + DA in the case of Bombay, Delhi, Calcutta, and Madras, and 40% of Basic + DA in cities other than metropolitan cities.
Medical and Insurance Policies
If the employee's salary is more than Rs 15,000, the employer provides a medi-claim policy. If it is less than Rs 15,000, the employee is covered under the ESI Act.
Firstly, you need to establish HR policies for your company. Please let me know if you need any further information.
Regards,
V.V.N. Suresh
From India, Hyderabad
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