In our organization, we were not providing the salary slip to our employees. However, now considering the need, we want to issue salary slips on a monthly basis. I am attaching the salary breakup herewith.
Kindly assist me in determining if it is appropriate or if any changes are required.
Thank you.
Regards
From India, Mumbai
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2Kindly assist me in determining if it is appropriate or if any changes are required.
Thank you.
Regards
From India, Mumbai
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Dear Ashvini, it is nice to hear that your organization is planning to implement a new salary structure and issue proper payslips for the employees. Before you proceed with this initiative, I would like to suggest a few important considerations.
Firstly, ensure that you determine the type of establishment your organization falls under, such as the Factories Act or Shops and Establishments Act. This classification will impact various aspects related to salaries, including professional taxes.
It is crucial to differentiate between different brackets or categories, particularly for higher-level employees, where taxes play a significant role for both the organization and the employees.
Upon reviewing your current salary structure, it appears satisfactory. However, I recommend verifying the House Rent Allowance (HRA) component, which should typically be set at around 40% for non-metro cities and approximately 50% for metro cities, in line with common industry practices. These percentages may vary based on additional components included in the salary package.
I suggest exploring various salary slip formats and also reviewing slips used in similar industries within your region and business sector. This comparative analysis will provide clarity and help in aligning your practices with industry standards.
Rather than focusing on specific details, it is advisable to establish a solid foundation for the salary bifurcations. Your payslip structure, overall, appears satisfactory.
Additionally, you may consider adding a statement in the footer of the payslip indicating that it is computer-generated and does not require a physical signature. However, the option of manual signatures can also be retained.
I hope these suggestions prove beneficial for your organization.
Have a great day.
From India, Gurgaon
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Firstly, ensure that you determine the type of establishment your organization falls under, such as the Factories Act or Shops and Establishments Act. This classification will impact various aspects related to salaries, including professional taxes.
It is crucial to differentiate between different brackets or categories, particularly for higher-level employees, where taxes play a significant role for both the organization and the employees.
Upon reviewing your current salary structure, it appears satisfactory. However, I recommend verifying the House Rent Allowance (HRA) component, which should typically be set at around 40% for non-metro cities and approximately 50% for metro cities, in line with common industry practices. These percentages may vary based on additional components included in the salary package.
I suggest exploring various salary slip formats and also reviewing slips used in similar industries within your region and business sector. This comparative analysis will provide clarity and help in aligning your practices with industry standards.
Rather than focusing on specific details, it is advisable to establish a solid foundation for the salary bifurcations. Your payslip structure, overall, appears satisfactory.
Additionally, you may consider adding a statement in the footer of the payslip indicating that it is computer-generated and does not require a physical signature. However, the option of manual signatures can also be retained.
I hope these suggestions prove beneficial for your organization.
Have a great day.
From India, Gurgaon
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It is a good idea to issue wage slips as it makes the wage/salary process more transparent and structured. I see some very good detailed information that has been given by a member.
I just wish to add a few pointers. Along with the S&E Act, you also need to adhere to the Minimum Wages Act. As per the act, the format of the Wage Slip is given in Form XI.
Ensure Compliance with Form XI
Firstly, you need to ensure that the headings given in Form XI are incorporated into your salary slip. It's a very simple document, and all headings are quite easily included in payslips. (You can do a search for "Form XI wage slip").
Considerations for CTC Structure
Secondly, as per the format you have attached, you have shown the CTC structure. Do you intend to keep the same headings? Under the assumption that you will keep it the same, may I suggest:
• You don't need to show the % for each head.
• Preferably combine the heads of Basic + DA since the requirement for the Minimum Wage is that Basic + DA shouldn't be less than the Min wage/Special allowance. Else, every 6 months, you may need to keep revising it. This is not mandatory but only for the sake of brevity.
• Legally in Maharashtra, you need to pay only 5% of basic + DA as HRA. However, industry standards take it up to 40% to 50% of basic + DA. Gross is not taken into account here.
• Generally, if you have DA, then CCA may not be a required heading; however, it's as per the company's requirement.
• Similarly, instead of terming Special Allowance as such, you may want to change it to project allowance.
The reasoning for points d & e is that the terms Special Allowance and DA are used interchangeably in industries and state declarations for the minimum wage.
I thought of suggesting these since you are already involved in making good changes within the company, so perhaps these may help.
Warm Regards,
Deena Jagasia
From India, Mumbai
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I just wish to add a few pointers. Along with the S&E Act, you also need to adhere to the Minimum Wages Act. As per the act, the format of the Wage Slip is given in Form XI.
Ensure Compliance with Form XI
Firstly, you need to ensure that the headings given in Form XI are incorporated into your salary slip. It's a very simple document, and all headings are quite easily included in payslips. (You can do a search for "Form XI wage slip").
Considerations for CTC Structure
Secondly, as per the format you have attached, you have shown the CTC structure. Do you intend to keep the same headings? Under the assumption that you will keep it the same, may I suggest:
• You don't need to show the % for each head.
• Preferably combine the heads of Basic + DA since the requirement for the Minimum Wage is that Basic + DA shouldn't be less than the Min wage/Special allowance. Else, every 6 months, you may need to keep revising it. This is not mandatory but only for the sake of brevity.
• Legally in Maharashtra, you need to pay only 5% of basic + DA as HRA. However, industry standards take it up to 40% to 50% of basic + DA. Gross is not taken into account here.
• Generally, if you have DA, then CCA may not be a required heading; however, it's as per the company's requirement.
• Similarly, instead of terming Special Allowance as such, you may want to change it to project allowance.
The reasoning for points d & e is that the terms Special Allowance and DA are used interchangeably in industries and state declarations for the minimum wage.
I thought of suggesting these since you are already involved in making good changes within the company, so perhaps these may help.
Warm Regards,
Deena Jagasia
From India, Mumbai
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