Think HR Think CHRM
Tuesday - 15 Oct 2019

CHRMGlobal.com on LinkedIn
Username : Password: Forgot Password?
Updates
Updates
Basic Pay
Human Resources » Compensation & Benefits


Chrm Message From: suraj2 Total Posts: 19 Join Date: 10/09/2009
Rank: Executive Post Date: 17/09/2009 10:12:38 Points: 95 Location: India

Dear All,

I have recently joined a company. Here what I found is that the Basic of all employee is very less, It's not even 10% of the CTC. Can any body help me out about the details how the pay structure should be. As per my knowledge the basic pay should be 50% of the CTC. Is this correct? Can anybody provide me the link or book name which provides me the legal aspect of Basic Pay.

Thanks in advance

Suraj

Chrm Message From: srinaren Total Posts: 2 Join Date: 10/09/2009  
Rank: Beginner Post Date: 19/12/2009 08:26:15 Points: 10 Location: India

Hi,

There is no law to fix the Basic to a percentage of CTC.  The normal industry practice is to have it between 40% to 80% of CTC as basic and the balance as DA, conveyance etc.,  But as far as PF authorities are concerned, they look into the Gross salary and if they feel that the contribution is not matching for that gross salary, then they will go in depth to find out what is the basic salary shown.  Then they will insist that the basic should be between 50 to 60% of the gross.  As per the supreme court ruling, even the salary shown as special allowance and food allowance will also attract PF as recently I had a discussion with Regional PF Commissioner.  If it is not corrected, then the company is liable for assessment of PF including the special allowance and food allowance and the amount payable will be huge.  If the Organisation sticks to the ceiling of Rs. 6500/- for all including top management and pays 780/- as PF, then even if somebody shows the breakup as special allowance or food allowance does not matter.  What PF authorities wants is a minimum of Rs. 780/- for staff and other higher income people.

-Srinaren

Chrm Message From: sas_09 Total Posts: 2 Join Date: 10/09/2009  
Rank: Beginner Post Date: 31/12/2009 05:09:50 Points: 10 Location: India

hi guys!!!

dat was quite informative....

3 cheers   enjoy     :))

Chrm Message From: mohanish_l Total Posts: 2 Join Date: 10/09/2009  
Rank: Beginner Post Date: 26/01/2010 17:57:33 Points: 10 Location: India
Hi.

the basic pay should be 35 - 45 % of ctc

and then other allowances.

the main reason why companies keep basic pay as low as possible, because all statutory benefits are calculated on basic and company dose not want to pay more.
Chrm Message From: Sadhana Total Posts: 1 Join Date: 10/09/2009  
Rank: Beginner Post Date: 29/01/2010 06:23:29 Points: 5 Location: India
For PF, there is one more fact that for members earning Basic salary more than or equal to 6500, it is optional to give PF, So this though that more basic more liability on company is false for highly paid employees, instead all companies try to make the basic as 6500 minimum, so that he/she go in optional bracket. The law says -Employees & employer has to make a matching contribution of 12 % each of the wages i.e. (Basic & DA) drawn by the employees to the extent of statutory limit of Rs 6500/-. If the employee desires to contribute more than his percentage of share, he may contribute more and for such contribution the employer will not make any matching contribution. This extra contribution is termed as VPF (which will be a fixed percentage to be decided once in a year) i.e. in April every year and no changes shall be made in currency of contribution period. (April to March ).

Previous 1 2 3 4 5 Next
 
Events
 
Related Discussion
Case Study : Variable Pay
When Managing Team, Pay a
Serving Others : Pay Heed
Pay attention to Human Ta
Some basic considerations
Team Based Pay in Process
While Managing Team, pay
Asians unhappiest with sa
Variable Pay Questionnair
Pay for Performance progr
 
Related Articles
Linking Pay to Performanc
Pay for Performance Syste
Asking for a Pay Raise
Pay for Performance Cultu