Dear All,
I am new to HR. Could you please explain to me the reasons behind companies having different percentages of basic salary in the gross salary? Why should I choose either 30% or 40% as the basic of gross salary?
Thank you.
From India, Gurgaon
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5I am new to HR. Could you please explain to me the reasons behind companies having different percentages of basic salary in the gross salary? Why should I choose either 30% or 40% as the basic of gross salary?
Thank you.
From India, Gurgaon
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Dear Friend,
The percentage of basic also depends upon the wage structure applicable and the policy of the company or the legal long-term settlement signed for wages with the union. The basic is linked to other payments in the wage structure, so most employers would keep the basic on the lower side when finalizing an employee's salary. For example, we have to pay 12% of (basic + DA) in PF as the employer's share, so the employer's cost of employment will be on the higher side if the basics are high. Therefore, to maintain these employment-related expenses on the lower side, the employer may choose to keep the basic at 40% or 30% of the gross salary, depending on benefits payable to employees such as PF, Gratuity, bonus, etc.
I hope this information answers your query. Other members can also provide further guidance. I recommend discussing this with a senior HR person in your vicinity to gain a better understanding.
Regards
From India, Mumbai
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The percentage of basic also depends upon the wage structure applicable and the policy of the company or the legal long-term settlement signed for wages with the union. The basic is linked to other payments in the wage structure, so most employers would keep the basic on the lower side when finalizing an employee's salary. For example, we have to pay 12% of (basic + DA) in PF as the employer's share, so the employer's cost of employment will be on the higher side if the basics are high. Therefore, to maintain these employment-related expenses on the lower side, the employer may choose to keep the basic at 40% or 30% of the gross salary, depending on benefits payable to employees such as PF, Gratuity, bonus, etc.
I hope this information answers your query. Other members can also provide further guidance. I recommend discussing this with a senior HR person in your vicinity to gain a better understanding.
Regards
From India, Mumbai
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