Greetings!
Hello everyone.
Please Advice! we are paying basic salary to our employees' as per minimum wages which is 16064/- for unskilled category. and we pay the EPF on full basic salary. And while calculating Bonus/Gratuity we calculate on the basic salary which is currently 16064 as per MW.
But day by day our employees' are complaining about the same they said that their basic salary should be 40 to 50% as per their CTC. and calculation of Bonus/Gratuity also should be on 40 to 50% of their CTC.
So I would like to know that we are doing correct or should we implement these things according to employees'
Your precious response awaited.
Thanks & Regards
Vishal Bhardwaj
From India, New Delhi
2Hello everyone.
Please Advice! we are paying basic salary to our employees' as per minimum wages which is 16064/- for unskilled category. and we pay the EPF on full basic salary. And while calculating Bonus/Gratuity we calculate on the basic salary which is currently 16064 as per MW.
But day by day our employees' are complaining about the same they said that their basic salary should be 40 to 50% as per their CTC. and calculation of Bonus/Gratuity also should be on 40 to 50% of their CTC.
So I would like to know that we are doing correct or should we implement these things according to employees'
Your precious response awaited.
Thanks & Regards
Vishal Bhardwaj
From India, New Delhi
Dear Vishal,
It appears that the employees of your organization are receiving Basic Salary as per MW and you are also paying PF contribution on the whole Basic i.e beyond statutory limit. If there is no other component in your monthly gross, then CTC will be Basic Salary, Employer contribution of PF & ESIC, Statutory Bonus as per Payment of Bonus Act and Gratuity impact as per Payment of Gratuity Act.
The claim of your employees are Basic Salary, Bonus and Gratuity should be paid 40-50% of CTC. I could find any rationale behind the claim.
You are paying Basic as per MW is perfectly ok. I do not know whether you are paying Bonus as per PB Act or not. You may calculate Bonus as per PB Act considering - Gross profit, Available surplus, Allocable surplus, Set on & Set off. Gratuity liability should also be calculated as per PG Act.
Thanks & Regards,
S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
USD HR Solutions – To Strive towards excellence with effort and integrity
From India, New Delhi
It appears that the employees of your organization are receiving Basic Salary as per MW and you are also paying PF contribution on the whole Basic i.e beyond statutory limit. If there is no other component in your monthly gross, then CTC will be Basic Salary, Employer contribution of PF & ESIC, Statutory Bonus as per Payment of Bonus Act and Gratuity impact as per Payment of Gratuity Act.
The claim of your employees are Basic Salary, Bonus and Gratuity should be paid 40-50% of CTC. I could find any rationale behind the claim.
You are paying Basic as per MW is perfectly ok. I do not know whether you are paying Bonus as per PB Act or not. You may calculate Bonus as per PB Act considering - Gross profit, Available surplus, Allocable surplus, Set on & Set off. Gratuity liability should also be calculated as per PG Act.
Thanks & Regards,
S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
USD HR Solutions – To Strive towards excellence with effort and integrity
From India, New Delhi
Dear Mr. S K Bandyopadhyay,
We're providing three more allowance to our employees' which are as HRA/CCA & Conveyance.
Below I've mentioned a structure how we're paying wages to our employee. In this matter one of our employee raised a concern that my basic salary should be 50% of my CTC and on that amount you should have pay my gratuity and bonus
so 50% of his CTC approx. INR. 26044/- and it is too much he is demanding for.
BASIC HRA CON MEDICAL GROSS PF NET PAY ER PF 13% CTC
16064 11312 11312 11312 50000 1928 48072 2088 52088
Please suggest me on this. That we are doing correct or should we implement in this area.
Thanks & Regards
Vishal Bhardwaj
From India, New Delhi
We're providing three more allowance to our employees' which are as HRA/CCA & Conveyance.
Below I've mentioned a structure how we're paying wages to our employee. In this matter one of our employee raised a concern that my basic salary should be 50% of my CTC and on that amount you should have pay my gratuity and bonus
so 50% of his CTC approx. INR. 26044/- and it is too much he is demanding for.
BASIC HRA CON MEDICAL GROSS PF NET PAY ER PF 13% CTC
16064 11312 11312 11312 50000 1928 48072 2088 52088
Please suggest me on this. That we are doing correct or should we implement in this area.
Thanks & Regards
Vishal Bhardwaj
From India, New Delhi
BASIC 16064 HRA 11312 CON 11312 MEDICAL 11312 GROSS 50000 PF 1928 NET PAY 48072 ER PF 13% 2088 CTC 52088
From India, New Delhi
From India, New Delhi
It appears from your 2nd post that the employee is also receiving HRA, Conveyance Allowance, Medical Allowance other than Basic and the monthly gross is 50,000/- . Considering Employer portion of PF contribution you have determined the CTC.
It also appears that the employee is eligible for Statutory Bonus as per Payment of Bonus Act if not the organization is enjoying the bonus holiday. There are also Gratuity, may be canteen subsidy, Co's transport, LTA etc etc. under CTC.
The employee who has raised the question regarding Basic , gratuity and bonus where basic should be 50% of CTC and accordingly the gratuity and bonus have to be calculated. The employee probably aware about the definition of Wages as per new Labour codes ( Yet to be implemented ). To determine wages ( Basic & DA) as per wage code is 50% of the total remuneration ( Payable amount to any employee - not monthly gross or CTC ) and keeping this in mind probably the cause of the claim by the concerned employee. Obviously there will be more Gratuity, more contribution to PF ( as your organization is paying PF contribution beyond the statutory limit 15,000/- per month ). But the Bonus will not be changed if it is paid as per payment of Bonus Act.
My personal opinion is your existing remuneration structure is more inclined towards allowances. Basic may be 40-42% of monthly gross. In that case when Labour codes will be implemented , some small correction will be sufficient.
S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
USD HR Solutions – To Strive towards excellence with effort and integrity
From India, New Delhi
It also appears that the employee is eligible for Statutory Bonus as per Payment of Bonus Act if not the organization is enjoying the bonus holiday. There are also Gratuity, may be canteen subsidy, Co's transport, LTA etc etc. under CTC.
The employee who has raised the question regarding Basic , gratuity and bonus where basic should be 50% of CTC and accordingly the gratuity and bonus have to be calculated. The employee probably aware about the definition of Wages as per new Labour codes ( Yet to be implemented ). To determine wages ( Basic & DA) as per wage code is 50% of the total remuneration ( Payable amount to any employee - not monthly gross or CTC ) and keeping this in mind probably the cause of the claim by the concerned employee. Obviously there will be more Gratuity, more contribution to PF ( as your organization is paying PF contribution beyond the statutory limit 15,000/- per month ). But the Bonus will not be changed if it is paid as per payment of Bonus Act.
My personal opinion is your existing remuneration structure is more inclined towards allowances. Basic may be 40-42% of monthly gross. In that case when Labour codes will be implemented , some small correction will be sufficient.
S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
USD HR Solutions – To Strive towards excellence with effort and integrity
From India, New Delhi
The employees cannot dictate how you should pay the statutory contributions. It is also surprising that employees themselves are demanding that their contribution to Pf and payment of bonus and gratuity should be on 40% of gross salary which is less than the amount you consider or payment. Though you need not pay the PF on Minimum Wages fixed by the government, ie, Rs 16064, you should never do it on salary lesser than Rs 15000. Again payment of Bonus and Gratuity on statutory salary are requirements of law and you should not dilute it.
From India, Kannur
From India, Kannur
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