Can Performance Incentice be a part of CTC? Recently one of our employees came to me arguing that Performace Incentive should not be a part of CTC as Company does not give the complete PI instead a part of the PI depending on your performance.I have not responded as yet but I need your suggestions so that the objective behind considering the components of CTC can be justified.
Regards,
Kumar Manoj
From India, Mumbai
Regards,
Kumar Manoj
From India, Mumbai
Dear Manoj,
Performance incentive cannot be a part of CTC until or unless u promised at the time of joining. It is the seperate component from CTC. but this incentive have TDS i mean tax to be deducted.
If u promise them at the time of joining if he accepts then how can he question again?
CTC is the one omnthly an employee gets - its constant / standard basis.
But performance incentive can - depends on performance - not in constant nature.
regards,
bhavani.
From India, Hyderabad
Performance incentive cannot be a part of CTC until or unless u promised at the time of joining. It is the seperate component from CTC. but this incentive have TDS i mean tax to be deducted.
If u promise them at the time of joining if he accepts then how can he question again?
CTC is the one omnthly an employee gets - its constant / standard basis.
But performance incentive can - depends on performance - not in constant nature.
regards,
bhavani.
From India, Hyderabad
Dear, Not at all , Performance Incentive is not the part of CTC, it is extra effort done by the employee and earn apart from agreed CTC amount. Thanks
From India, Mumbai
From India, Mumbai
Hello Colleagues,
Performance Incentive was initially devised to award an employee for doing outstanding job. And it was over and above the CTC. Now a days to make the package more attractive companies have started using the CTC as Fixed + Var (as in CTC of 11L PA is 10 L + 1L Perf Based). Mostly this is done at Team Lead level or Middle Management Level. The reasoning behind this comes from a fact that Company expects Employees at this level to go beyond what is routine Job. This is included in CTC because, for a particular level of performance, Company has a cost attached to it.
When you have this Performance Bonus component attached to your CTC Structure and it is entirely performance based, then it is directly linked to the Appraisal Ratings. If you fall under the top most ratings then you get complete bonus. If you fall just short then company deducts some amount, may be 90% is paid.
Because it is named as Performance Incentive/ Performance Bonus, there is nothing wrong in this kind of deduction.
And it can be added anytime in the structure without decreasing the Basic Salary.
This is what we have been followin in our company for quite some time now.
Would appreciate any querries on the same.
Thanks and Regards
Tanuj Vaid
From India, Gurgaon
1Performance Incentive was initially devised to award an employee for doing outstanding job. And it was over and above the CTC. Now a days to make the package more attractive companies have started using the CTC as Fixed + Var (as in CTC of 11L PA is 10 L + 1L Perf Based). Mostly this is done at Team Lead level or Middle Management Level. The reasoning behind this comes from a fact that Company expects Employees at this level to go beyond what is routine Job. This is included in CTC because, for a particular level of performance, Company has a cost attached to it.
When you have this Performance Bonus component attached to your CTC Structure and it is entirely performance based, then it is directly linked to the Appraisal Ratings. If you fall under the top most ratings then you get complete bonus. If you fall just short then company deducts some amount, may be 90% is paid.
Because it is named as Performance Incentive/ Performance Bonus, there is nothing wrong in this kind of deduction.
And it can be added anytime in the structure without decreasing the Basic Salary.
This is what we have been followin in our company for quite some time now.
Would appreciate any querries on the same.
Thanks and Regards
Tanuj Vaid
From India, Gurgaon
Thanks Bhavani.....and Pradeep for your valuable knowledge that you have shared.I will put these thoughts across the management and will ensure the employees get a better deal.
Regards,
Kumar Manoj:icon1:
From India, Mumbai
Regards,
Kumar Manoj:icon1:
From India, Mumbai
Hello,
If performance incentive is part of CTC and the company is supposed to pay the performance incentive in bulk once in an year (take April for instance). What will happen if an employee wishes to leave after few months (say December). Will the performance incentive for the period (during which the employee was part of the organization) be calculated and cleared during full and final settlement or will the company have rights to withhold the amount.
Regards,
Vijay
From India, Bangalore
If performance incentive is part of CTC and the company is supposed to pay the performance incentive in bulk once in an year (take April for instance). What will happen if an employee wishes to leave after few months (say December). Will the performance incentive for the period (during which the employee was part of the organization) be calculated and cleared during full and final settlement or will the company have rights to withhold the amount.
Regards,
Vijay
From India, Bangalore
Dear All,
Performance bonus is part of CTC. It is a type of variable benefits the company provides, so it must be part of CTC. For your reference i am posting the CTC equation which is internationally used. T
The whole CTC is divided in five components :
1. Annual Basic (Includes only the basic salary of the beneficiary)
2. Annual Guaranteed Cash (Includes Annual Basic + Cash Allowances )
Here Cash Allowances include : House Rent Allowance, Conveyance, Festival Bonus, Medical Reimbursement, Leave fare assistance, Others
3. Annual Total Cash (Includes Annual Guranteed Cash + Variable Benefits)
Here Variable Benefits include: Performance Bonus, Variable pay, Sales incentive, Profit Sharing
4. Annual Total Remuneration (Includes Annual Total Cash + Non-Cash Benefits)
Here Non-cash Benefits include: Loans, Car, Petrol & Maintenance, Driver, Club Membership, Insurance Premium, Others
5. Annual Total Cost to the Company (Includes Annual Total Remuneration + Deferred Benefits)
Here Deferred Benefits include: Provident fund, Gratuity, Superannuation
If any clarification pls let me know.
Thanking yours,
Md. Mehadi Hasan Bin Ghani
Officer Human Resources
Warid Telecom International Ltd.
================================================== ================
Performance bonus is part of CTC. It is a type of variable benefits the company provides, so it must be part of CTC. For your reference i am posting the CTC equation which is internationally used. T
The whole CTC is divided in five components :
1. Annual Basic (Includes only the basic salary of the beneficiary)
2. Annual Guaranteed Cash (Includes Annual Basic + Cash Allowances )
Here Cash Allowances include : House Rent Allowance, Conveyance, Festival Bonus, Medical Reimbursement, Leave fare assistance, Others
3. Annual Total Cash (Includes Annual Guranteed Cash + Variable Benefits)
Here Variable Benefits include: Performance Bonus, Variable pay, Sales incentive, Profit Sharing
4. Annual Total Remuneration (Includes Annual Total Cash + Non-Cash Benefits)
Here Non-cash Benefits include: Loans, Car, Petrol & Maintenance, Driver, Club Membership, Insurance Premium, Others
5. Annual Total Cost to the Company (Includes Annual Total Remuneration + Deferred Benefits)
Here Deferred Benefits include: Provident fund, Gratuity, Superannuation
If any clarification pls let me know.
Thanking yours,
Md. Mehadi Hasan Bin Ghani
Officer Human Resources
Warid Telecom International Ltd.
================================================== ================
Thanks for your inputs.But i have a problem like can u suggest how we can workout to give maximum benefit to employee on tax saving. please let me know what are the benefits will be non taxable. If company is ready to pay FBT then what is the max amount can be given as different reumbursement. if u give me these details it will be helpful...
Regards
Mahesh
From India, Bangalore
Regards
Mahesh
From India, Bangalore
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