Dear Seniors,
Our company follows a salary structure with the breakup with components like Basic, HRA, Conveyance & Other allowance forming the gross salary. PF, ESI & Professional tax is deducted as per rules & this forms the employee's take home.
My management wants to review this salary breakup.I would like to know whether :
1) Salary break is compulsory under law? If so can you provide the rule which states so?
2) Say I am paying an amount Rs. 18000/- to an employee As per my current salary structure --- this 18000 becomes the CTC, 60% of CTC forms the basic, 40% of Basic forms the HRA and the remaining is divided proportionately into conveyance & other allowance and PF & ESIC deducted as per rules.
My question is can I consider 18000 just as it is without providing any breakup and if the employee is eligible for PF & ESI we are ready to pay this.
3) All i want to clear is what is the purpose of a salary breakup other than to exempt employees above PF ESIC limits from the
same? Does any rule state that salary has to have a break-up?
4) What about PF & ESI rules. Is that mentioned anywhere that wages should necessarily be basic and gross respectively. I mean if the employees' salary is say Rs. 14000/- can I not pay both PF & ESIC on 14000?
We are not in the favour of violating any laws, we were just curious to know the exact rule which governs the various components of salary structure???
Actually, I took 3 examples with different salary range and explained to my management that by considering the remuneration paid to an employee say Rs. 18000/- as a fixed amount without any breakup we are violating the law because in this case we are deliberately placing the employee out of the purview of both PF & ESIC.
Suppose we take salary of Rs. 14000/- and pay both PF & ESIC on this amount we end up paying a higher PF & ESIC as a breakup of the same into gross and basic would have resulted in a smaller amount being paid. With a staff strength of more than 270 employees, we will end up paying substantially in PF & ESIC.
However my boss wants me to back up my answer with the laws & statutes.Please guide me with your inputs.
I know that breakup of salary structure is the norm in industries but what if the breakup is not there???
From India, Bharuch
16Our company follows a salary structure with the breakup with components like Basic, HRA, Conveyance & Other allowance forming the gross salary. PF, ESI & Professional tax is deducted as per rules & this forms the employee's take home.
My management wants to review this salary breakup.I would like to know whether :
1) Salary break is compulsory under law? If so can you provide the rule which states so?
2) Say I am paying an amount Rs. 18000/- to an employee As per my current salary structure --- this 18000 becomes the CTC, 60% of CTC forms the basic, 40% of Basic forms the HRA and the remaining is divided proportionately into conveyance & other allowance and PF & ESIC deducted as per rules.
My question is can I consider 18000 just as it is without providing any breakup and if the employee is eligible for PF & ESI we are ready to pay this.
3) All i want to clear is what is the purpose of a salary breakup other than to exempt employees above PF ESIC limits from the
same? Does any rule state that salary has to have a break-up?
4) What about PF & ESI rules. Is that mentioned anywhere that wages should necessarily be basic and gross respectively. I mean if the employees' salary is say Rs. 14000/- can I not pay both PF & ESIC on 14000?
We are not in the favour of violating any laws, we were just curious to know the exact rule which governs the various components of salary structure???
Actually, I took 3 examples with different salary range and explained to my management that by considering the remuneration paid to an employee say Rs. 18000/- as a fixed amount without any breakup we are violating the law because in this case we are deliberately placing the employee out of the purview of both PF & ESIC.
Suppose we take salary of Rs. 14000/- and pay both PF & ESIC on this amount we end up paying a higher PF & ESIC as a breakup of the same into gross and basic would have resulted in a smaller amount being paid. With a staff strength of more than 270 employees, we will end up paying substantially in PF & ESIC.
However my boss wants me to back up my answer with the laws & statutes.Please guide me with your inputs.
I know that breakup of salary structure is the norm in industries but what if the breakup is not there???
From India, Bharuch
Dear Madhu Sir, Koregonkar Sir, Umakanthan sir,
Please help with your feedback
QUOTE=tittli;2199385]Dear Seniors,
Our company follows a salary structure with the breakup with components like Basic, HRA, Conveyance & Other allowance forming the gross salary. PF, ESI & Professional tax is deducted as per rules & this forms the employee's take home.
My management wants to review this salary breakup.I would like to know whether :
1) Salary break is compulsory under law? If so can you provide the rule which states so?
2) Say I am paying an amount Rs. 18000/- to an employee As per my current salary structure --- this 18000 becomes the CTC, 60% of CTC forms the basic, 40% of Basic forms the HRA and the remaining is divided proportionately into conveyance & other allowance and PF & ESIC deducted as per rules.
My question is can I consider 18000 just as it is without providing any breakup and if the employee is eligible for PF & ESI we are ready to pay this.
3) All i want to clear is what is the purpose of a salary breakup other than to exempt employees above PF ESIC limits from the
same? Does any rule state that salary has to have a break-up?
4) What about PF & ESI rules. Is that mentioned anywhere that wages should necessarily be basic and gross respectively. I mean if the employees' salary is say Rs. 14000/- can I not pay both PF & ESIC on 14000?
We are not in the favour of violating any laws, we were just curious to know the exact rule which governs the various components of salary structure???
Actually, I took 3 examples with different salary range and explained to my management that by considering the remuneration paid to an employee say Rs. 18000/- as a fixed amount without any breakup we are violating the law because in this case we are deliberately placing the employee out of the purview of both PF & ESIC.
Suppose we take salary of Rs. 14000/- and pay both PF & ESIC on this amount we end up paying a higher PF & ESIC as a breakup of the same into gross and basic would have resulted in a smaller amount being paid. With a staff strength of more than 270 employees, we will end up paying substantially in PF & ESIC.
However my boss wants me to back up my answer with the laws & statutes.Please guide me with your inputs.
I know that breakup of salary structure is the norm in industries but what if the breakup is not there???[/QUOTE]
From India, Bharuch
Please help with your feedback
QUOTE=tittli;2199385]Dear Seniors,
Our company follows a salary structure with the breakup with components like Basic, HRA, Conveyance & Other allowance forming the gross salary. PF, ESI & Professional tax is deducted as per rules & this forms the employee's take home.
My management wants to review this salary breakup.I would like to know whether :
1) Salary break is compulsory under law? If so can you provide the rule which states so?
2) Say I am paying an amount Rs. 18000/- to an employee As per my current salary structure --- this 18000 becomes the CTC, 60% of CTC forms the basic, 40% of Basic forms the HRA and the remaining is divided proportionately into conveyance & other allowance and PF & ESIC deducted as per rules.
My question is can I consider 18000 just as it is without providing any breakup and if the employee is eligible for PF & ESI we are ready to pay this.
3) All i want to clear is what is the purpose of a salary breakup other than to exempt employees above PF ESIC limits from the
same? Does any rule state that salary has to have a break-up?
4) What about PF & ESI rules. Is that mentioned anywhere that wages should necessarily be basic and gross respectively. I mean if the employees' salary is say Rs. 14000/- can I not pay both PF & ESIC on 14000?
We are not in the favour of violating any laws, we were just curious to know the exact rule which governs the various components of salary structure???
Actually, I took 3 examples with different salary range and explained to my management that by considering the remuneration paid to an employee say Rs. 18000/- as a fixed amount without any breakup we are violating the law because in this case we are deliberately placing the employee out of the purview of both PF & ESIC.
Suppose we take salary of Rs. 14000/- and pay both PF & ESIC on this amount we end up paying a higher PF & ESIC as a breakup of the same into gross and basic would have resulted in a smaller amount being paid. With a staff strength of more than 270 employees, we will end up paying substantially in PF & ESIC.
However my boss wants me to back up my answer with the laws & statutes.Please guide me with your inputs.
I know that breakup of salary structure is the norm in industries but what if the breakup is not there???[/QUOTE]
From India, Bharuch
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Typical salary breakup.jpg
Salary breakup format.xls