From a logical stand point if the employer complies to all the employee related acts and wants to make a point to the employee about every rupee he spends then the term Cost to company seems appropriate. For example, in the past factories that employed more than 500 employees used to give their employees subsidized token for the canteen. These days in the IT/ITeS sector where people work in shifts that is abnormal there are facilities like cab, lunch/dinner etc. Similarly I believe that factories that are more than 50 kms away from the city provide transportation to the employees. These are offered at subsidized rates where the employer pays a major part. Is this understanding correct?
From India, Chennai
33From India, Chennai
In the past, these allowances or payments by the employer were outside the package and these were accounted as employee welfare costs. Now these payments are included in the cost of labour. From the employer point of view this is right because these are costs directly attributed to an employee and as such he should know what costs to the employer. If there is an understanding as to what is Cost To Company (CTC) the employee can also decide what will be his take home salary, what will be his annual component or what will be his entitlements at the time of his retirement. And the HR should also be transparent and should give a salary break up showing the gross salary and the monthly take home salary apart from the CTC offered. This would reduce the confusion which may arise in future.
Madhu.T.K
From India, Kannur
Madhu.T.K
From India, Kannur
Hello Thirumurugan,
Like Madhu TK mentioned above, it's more of 'HOW' things.....in this case Salary......are projected.
Why not give the details of ACTUAL SITUATION you have in mind that made you post this issue? While the general picture is what other members stated, there would always be nuances based on the actual issue/situation.
Like, for eg, you mentioned about 'deducting PF and ESI amount of employers part also from employees salary'--not sure whether you meant the Company REALLY DEDUCTS the Employer's contribution from the employee's salary [which is illegal] OR mentions this figure as a part of the CTC figures [which is factually correct].
There's another aspect to this issue--psychologically, employees have been used to the model/practice of Salary disbursal in the form you mentioned since decades. However, since mid-1990s, after liberalization in 1991, many of the corporate practices have undergone changes.......CTC replacing the earlier model being one of them. This model gives a better idea & control to Employers about the cash outflows [this is a typical American model].
So I guess, it is also imperative for employees to be in-tune with the trends.....in this case, he/she needs to go thru the Salary Breakup carefully & clearly to figure-out what are the heads of salary & deductions & the take-home.
Frankly, gone are the days when employees can just expect the Take-home figure & let the rest of the expenses the Employer incurs on the employees be the Employer's headache.....whatever be the name/term for it. That used to be the employee mental mindset earlier when things were so laid-back, more so in the Public sector [which was the highest employment generating mechanism until 1991 or so]. No more Freebies after that.
If you are referring to an ACTUAL situation, pl give the clear details so that the members can give their suggestions/feedback more accurately.
Rgds,
TS
From India, Hyderabad
Like Madhu TK mentioned above, it's more of 'HOW' things.....in this case Salary......are projected.
Why not give the details of ACTUAL SITUATION you have in mind that made you post this issue? While the general picture is what other members stated, there would always be nuances based on the actual issue/situation.
Like, for eg, you mentioned about 'deducting PF and ESI amount of employers part also from employees salary'--not sure whether you meant the Company REALLY DEDUCTS the Employer's contribution from the employee's salary [which is illegal] OR mentions this figure as a part of the CTC figures [which is factually correct].
There's another aspect to this issue--psychologically, employees have been used to the model/practice of Salary disbursal in the form you mentioned since decades. However, since mid-1990s, after liberalization in 1991, many of the corporate practices have undergone changes.......CTC replacing the earlier model being one of them. This model gives a better idea & control to Employers about the cash outflows [this is a typical American model].
So I guess, it is also imperative for employees to be in-tune with the trends.....in this case, he/she needs to go thru the Salary Breakup carefully & clearly to figure-out what are the heads of salary & deductions & the take-home.
Frankly, gone are the days when employees can just expect the Take-home figure & let the rest of the expenses the Employer incurs on the employees be the Employer's headache.....whatever be the name/term for it. That used to be the employee mental mindset earlier when things were so laid-back, more so in the Public sector [which was the highest employment generating mechanism until 1991 or so]. No more Freebies after that.
If you are referring to an ACTUAL situation, pl give the clear details so that the members can give their suggestions/feedback more accurately.
Rgds,
TS
From India, Hyderabad
Dear all, My name is Tilak and I'm working as executive H.R. CTC system is also running in my company.but I think its illegal bcz CTC means cost to company and all legal dues to employee like as PF, ESI, Bonus, LWW and gratuity can't be deducted from employees salary. bcz, as per legal provision it is the responsibility of the employer to contribute in employees PF and ESI as employer`s share of contribution if wrong pl.clarify
From India, Mohali
From India, Mohali
Dear Tilak Bhardwaj,
Mere guess about legality of a term cannot be sufficient to prove that as illegal unless any provision in law speaks about that as illegal. CTC cannot be said illegal unless it is declared so legally by some court's decision or otherwise by making provision in law by the Government of India/ States. However, if you have the knowledge about any section declaring CTC as illegal, you may better quote that for the guidance of the members here.
Also, if you are working as HR Executive, you could better have apprised the members what term of offer your company adopts to convey to the candidates about offer of salary, while offering appointment to the candidates.
In fact, CTC denotes total liability of the company that it has to bear with on account of all the dues, including the dues of PF and ESI, etc., of a worker/employee. It does not denote that the employer shuns his responsibility to contribute in those funds, nor the PF & ESI law prohibits in doing so out of the CTC. The term CTC, does not in any way mean carry home salary of the employee.
However, if the employee has objection to the term CTC, he can feel free to negotiate with the company on the issue at the time of recruitment to convince the recruiters or can decide not to accept the job offer on such terms. But once CTC is accepted by an employee that becomes the part of the contract of employment. So far I have not come across any case where any employee has challenged the CTC in the court of law to get that declared illegal after accepting CTC.
However, if you feel that CTC is illegal, you can take the lead to challenge that in the court of law to get a legal verdict on that.
From India, Delhi
Mere guess about legality of a term cannot be sufficient to prove that as illegal unless any provision in law speaks about that as illegal. CTC cannot be said illegal unless it is declared so legally by some court's decision or otherwise by making provision in law by the Government of India/ States. However, if you have the knowledge about any section declaring CTC as illegal, you may better quote that for the guidance of the members here.
Also, if you are working as HR Executive, you could better have apprised the members what term of offer your company adopts to convey to the candidates about offer of salary, while offering appointment to the candidates.
In fact, CTC denotes total liability of the company that it has to bear with on account of all the dues, including the dues of PF and ESI, etc., of a worker/employee. It does not denote that the employer shuns his responsibility to contribute in those funds, nor the PF & ESI law prohibits in doing so out of the CTC. The term CTC, does not in any way mean carry home salary of the employee.
However, if the employee has objection to the term CTC, he can feel free to negotiate with the company on the issue at the time of recruitment to convince the recruiters or can decide not to accept the job offer on such terms. But once CTC is accepted by an employee that becomes the part of the contract of employment. So far I have not come across any case where any employee has challenged the CTC in the court of law to get that declared illegal after accepting CTC.
However, if you feel that CTC is illegal, you can take the lead to challenge that in the court of law to get a legal verdict on that.
From India, Delhi
Dear Mr. Tilak,
You have a confusion regarding the terms CTC. Please understand that CTC is merely a term and nothing else. This shows the exact amount of financial burden the employer carries in respect of any subject position / employee. Now a days it has become a trend to clearly indicate this to the employee at the time of an offer. Having just indicating Cost to Company does not mean that employer wishes prospective employee to pay employer's share from his salary / wages; and nobody will accept it as it is not only illegal but also not logical. Further, the fact remains that employer actually is legally bound and has to pay his respective share of contributions for the benefit of the employee; if not in his monthly package; certainly for his future welfare. Employers contributions to PF/FPF, Provisions for Payment of Gratuity (When eligible), payments to ESIC and other applicable Welfare Schemes, are the examples of this. Moreover, in a broader perspective, these contributions by employer could be seen as a part of salary / wages. If not in a monthly take home package, certainly at the time of eligibility as and when occurs under respective enactments.
If you look at the CTC in the light of above; I'm sure your doubts will be clear.
Rgds,
Arun Dixit
9420 69 6660
020 2437 6185
You have a confusion regarding the terms CTC. Please understand that CTC is merely a term and nothing else. This shows the exact amount of financial burden the employer carries in respect of any subject position / employee. Now a days it has become a trend to clearly indicate this to the employee at the time of an offer. Having just indicating Cost to Company does not mean that employer wishes prospective employee to pay employer's share from his salary / wages; and nobody will accept it as it is not only illegal but also not logical. Further, the fact remains that employer actually is legally bound and has to pay his respective share of contributions for the benefit of the employee; if not in his monthly package; certainly for his future welfare. Employers contributions to PF/FPF, Provisions for Payment of Gratuity (When eligible), payments to ESIC and other applicable Welfare Schemes, are the examples of this. Moreover, in a broader perspective, these contributions by employer could be seen as a part of salary / wages. If not in a monthly take home package, certainly at the time of eligibility as and when occurs under respective enactments.
If you look at the CTC in the light of above; I'm sure your doubts will be clear.
Rgds,
Arun Dixit
9420 69 6660
020 2437 6185
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