Hello Everyone,
I understand everything is mentioned in the offer letter clearly.
But what will be the difference between the employer and employee contribution of PF if an employer is deducting it from the salary of an employee?? In such a case this cannot be mentioned as an employees benefit (As displayed in Pay slip).
By such deductions employee inhand CTC is getting effected which will be in the end very disappointing.
Is it correct to deduct the Employer contribution of PF from employees' salary??
Regards,
Asna.....
From India, Hyderabad
21I understand everything is mentioned in the offer letter clearly.
But what will be the difference between the employer and employee contribution of PF if an employer is deducting it from the salary of an employee?? In such a case this cannot be mentioned as an employees benefit (As displayed in Pay slip).
By such deductions employee inhand CTC is getting effected which will be in the end very disappointing.
Is it correct to deduct the Employer contribution of PF from employees' salary??
Regards,
Asna.....
From India, Hyderabad
Dear Asna,
How about this situation? You and your employer decide to save a fund for future. Now you contribute Rs.10 to the Fund and your employer contributes Rs. 20
This does seem that you are not benefitting from this arrangement to save money. However, since it will reap you rich interests, your employer contributes double the amount you pay.
This is exactly how it works in PF .
From India, Mumbai
How about this situation? You and your employer decide to save a fund for future. Now you contribute Rs.10 to the Fund and your employer contributes Rs. 20
This does seem that you are not benefitting from this arrangement to save money. However, since it will reap you rich interests, your employer contributes double the amount you pay.
This is exactly how it works in PF .
From India, Mumbai
Hello,
Your concern is RIGHT!
If your CTC (Cost to Company) is amount "A", your salary is bound to be less than "A"
The confusion ( or mischief?) is, while "salary" should be negotiated, the employers negotiate "CTC". Gullible employees IGNORE the difference and discover the truth only when they get the pay slip!
I have said again and again on this forum and elsewhere that CTC has NO legal support/justification. It is merely a "tool" for budgeting "manpower costs" which is fair in the sense that an employer has an obligation of its role to budget and control all costs for the good of the organization but that is where it should stop.
As far as the PF is concerned, both the employee and the employer, each has to contribute 12% of Basic+DA (upto Rs. 6500/- and nothing over this limit). The employer has to pay to the PF administration an "administrative cost" of 1.61% of the Basic+DA on which PF contribution is contributed.
Now while 13.61% of Basic+DA is a "cost to the company (CTC) the law specifically prohibits the employer to recover its (employer's) contribution obligation from the employee's salary. If employers negotiate "salaries" and not "CTC" the matter becomes simple and credibility remains intact! It is also for this reason the CTC does NOT appear in your pay slip as, if it does, it will get the status of "salary" and the employer will be guilty of recovering own (Employer's) contribution from employee's salary and that would be a provable breach of substantive law on the subject.
Since the employers take due precautions in this regard the candidate has to choose whether to be led up the garden path by believing the CTC is your agreed salary and discover the truth later, OR to diplomatically insist on negotiating "Salary" alone OR to negotiate higher CTC so that your "salary" expectations can be realized! Unless you are on guard, your future "salary increments" would also be structured on the principle of "CTC" and believe me I have seen this happening in reality!
Further and finally for now, the CTC that an employer uses does NOT cover every cost of the employee that the organization anyway, and then becomes ignorance(?) or dishonesty on the part of the employers but is a justification in the hands of the employee to insist on negotiating "salary" and NOT the CTC!!!
All that is said here is an explanation of the thought train of such employers. I am aware that this explanation will not resolve your problem and will only tell you where and how you have slipped.
Regards
samvedan
January 2, 2013
-----------------------------
From India, Pune
Your concern is RIGHT!
If your CTC (Cost to Company) is amount "A", your salary is bound to be less than "A"
The confusion ( or mischief?) is, while "salary" should be negotiated, the employers negotiate "CTC". Gullible employees IGNORE the difference and discover the truth only when they get the pay slip!
I have said again and again on this forum and elsewhere that CTC has NO legal support/justification. It is merely a "tool" for budgeting "manpower costs" which is fair in the sense that an employer has an obligation of its role to budget and control all costs for the good of the organization but that is where it should stop.
As far as the PF is concerned, both the employee and the employer, each has to contribute 12% of Basic+DA (upto Rs. 6500/- and nothing over this limit). The employer has to pay to the PF administration an "administrative cost" of 1.61% of the Basic+DA on which PF contribution is contributed.
Now while 13.61% of Basic+DA is a "cost to the company (CTC) the law specifically prohibits the employer to recover its (employer's) contribution obligation from the employee's salary. If employers negotiate "salaries" and not "CTC" the matter becomes simple and credibility remains intact! It is also for this reason the CTC does NOT appear in your pay slip as, if it does, it will get the status of "salary" and the employer will be guilty of recovering own (Employer's) contribution from employee's salary and that would be a provable breach of substantive law on the subject.
Since the employers take due precautions in this regard the candidate has to choose whether to be led up the garden path by believing the CTC is your agreed salary and discover the truth later, OR to diplomatically insist on negotiating "Salary" alone OR to negotiate higher CTC so that your "salary" expectations can be realized! Unless you are on guard, your future "salary increments" would also be structured on the principle of "CTC" and believe me I have seen this happening in reality!
Further and finally for now, the CTC that an employer uses does NOT cover every cost of the employee that the organization anyway, and then becomes ignorance(?) or dishonesty on the part of the employers but is a justification in the hands of the employee to insist on negotiating "salary" and NOT the CTC!!!
All that is said here is an explanation of the thought train of such employers. I am aware that this explanation will not resolve your problem and will only tell you where and how you have slipped.
Regards
samvedan
January 2, 2013
-----------------------------
From India, Pune
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