We are a freight forwarding startup. Our current company just has only 3 components of Salary, I have to include more components, as advised by management, kindly let me know the pros and cons of adding more components. Current components are Basic + DA = 70% and HRA =30%
Kindly advice...
From India, Chennai
Kindly advice...
From India, Chennai
Adding more component in salary structure is more administrative hassles. On the other hand, your salary structure to my opinion is quite scientific.
In India there is feeling of employees for more components in salary structure. They also expect yearly component like LTA etc.
Now it depends on organization's policy and random vary from organization to organization.
S K Bandyopadhyay ( WB, Howrah )
CEO-USD HR Solutions
From India, New Delhi
334In India there is feeling of employees for more components in salary structure. They also expect yearly component like LTA etc.
Now it depends on organization's policy and random vary from organization to organization.
S K Bandyopadhyay ( WB, Howrah )
CEO-USD HR Solutions
From India, New Delhi
Basic -40%-50% HRA-20%30% DA-0-10% Conveyance Allowance -5%-10% Medical -5%-10% Other Allowance -upto 15%
From India, Hyderabad
From India, Hyderabad
There are atleast 4-5 addl. heads of allowances you may consider. However there is no specific rule about the nomenclature or the quantum (% ages), as it is the discretion of the management.
1). Conveyance allowance or Conveyance exp.reimbursements (2) Medical allowance- This suggested where employees are not covered with liberal medical insurance or reimbursement scheme. (3) Children's Education allowance - this is towards supporting employees in respect of schooling of their children. Even reimbursements of tuition fees at actuals paid also may be considered. (4) Uniform allw., or reimbursements, this is required to support the running staff to be neat and tidy.(5) Like this attendance incentives/bonus to encourage those clocking 100 % attendance (6) Loyalty bonus for long serving employees, say 10,15, 20 yrs service, suitable slabs can be thought of. Even advance or addl.increments also suggested. (7) Over time allw. and so on.
From India, Bangalore
1). Conveyance allowance or Conveyance exp.reimbursements (2) Medical allowance- This suggested where employees are not covered with liberal medical insurance or reimbursement scheme. (3) Children's Education allowance - this is towards supporting employees in respect of schooling of their children. Even reimbursements of tuition fees at actuals paid also may be considered. (4) Uniform allw., or reimbursements, this is required to support the running staff to be neat and tidy.(5) Like this attendance incentives/bonus to encourage those clocking 100 % attendance (6) Loyalty bonus for long serving employees, say 10,15, 20 yrs service, suitable slabs can be thought of. Even advance or addl.increments also suggested. (7) Over time allw. and so on.
From India, Bangalore
Dear Swathy,
The only component that makes a difference tax wise is conveyance allowance.
Rest, the components are of little materiality, except if you want to use it to favour a particular segment or type of employees or give some additional amount to those who need to spend in line with work.
Earlier, the breakup was important in order to reduce PF incidence, which is now mostly immaterial after the Feb 2019 supreme court case which makes almost all allowance other then HRA a part of Basic. For ESIC, the payment is on gross, so again no impact.
Once the Code on Wages is implemented, you will need to provide at least 50% of wages as basic. But till then you can manipulate things by giving more on HRA. But in the end, the impact is marginal.
Also note, Minimum Wages is defined as Basic + DA. in working components, do not end up with being below minimum wages
From India, Mumbai
The only component that makes a difference tax wise is conveyance allowance.
Rest, the components are of little materiality, except if you want to use it to favour a particular segment or type of employees or give some additional amount to those who need to spend in line with work.
Earlier, the breakup was important in order to reduce PF incidence, which is now mostly immaterial after the Feb 2019 supreme court case which makes almost all allowance other then HRA a part of Basic. For ESIC, the payment is on gross, so again no impact.
Once the Code on Wages is implemented, you will need to provide at least 50% of wages as basic. But till then you can manipulate things by giving more on HRA. But in the end, the impact is marginal.
Also note, Minimum Wages is defined as Basic + DA. in working components, do not end up with being below minimum wages
From India, Mumbai
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SALARY CAN BE SPLIT INTO COMPONENTS BUT NOT LESS THAN THE MINIMUM WAGES.docx