Dear HR Managers,
Good Morning!! I am working as HR Manager of a reputed Hospital in Central Delhi. My Management want me to rediffine the Company Cost to the Employee by Adding various factors like Gratuity, Leave encashment etc. As the Gratuity is applicable to an employee only after completion of 5 years continous service, I am little confused how to calculate the same for fresh employees??
Wating for your valuable feed back on the subject.
Thank You.
Sreehariprasad.N
Manager HR
DHLI
From India, Lucknow
2Good Morning!! I am working as HR Manager of a reputed Hospital in Central Delhi. My Management want me to rediffine the Company Cost to the Employee by Adding various factors like Gratuity, Leave encashment etc. As the Gratuity is applicable to an employee only after completion of 5 years continous service, I am little confused how to calculate the same for fresh employees??
Wating for your valuable feed back on the subject.
Thank You.
Sreehariprasad.N
Manager HR
DHLI
From India, Lucknow
Dear Sreehariprasad,
Had you searched CiteHr you would have found some discussions at https://www.citehr.com/48148-calcula...mpany-ctc.html
It all depends upon your company policy, as some one said.
Have a nice day.
Simhan
A retired academic in the UK
From United Kingdom
Had you searched CiteHr you would have found some discussions at https://www.citehr.com/48148-calcula...mpany-ctc.html
It all depends upon your company policy, as some one said.
Have a nice day.
Simhan
A retired academic in the UK
From United Kingdom
CTC is normaly a combination of 3 main heads:
a) Fixed Annual CTC
b) Variable/Incentive/Performance Bonus
c) Other Benefits/Perquisits
a) Fixed Annual CTC consists generaly of Basic, HRA, Special Allowance, Medical Allowance, Conveyance Allowance and various other allowances, Superannuation , LTA etc
c) Other Benefits are Vehicle facility, Housing Facility, Gratuity, Mediclaim Insurance, Personal Accident Insurance, Mobile/Residential Telephone facility etc
Component a & b can be quantified easily however, for Other Benefits like vehicle, ph, housing you can take actual amount paid by the company, premium paid individualy for insurance, gratuity can be quanitified as (15 days basic/26)*30 for a year,although the same is not being paid by the organisation bt company is paying to trust to make a provision of the same.Same way for Leave encashment you can take provisional figures from your Finance & Accounts department as booked by them in their books of accounts.
Hope this info will help you.
Regards
From India, Mumbai
a) Fixed Annual CTC
b) Variable/Incentive/Performance Bonus
c) Other Benefits/Perquisits
a) Fixed Annual CTC consists generaly of Basic, HRA, Special Allowance, Medical Allowance, Conveyance Allowance and various other allowances, Superannuation , LTA etc
c) Other Benefits are Vehicle facility, Housing Facility, Gratuity, Mediclaim Insurance, Personal Accident Insurance, Mobile/Residential Telephone facility etc
Component a & b can be quantified easily however, for Other Benefits like vehicle, ph, housing you can take actual amount paid by the company, premium paid individualy for insurance, gratuity can be quanitified as (15 days basic/26)*30 for a year,although the same is not being paid by the organisation bt company is paying to trust to make a provision of the same.Same way for Leave encashment you can take provisional figures from your Finance & Accounts department as booked by them in their books of accounts.
Hope this info will help you.
Regards
From India, Mumbai
Dear sreehariprasad,
Ans for your query:
-Normally the provision of Gratuity is booked in books of accounts because it is a liability for the company.
The calculation of gratuity in CTC on monthly basis, 4.81% of basic will go to gratuity accumulation.
- As per encashment of leave, draw a policy that only this much of days can be encashable in a year, irrespective of the accumulated leave. This restriction will help to calculate out the amount to be reserved for encashment.
or else if you have to calculate out the entire leave encashment, calculate out each employees out standing encashable leave and compile them for provision in books of accounts.
Hope it is clear.
Wish you all the best in your HR Career.
S.Sethupathy,
Excellent HR Services,
Erode.
From India, Selam
Ans for your query:
-Normally the provision of Gratuity is booked in books of accounts because it is a liability for the company.
The calculation of gratuity in CTC on monthly basis, 4.81% of basic will go to gratuity accumulation.
- As per encashment of leave, draw a policy that only this much of days can be encashable in a year, irrespective of the accumulated leave. This restriction will help to calculate out the amount to be reserved for encashment.
or else if you have to calculate out the entire leave encashment, calculate out each employees out standing encashable leave and compile them for provision in books of accounts.
Hope it is clear.
Wish you all the best in your HR Career.
S.Sethupathy,
Excellent HR Services,
Erode.
From India, Selam
Dear Sree
TOTAL COMPENSATION AS A PERCENTAGE OF REVENUE
The Total Compensation as a Percentage of Revenue factor is an indicator measurement that is used to monitor labor costs. Tracking total compensation as a percent of total costs provides managers with valuable information for use in managing the costs associated with human capital, including evaluating the use of fixed versus variable compensation. Following this measurement will also permit an organization to determine if personnel cost (as indicated by base pay, incentives and benefits) is in line with organization goals, industry benchmarks and business plans.
Total Compensation as a Percentage of Revenue =( Compensation Cost + Benefit Cost [Workforce on Payroll] )/Revenue
BENEFIT COST AS A PERCENTAGE OF REVENUE
The Benefit Cost as a Percentage of Revenue factor is an indicator measurement that is used to monitor non-taxable/non-cash labor costs. Tracking benefit cost as a percent of revenue provides managers with valuable information for use in managing the costs associated with human capital. Total financial impact of new programs such as wellness efforts or insurance plan design can be evaluated in relationship to revenue. Trends up or down in this factor will reveal costs that need attention or value that has been added. Following this measurement will also permit an organization to determine if the benefit labor cost (as indicated by non-taxable/non-cash benefits) is in line with organization goals, industry benchmarks and business plans.
How is it Calculated?
Benefit costs are totaled and then divided by either period actual or budgeted revenue for a calendar, fiscal year or other 12 month reporting period.
Benefit Cost as a Percentage of Revenue =Benefit Cost/Revenue
BENEFIT COST AS A PERCENTAGE OF TOTAL COMPENSATION
The Benefit Cost as a Percentage of Total Compensation is an indicator measurement that is used to monitor non-taxable/non-cash labor costs. Tracking benefit cost as a percent of total compensation provides management with valuable information for use in managing the costs associated with benefits. This information can be useful when looking at hire versus lease or outsource decisions. Trends up or down in this factor will reveal costs that need attention or value that has been added with increasing relative costs.
How is it Calculated?
Benefit costs are totaled and then divided by total costs for a calendar, fiscal year or other 12 month reporting period.
Benefit Cost as a Percentage of Total Compensation =Benefit Cost/Total Compensation Cost
VARIABLE COMPENSATION AS A PERCENTAGE OF TOTAL COMPENSATION
Variable compensation as a percentage of total compensation is a measurement that demonstrates how much of an organization’s total compensation can vary with the revenues of the organization. Recent compensation trends have focused on increasing the amount of variable compensation. High levels of variable compensation can be correlated to high performing organization and organizations that attract and retain high performing employees. This measurement permits an organization to look at the success of variable compensation programs and fixed and variable compensation as it relates to revenue.
How is it Calculated?
Variable compensation as a percentage of total compensation is calculated by adding up all variable compensation and dividing that sum by total compensation.
Variable Compensation as a Percentage of Total Compensation =Variable Compensation/Total Compensation
Information as above are easily available on line. Just look for HR Metrics.
Regards
Octavious
From India, Mumbai
TOTAL COMPENSATION AS A PERCENTAGE OF REVENUE
The Total Compensation as a Percentage of Revenue factor is an indicator measurement that is used to monitor labor costs. Tracking total compensation as a percent of total costs provides managers with valuable information for use in managing the costs associated with human capital, including evaluating the use of fixed versus variable compensation. Following this measurement will also permit an organization to determine if personnel cost (as indicated by base pay, incentives and benefits) is in line with organization goals, industry benchmarks and business plans.
Total Compensation as a Percentage of Revenue =( Compensation Cost + Benefit Cost [Workforce on Payroll] )/Revenue
BENEFIT COST AS A PERCENTAGE OF REVENUE
The Benefit Cost as a Percentage of Revenue factor is an indicator measurement that is used to monitor non-taxable/non-cash labor costs. Tracking benefit cost as a percent of revenue provides managers with valuable information for use in managing the costs associated with human capital. Total financial impact of new programs such as wellness efforts or insurance plan design can be evaluated in relationship to revenue. Trends up or down in this factor will reveal costs that need attention or value that has been added. Following this measurement will also permit an organization to determine if the benefit labor cost (as indicated by non-taxable/non-cash benefits) is in line with organization goals, industry benchmarks and business plans.
How is it Calculated?
Benefit costs are totaled and then divided by either period actual or budgeted revenue for a calendar, fiscal year or other 12 month reporting period.
Benefit Cost as a Percentage of Revenue =Benefit Cost/Revenue
BENEFIT COST AS A PERCENTAGE OF TOTAL COMPENSATION
The Benefit Cost as a Percentage of Total Compensation is an indicator measurement that is used to monitor non-taxable/non-cash labor costs. Tracking benefit cost as a percent of total compensation provides management with valuable information for use in managing the costs associated with benefits. This information can be useful when looking at hire versus lease or outsource decisions. Trends up or down in this factor will reveal costs that need attention or value that has been added with increasing relative costs.
How is it Calculated?
Benefit costs are totaled and then divided by total costs for a calendar, fiscal year or other 12 month reporting period.
Benefit Cost as a Percentage of Total Compensation =Benefit Cost/Total Compensation Cost
VARIABLE COMPENSATION AS A PERCENTAGE OF TOTAL COMPENSATION
Variable compensation as a percentage of total compensation is a measurement that demonstrates how much of an organization’s total compensation can vary with the revenues of the organization. Recent compensation trends have focused on increasing the amount of variable compensation. High levels of variable compensation can be correlated to high performing organization and organizations that attract and retain high performing employees. This measurement permits an organization to look at the success of variable compensation programs and fixed and variable compensation as it relates to revenue.
How is it Calculated?
Variable compensation as a percentage of total compensation is calculated by adding up all variable compensation and dividing that sum by total compensation.
Variable Compensation as a Percentage of Total Compensation =Variable Compensation/Total Compensation
Information as above are easily available on line. Just look for HR Metrics.
Regards
Octavious
From India, Mumbai
- You have following three options while considering cost of gratuity in CTC. Discuss these options with your Management and come to some conclusion.
- Add 4.8 % of Basic Salary + DA as a monthly cost of Gratuity, only in case of those employees who have completed 5 years service.
- Add 4.8 % of Basic Salary + DA as a monthly cost of Gratuity, in case of all employees irrespective of their length of service. This is more realistic since gratuity is payable even before completion of 5 years service, in case of death of employee.
- In case you have taken a Group Gratuity Scheme Policy from LIC or any other insurance company, then add the policy Premium paid by you to CTC by proportionately allocating it to individual employees.
From India, Pune
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