Dear All,
I am working with an IT company where the CTC comprises Fixed Salary and Variable Salary (30% of CTC). The company assured us to pay the variable salary at the end of every year based on individual appraisal ratings and company performance. Due to the recession, they deferred the payment. This year also, they did not pay the variable component, and now they have announced that variable pay is abolished. This brings down our CTC by 30% flat.
Legal Guidance on Variable Pay Abolishment
Is there any law by which employees can get this variable as part of the fixed salary? Because I feel the company has cheated its employees by abolishing the variable pay. I need your guidance at the earliest.
Regards,
Sunny
From India, Pune
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I am working with an IT company where the CTC comprises Fixed Salary and Variable Salary (30% of CTC). The company assured us to pay the variable salary at the end of every year based on individual appraisal ratings and company performance. Due to the recession, they deferred the payment. This year also, they did not pay the variable component, and now they have announced that variable pay is abolished. This brings down our CTC by 30% flat.
Legal Guidance on Variable Pay Abolishment
Is there any law by which employees can get this variable as part of the fixed salary? Because I feel the company has cheated its employees by abolishing the variable pay. I need your guidance at the earliest.
Regards,
Sunny
From India, Pune
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Dear Sunny,
Based on my understanding, the variable pay will not be part of CTC. If they have defined the same in the CTC, along with the quote "based on the performance," you cannot do anything. Your employer is on the safer side.
Regards,
Sundar
From India, Bangalore
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17Based on my understanding, the variable pay will not be part of CTC. If they have defined the same in the CTC, along with the quote "based on the performance," you cannot do anything. Your employer is on the safer side.
Regards,
Sundar
From India, Bangalore
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Dear Sundar,
Thanks for the response. Variable pay is mentioned as part of CTC. Now, if the company abolishes the variable pay, this will result in CTC being 30% less. This will definitely affect all of us while exploring opportunities outside this company.
Isn't there anything that can be done by the employees to at least retain the CTC on paper?
Kindly advise.
Regards,
Sunny
From India, Pune
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Thanks for the response. Variable pay is mentioned as part of CTC. Now, if the company abolishes the variable pay, this will result in CTC being 30% less. This will definitely affect all of us while exploring opportunities outside this company.
Isn't there anything that can be done by the employees to at least retain the CTC on paper?
Kindly advise.
Regards,
Sunny
From India, Pune
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The CTC is just an indication of what the employee might expect to receive in terms of cash remuneration, benefits, and insurances. It is wrong to expect a "variable" component of your salary to be paid to you or to be part of the legal salary required to be paid. There is a reason they call it "variable"; it cannot be predicted, and it is not regular.
It is now your choice to stay with the company and accept the changes, hoping for an improvement when their budgets increase, or to look for another job. At least if you go elsewhere, you will be smarter and not just expect variable pay to stay the same.
From United Kingdom, London
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It is now your choice to stay with the company and accept the changes, hoping for an improvement when their budgets increase, or to look for another job. At least if you go elsewhere, you will be smarter and not just expect variable pay to stay the same.
From United Kingdom, London
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Variable Pay in Start-up Companies
Regarding Variable Pay, I have one more dimension to discuss. Start-up companies often include a portion of the CTC (20-30%) as variable pay. In a start-up, variable pay cannot be determined based on business performance alone. The only basis on which an employer can provide variable pay is through KRA-based individual performance.
Here, the employer has the liberty to pay whatever they deem fit as variable pay. Otherwise, as our colleague rightly mentioned, it should be formalized as an undertaking signed off between the two parties.
Regards,
Dr. K. Sureshkumar
From India, Mumbai
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Regarding Variable Pay, I have one more dimension to discuss. Start-up companies often include a portion of the CTC (20-30%) as variable pay. In a start-up, variable pay cannot be determined based on business performance alone. The only basis on which an employer can provide variable pay is through KRA-based individual performance.
Here, the employer has the liberty to pay whatever they deem fit as variable pay. Otherwise, as our colleague rightly mentioned, it should be formalized as an undertaking signed off between the two parties.
Regards,
Dr. K. Sureshkumar
From India, Mumbai
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Thanks for all the responses. It seems like there's no scope for improvement for the employees . I am not disputing the company paying the Variable Component. Even if it's not paid, it is a part of CTC, which helps employees in negotiating with the next companies. The issue is when the company abolishes the variable component, the revised letter contains only the fixed salary, which is now the actual CTC minus the variable component of 30%. The next job search will now be based on this reduced salary!
Is there any way to stop the company from abolishing the variable pay?
Let there be no disbursement of the variable component, but it should not be removed from the CTC.
Regards,
Sunny
From India, Pune
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Is there any way to stop the company from abolishing the variable pay?
Let there be no disbursement of the variable component, but it should not be removed from the CTC.
Regards,
Sunny
From India, Pune
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Understanding Variable Pay Policies
Good companies will always have a well-laid policy on variable pay, and all employees will know whether they are eligible or not based on the policy. Hence, if one is offered variable pay as part of the CTC, they should take care to ask for the company's policy on variable pay before accepting the offer.
From India, Mumbai
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Good companies will always have a well-laid policy on variable pay, and all employees will know whether they are eligible or not based on the policy. Hence, if one is offered variable pay as part of the CTC, they should take care to ask for the company's policy on variable pay before accepting the offer.
From India, Mumbai
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Dear Sir,
Is there any particular salary structure that every company should follow the same, and is it as per the law? Different companies follow different salary structures. My concern is that some companies show less basic pay in employees' salaries to minimize the burden on the cost to the company. Is this acceptable? Can we challenge this as per the law? Please suggest.
Thank you,
rk
From India, Hyderabad
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Is there any particular salary structure that every company should follow the same, and is it as per the law? Different companies follow different salary structures. My concern is that some companies show less basic pay in employees' salaries to minimize the burden on the cost to the company. Is this acceptable? Can we challenge this as per the law? Please suggest.
Thank you,
rk
From India, Hyderabad
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