If employee is hired and his package of 3,00,000/- so what is breakup of salary, can the employer fix Gross Basic Pay 25,000/- this is legal breakup of salary.
From India, New Delhi
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1From India, New Delhi
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Your query is very sketchy; you have to provide details. Rs.3,00,000 - isn't CTC or what. Don't you follow any policy on salary structure? There is no legal breakup for a salary or package. However, minimum wages appropriate to skills as prescribed have to be followed. You are aware that different salary structures have to be applied for various posts. The gross salary will vary depending on the status.
From India, Bangalore
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From India, Bangalore
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Dear Khalid,
My answer may seem a bit lengthy, but I feel such a response becomes inevitable because many questions are asked about the concept of salary or wages of employees, with reference to components as well as to CTC. Salary or wage, as I understand, is simply the overall monetary consideration payable by the employer to the employee hired by him for the services rendered as per the contract of employment. However, the cost of retention of labor and social security eventually added to the salary or wage either by way of convention or by statutory compulsion has enlarged the terms of the contract of employment relating to the compensation part of labor, resulting in the bifurcation of the concept of wage/salary into basic and allowances. However, this bifurcation is not compulsory, and the salary/wage can also be a consolidated one based on the demand and supply of labor, provided it does not fall short of the statutory minimum wages, if any, fixed. There is no hard and fast rule or any straight-jacket formula for the bifurcation of salary/wages into basic and allowances.
However, the difference in the definitions of the terms "salary or wages" under various Labor Laws mandates the bifurcation of the overall salary or wages payable to employees. In the absence of bifurcation, the entire sum paid is taken into account for the computation of various benefits of employment such as PF, gratuity, bonus, etc. Hence the bifurcation is mainly to reduce the indirect financial commitments of the employer.
I infer that the package of Rs. 3 lakh mentioned is per annum. If the basic pay of Rs. 25,000 mentioned is per month, then there is no break-up, and it is just a consolidated salary only. Can you please explain?
Thank you.
From India, Salem
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My answer may seem a bit lengthy, but I feel such a response becomes inevitable because many questions are asked about the concept of salary or wages of employees, with reference to components as well as to CTC. Salary or wage, as I understand, is simply the overall monetary consideration payable by the employer to the employee hired by him for the services rendered as per the contract of employment. However, the cost of retention of labor and social security eventually added to the salary or wage either by way of convention or by statutory compulsion has enlarged the terms of the contract of employment relating to the compensation part of labor, resulting in the bifurcation of the concept of wage/salary into basic and allowances. However, this bifurcation is not compulsory, and the salary/wage can also be a consolidated one based on the demand and supply of labor, provided it does not fall short of the statutory minimum wages, if any, fixed. There is no hard and fast rule or any straight-jacket formula for the bifurcation of salary/wages into basic and allowances.
However, the difference in the definitions of the terms "salary or wages" under various Labor Laws mandates the bifurcation of the overall salary or wages payable to employees. In the absence of bifurcation, the entire sum paid is taken into account for the computation of various benefits of employment such as PF, gratuity, bonus, etc. Hence the bifurcation is mainly to reduce the indirect financial commitments of the employer.
I infer that the package of Rs. 3 lakh mentioned is per annum. If the basic pay of Rs. 25,000 mentioned is per month, then there is no break-up, and it is just a consolidated salary only. Can you please explain?
Thank you.
From India, Salem
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(Fact Checked)-The user's reply contains accurate information regarding the concept of salary or wages, the bifurcation of basic and allowances, and the implications of such breakdown on statutory benefits. The user correctly highlights that the bifurcation of salary is not compulsory, and a consolidated salary is also permissible as long as it meets statutory requirements. The user's explanation is comprehensive and aligns with labor laws and practices. (1 Acknowledge point)
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You will find more information from this link: https://www.citehr.com/94093-how-pre...ls.html#377789
From India, Bangalore
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From India, Bangalore
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(Fact Check Failed/Partial)-[B]Response[/B]: The link provided offers insights into preparing a salary breakup but doesn't address legality. Ensure compliance with labor laws and consider the overall package structure.
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Members have elaborated the rule position as well as other aspects. Answer to your query is — Yes they can do it This apparently is being done to avoid PF and ESI contribution. Col.Suresh Rathi
From India, Delhi
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From India, Delhi
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(Fact Check Failed/Partial)-The reply is incorrect. Employers cannot fix the Basic Pay arbitrarily to avoid PF and ESI contributions. Wages must comply with minimum wage laws.
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CiteHR.AI
(Fact Checked)-The user's reply contains accurate information regarding the absence of a legal breakup for a salary or package; however, it could benefit from more clarity and structure. (1 Acknowledge point)