Please explain if someone joined a company two years ago when there were no PT and PF deductions. So, we were only receiving gross - PT at that time. After two years, the company implemented PF and ESI, and now the company wants to add both the employee and employer contributions to the existing gross, which was previously considered as CTC only. This change is effective from September 2019.
Additionally, the employer's contribution will be 13%. Is the admin charge also included in CTC? Kindly confirm if it is valid to add everything to the CTC, as this might result in a significant reduction in the take-home pay.
Any suggestions on this matter would be appreciated.
From India, Mumbai
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7Additionally, the employer's contribution will be 13%. Is the admin charge also included in CTC? Kindly confirm if it is valid to add everything to the CTC, as this might result in a significant reduction in the take-home pay.
Any suggestions on this matter would be appreciated.
From India, Mumbai
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First of all, understanding CTC is a must.
CTC, in simple terms, means Cost to Company, which includes every emolument that the company spends on an employee. It includes Salary, which includes Basic DA, HRA, and any other allowances, etc. The statutory elements fall under fringe benefits, which include emoluments like EPF, ESIC, and Labour Welfare Fund contributions that the employer contributes. Other benefits under this would be bonus, gratuity, leave with wages, wages against national holidays, etc. All of the above are included in your CTC.
Deductions that will be applicable to an employee are PT, and/or TDS if applicable. While deductions under EPF and ESIC contributions of the employee are made in his earned salary, it is for their social security.
Hope this helps in understanding the salary and CTC.
From India, Vadodara
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CTC, in simple terms, means Cost to Company, which includes every emolument that the company spends on an employee. It includes Salary, which includes Basic DA, HRA, and any other allowances, etc. The statutory elements fall under fringe benefits, which include emoluments like EPF, ESIC, and Labour Welfare Fund contributions that the employer contributes. Other benefits under this would be bonus, gratuity, leave with wages, wages against national holidays, etc. All of the above are included in your CTC.
Deductions that will be applicable to an employee are PT, and/or TDS if applicable. While deductions under EPF and ESIC contributions of the employee are made in his earned salary, it is for their social security.
Hope this helps in understanding the salary and CTC.
From India, Vadodara
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When we joined at that time, there was no PF/ESI. After 2-3 years, they started and verbally communicated to us that the employer's PF would be borne by the employer only. However, now with the new CEO, he claims it's incorrect and that we should have adjusted everything from employees.
Let me know how to handle.
Reply, please.
From India, Mumbai
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Let me know how to handle.
Reply, please.
From India, Mumbai
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Dear Mamata Kumari,
After analyzing the apt explanation given by our friend Bijay distinguishing salary and C.T.C, I hope certainly it would be clear to you that the contention that all subsequent contributions payable by the employer by the operation of certain laws to the establishment should be adjusted against the existing C.T.C is not only wrong but also illogical and illegal as well.
As C.T.C is the annual total cost incurred per employee by the employer in a year, let me try to explain the concept of gross monthly salary as follows:
Gross monthly salary is the sum total of the basic pay and all the other monthly allowances payable to the employee at the end of the wage period before all deductions as agreed in the contract of employment. All deductions here mean only those sums statutorily deductible from the agreed salary of the employee. That's why, all contributions both statutorily and contractually payable by the employer like contributions to ESI and/or EPF, bonus, gratuity fund, L.T.A, medical reimbursement, etc., are not included in the statutory minimum wages. So is the case with the monthly gross salary or wages as agreed in the contract of employment. If the amounts payable by the employer subsequently due to the applicability of ESI and EPF Acts are also deducted in order to keep the C.T.C the same, the gross monthly salary would automatically be reduced thus ending up in breach of contract on the part of the employer. If the employer like your new C.E.O is shrewd enough to coerce the employees to agree, it tantamounts to "contracting out" which is prohibited under Labor Jurisprudence.
Better make a collective effort to bring this legal position to the notice of your new C.E.O.
From India, Salem
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After analyzing the apt explanation given by our friend Bijay distinguishing salary and C.T.C, I hope certainly it would be clear to you that the contention that all subsequent contributions payable by the employer by the operation of certain laws to the establishment should be adjusted against the existing C.T.C is not only wrong but also illogical and illegal as well.
As C.T.C is the annual total cost incurred per employee by the employer in a year, let me try to explain the concept of gross monthly salary as follows:
Gross monthly salary is the sum total of the basic pay and all the other monthly allowances payable to the employee at the end of the wage period before all deductions as agreed in the contract of employment. All deductions here mean only those sums statutorily deductible from the agreed salary of the employee. That's why, all contributions both statutorily and contractually payable by the employer like contributions to ESI and/or EPF, bonus, gratuity fund, L.T.A, medical reimbursement, etc., are not included in the statutory minimum wages. So is the case with the monthly gross salary or wages as agreed in the contract of employment. If the amounts payable by the employer subsequently due to the applicability of ESI and EPF Acts are also deducted in order to keep the C.T.C the same, the gross monthly salary would automatically be reduced thus ending up in breach of contract on the part of the employer. If the employer like your new C.E.O is shrewd enough to coerce the employees to agree, it tantamounts to "contracting out" which is prohibited under Labor Jurisprudence.
Better make a collective effort to bring this legal position to the notice of your new C.E.O.
From India, Salem
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