Dear Seniors!
I've got a query here. Highly appreciate your kind clarification.
Is it appropriate/justified to deduct the employer's EPF contribution from the employee's CTC during a salary calculation?
Best Regards
From India, Hyderabad
10I've got a query here. Highly appreciate your kind clarification.
Is it appropriate/justified to deduct the employer's EPF contribution from the employee's CTC during a salary calculation?
Best Regards
From India, Hyderabad
Hello,
It is neither appropriate nor is it justified to deduct employer's contribution to PF from employee's wage.
Sec 12 of the EPF and Misc Provisions Act 1952 mandates that the Employer shall not reduce wages etc. and Clause 31 of the Employees Provident Fund Scheme mandates that Employer's share not to be decucted from the members.
I suspect slight confusion in your querry.
CTC or "Cost to Company" is an internal budgetting tool for the management to check and control total Employee Related Costs to the organization. CTC includes the wage and in addition the conditional and , indirect payment that an employee may be entitled to as a consequence of his employment. Professionally I have no objection to the use of the CTC concept but only when it is used for budgetary control.
I consider it entirely WRONG to negotiate salaries on the basis of CTC as when conditional payments (like bonuses, incentives, housing loans and/or interest subsidies etc) do not come through (for no fault of the employee), what the organization gets is a disgruntled employee and what the organization loses is CREDIBILITY!!!
Therefore while employer's share of PF contribution can be a part of CTC, it should not be used to bloat the figure to attract a potential candidate. If an organization does that it will have to regret sooner than later!
I hope the issue clear now!!
Regards
samvedan
March 13, 2009
From India, Pune
It is neither appropriate nor is it justified to deduct employer's contribution to PF from employee's wage.
Sec 12 of the EPF and Misc Provisions Act 1952 mandates that the Employer shall not reduce wages etc. and Clause 31 of the Employees Provident Fund Scheme mandates that Employer's share not to be decucted from the members.
I suspect slight confusion in your querry.
CTC or "Cost to Company" is an internal budgetting tool for the management to check and control total Employee Related Costs to the organization. CTC includes the wage and in addition the conditional and , indirect payment that an employee may be entitled to as a consequence of his employment. Professionally I have no objection to the use of the CTC concept but only when it is used for budgetary control.
I consider it entirely WRONG to negotiate salaries on the basis of CTC as when conditional payments (like bonuses, incentives, housing loans and/or interest subsidies etc) do not come through (for no fault of the employee), what the organization gets is a disgruntled employee and what the organization loses is CREDIBILITY!!!
Therefore while employer's share of PF contribution can be a part of CTC, it should not be used to bloat the figure to attract a potential candidate. If an organization does that it will have to regret sooner than later!
I hope the issue clear now!!
Regards
samvedan
March 13, 2009
From India, Pune
It depends on how you negotiate CTC. Company's are adding the Employer's share of PF in the CTC and it is clearlly told to the hiring employee that his CTC includes employer's share of PF.
From India, Delhi
From India, Delhi
Dear MR. Samvedan
you are very right in your approach. but what i feel is that is one side of picture. May be a fresher get a partial understanding of CTC and can be lured with the attractive figure.But this is not true in every case. A person negotiating on the salary part shoud have a clear idea of his cash in hand from the HR. and we HR persons are liable to make the candidate through with that. If the person feel satisfy of what he is getting only then he will join the organisation. But the responsibility is on the shoulders of HR people to make the candidate aware of real picture.
moreover CTC actually provides a true picture to the candidate itself that how much he would be getting and how much cost company is bearing while hiring him.So all depends upon people perception.
regards
Suman
you are very right in your approach. but what i feel is that is one side of picture. May be a fresher get a partial understanding of CTC and can be lured with the attractive figure.But this is not true in every case. A person negotiating on the salary part shoud have a clear idea of his cash in hand from the HR. and we HR persons are liable to make the candidate through with that. If the person feel satisfy of what he is getting only then he will join the organisation. But the responsibility is on the shoulders of HR people to make the candidate aware of real picture.
moreover CTC actually provides a true picture to the candidate itself that how much he would be getting and how much cost company is bearing while hiring him.So all depends upon people perception.
regards
Suman
Dear All
At the time of Salary Fixation / Negotiation or after employee joining kindly inform the same to the employee,i,e PF is a part of CTC..Also brief the difference between the CTC and How the Monthly salary calculates
PF is a Employer contribution shown in CTC
For salary purpose we will consider upto the Gross Components
Regards
Venkatesh
From India, Madras
At the time of Salary Fixation / Negotiation or after employee joining kindly inform the same to the employee,i,e PF is a part of CTC..Also brief the difference between the CTC and How the Monthly salary calculates
PF is a Employer contribution shown in CTC
For salary purpose we will consider upto the Gross Components
Regards
Venkatesh
From India, Madras
Hello Suman & everyone!
I am sorry if I sounded like generalizing my observation. That was not the intention.
I have no issues at all if a candidate is adequately explained the difference between CTC and Salary that would be paid to him monthly. At times I have seen the difference between the two to the extent of a few thousand on a monthly basis. This may also be an organization specific matter.
We must presume that the candidate may be naive about the two terms and realities and speaking for the organizations, i feel we are obliged to ensure that we are NOT misunderstood on this vital issue particularly! That primarily was the drift my argument.
I hope I have clarified my stance!
Regards
samvedan
MArch 13, 2009
----------------------
From India, Pune
I am sorry if I sounded like generalizing my observation. That was not the intention.
I have no issues at all if a candidate is adequately explained the difference between CTC and Salary that would be paid to him monthly. At times I have seen the difference between the two to the extent of a few thousand on a monthly basis. This may also be an organization specific matter.
We must presume that the candidate may be naive about the two terms and realities and speaking for the organizations, i feel we are obliged to ensure that we are NOT misunderstood on this vital issue particularly! That primarily was the drift my argument.
I hope I have clarified my stance!
Regards
samvedan
MArch 13, 2009
----------------------
From India, Pune
Dear Mr. Samvedan & friends,
Pl. note that now a days 99% of the candidates are asking for the details and even they are asking for the take home salary also however we are issuing offer letter with a breakup of the CTC and the candidate is acknowledging the same hence under any circumstances there is no issue with the same but if it is not clearly explained and agreed then not only the PF contribution but every thing is going to be an issue. Now a days all the companies are following the same procedure as we have to finalize the budget at the begining of the financial year hence it is better to have a CTC mode only. In this context I agree with Mr. Suman.
Thnaks and regards - kameswarao
From India, Hyderabad
Pl. note that now a days 99% of the candidates are asking for the details and even they are asking for the take home salary also however we are issuing offer letter with a breakup of the CTC and the candidate is acknowledging the same hence under any circumstances there is no issue with the same but if it is not clearly explained and agreed then not only the PF contribution but every thing is going to be an issue. Now a days all the companies are following the same procedure as we have to finalize the budget at the begining of the financial year hence it is better to have a CTC mode only. In this context I agree with Mr. Suman.
Thnaks and regards - kameswarao
From India, Hyderabad
Dear Mr Samvedan & friends
We HR are always blamed that the salary shown to us at the time of salary negotiation is very was high as compare to salary in hand after completion of month.
Every employee who negotiates with the salary that what is CTC , nowadys every organization are impleting same practice. If we show an employee what organization pays to him what's wrong in it. Every employee should get a clear idea from HR what is the salary in hand he will get.
I will give a example how employees behave and the blame come to HR.
We selected a Safety Manager at our plant which is located in remote area and company gave accomodation free of cost and at the time of offer we made him clear in writing that 10% will be deducted as perquiste cost but when he got slary slip showing 10% deduction he made issue that he was not given the idea of 10% deduction.
So this way HR are blamed always so it is the prime responisibility towards employee that he should always be clear towards his CTC part and HR should not give him colourfull picture when he is going to join.
Abhijeet Sawant
From India, Ahmadabad
We HR are always blamed that the salary shown to us at the time of salary negotiation is very was high as compare to salary in hand after completion of month.
Every employee who negotiates with the salary that what is CTC , nowadys every organization are impleting same practice. If we show an employee what organization pays to him what's wrong in it. Every employee should get a clear idea from HR what is the salary in hand he will get.
I will give a example how employees behave and the blame come to HR.
We selected a Safety Manager at our plant which is located in remote area and company gave accomodation free of cost and at the time of offer we made him clear in writing that 10% will be deducted as perquiste cost but when he got slary slip showing 10% deduction he made issue that he was not given the idea of 10% deduction.
So this way HR are blamed always so it is the prime responisibility towards employee that he should always be clear towards his CTC part and HR should not give him colourfull picture when he is going to join.
Abhijeet Sawant
From India, Ahmadabad
Dear Saleem,
CTC is inclusive of EPF so it has to be deducted from the salary.
Basically most of the people don't want to understand what is mean by CTC because they are desperate for change from their present employment due to Monotonuous and figigue natire of jobs. Or their desire to elevate from one level to another with respect to next job position.
This cost them 10% to 20% less pay than their exceptations.
Badlu
From Saudi Arabia
CTC is inclusive of EPF so it has to be deducted from the salary.
Basically most of the people don't want to understand what is mean by CTC because they are desperate for change from their present employment due to Monotonuous and figigue natire of jobs. Or their desire to elevate from one level to another with respect to next job position.
This cost them 10% to 20% less pay than their exceptations.
Badlu
From Saudi Arabia
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