Topic: “Session on creating salary structure”

Speaker: Mr. Govind Singh Negi, Founder HR SUCCESS TALK, Senior Director - Talent Management & Delivery Center Lead, 3Pillar Global

Hi Everyone,

Compensation is what employees receive in exchange for their contribution to the organization. Pay refers to the base wages and salaries employees normally receives.

Compensation forms such as bonuses, commissions and profit-sharing plans are incentives designed to produce results beyond normal expectation. Benefits such as insurance, medical, recreational, retirement, etc., represent a more indirect type of compensation.

Managers have to observe legal formalities that offer physical as well as financial security to employees. All these issues play an important role in any HR department’s efforts to obtain, maintain and retain an effective workforce.

Takeaways from Above Video:

Salary Component and their meaning
- Basic: Should be 40 To 50 percent of Gross Salary, Basic Should not be less then minimum wages of state
- HRA (House Rent Allowance): 50% of Basic Salary, It can be tax exempted
A) What is actual HRA paid?
B) 50% of Basic(Metro)/ 40% of Basic(Non Metro)
C) Rent paid – 10% of Basic salary
Whichever is minimum will be considered
- Transport Allowance: Tax exempted upto 1600/-
- City Compensatory Allowance: Taxable
- Special Allowance: Whatever remains is put here

Employer Contribution
- Provident Fund: 12% of (Basic + D.A.) ((Basic + D.A.) <= 1500/-)), Capping at 15000/-
- ESIC: Gross should be less then 21000/-(3.75% of Gross)
- Gratuity: 4.81% of Basic Salary Per Month
- LWF (Labour Welfare Fund): Depends upon the state
- Provident Fund Admin Charges: 1.15% of (Basic + D.A.)
- Statutory Bonus: Basic Should be <=21000/-, 8.33 to 20% of it.

Benefits
Objective: 1) To make it tax free income and 2) To retain person for longer time
- Medical Reimbursement <=15000/- Per year
- LTA (Leave Travelling Allowance): No limit yet but one basic salary per year.
- Annual Bonus: 10% of Gross Salary(Based on profit)
- Insurance:2000/-
- Food/ Sodaxo Coupon: upto 6000 Per month(100/- Rs per day)

Thought of the day:  The thing always happens that you really believe in; and the belief in a thing makes it happen. ~Frank Loyd Wright

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Happy Learning!
Regards
Vijay Tiwari
Team - HR SUCCESS TALK