Salary Structure

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Designing a Simple Compensation Structure

• Payroll Webinar Series

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Compensation

• Compensation is the total amount of the monetary
  and non-monetary pay provided to an employee by
  an employer in return for work performed as
  required.
• Compensation also includes payments such
  as bonuses, profit sharing, overtime pay,
  recognition rewards and checks, and sales
  commission.

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Objectives

• The ultimate goal of compensation planning is to
  reward and encourage employees to do well in
  their jobs. Some of the objectives are sought to
  be achieved through effective compensation
  planning like
• Entice the employees
• Retain the best talent
• Ensure equity
• Reward new ideas and
• behaviors
• Cost control
• Compliance

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Content

• Classification of Salary Components
• Compensation Structure
• Governance/Compliance
• Sample Salary Component Structure

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Classification of Salary Components
Component Structure
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Component Details
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Component Details
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Fixed Salary
Fixed Salary Details
Basic Salary 40 to 50 of CTC
House Rent Allowance 50 of Basic Salary for Metro Cities (Chennai, Mumbai, Delhi and Kolkata) 40 of Basic Salary for Other Cities
Conveyance / Transport Allowance Rs. 800 per month (for handicapped Rs. 1600 per month)
Child Education Allowance Rs. 100 per child/per month (maximum of two childrens)
Other / Special Allowance As per Section 10(14) of Income Tax act.
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Non Monetary Benefits
Non-Monetary Benefits / Perks Details
Company Car As per company car policy to senior management staff
Accommodations Company provided accommodations
Fixed Assets Fixed Assets / Furniture Fixtures
Employee Stock Option Plan (ESOP) As per company ESOP plan
Others Food Coupons (Rs. 1100pm), Gas, Electricity Water Helper , House Maid, Gardener, etc.
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Reimbursement Components
Reimbursement Components Details
Medical Rs. 15000 p.a. (for self, spouse and dependants)
Leave Travel Allowance (LTA) One month basic salary Two claims in a block of 4 years (current block 2014 - 2017)
Telephone As per company compensation policy Rs. 2000 4000 p.m.
Vehicle Maintenance/Petrol Employer car (fuel maintenance expenses met by employer) No limit Up to Rs.10000 p.m. Employee car (fuel maintenance expenses met by employer) Rs. 1800p.m. for small car (with 1.6cc) Rs. 2400 p.m. for big car (with above 1.6 cc)
Driver Recommended for senior management staff
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Retirement Benefits
Retirement Benefits Details
Company Contribution to Provident Fund 12 of PF wage
Gratuity 4.81 of basic p.m.
Superannuation As per company policy / trust by-laws
Pension Fund As per company policy or New Pension Scheme (NPS)
Insurance Group Mediclaim Insurance Group Life Insurance, etc.
Employer Contribution to Employees State Insurance (ESI) 4.75 of ESI wage
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Governance Compliance

• Ensure that the salary components are in
  compliance with income tax rules and labour laws
• Refer to minimum wages act-state rules for any
  specific segment of workers
• Union employees salary structures are governed by
  Union agreement/settlement
• Ensure that the special/other/personal allowance
  is lesser than the other components in salary
  structure

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Sample Salary Structure
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Sample Salary Structure
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Sample Salary Structure
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Webinar link

• To get detailed information about Designing a
  Simple Compensation Structure in video form
  please click the link below

• http//www.adp.in/webinars/designing-a-simple-comp
  ensation-structure.aspx

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Next webinar series

• Aligning Pay Structures with Job Evaluation

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