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Compensation Salary Structure
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Transcript of Compensation Salary Structure
Designing a Simple
Compensation Structure
Payroll Webinar Series
CompensationCompensation 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.
ObjectivesThe 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
Content
Classification of Salary Components Compensation Structure Governance/Compliance Sample Salary Component Structure
Classification of Salary Components
Fixed Salary
Reimbursement
Non-monetary/
perks
Deferred Systems
Retirement/Social Security
Benefits
Component Structure
Component Details
Fixed
Salary
• Basic, House Rent Allowance• Conveyance/Transport, Child Education
Allowance, Special/Other Allowance, etc.
Reimbursement
Compone
nt
• Medical, Leave Travel Allowance (LTA)• Petrol/Vehicle Maintenance, Driver,
Telephone, etc.
Non-Monetary /
Perks
• Car, Accommodation, Fixed/Moveable Assets
• ESOP, etc.
Component Details
Deferred Payments
• Bonus/Performance Bonus• Incentive, Exgratia, etc.
Retirement Benefits
• Group Medical/Accident Insurance, Life Insurance
• Provident Fund, ESI, Gratuity• Superannuation, Pension Fund, etc.
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 children’s)
Other / Special Allowance As per Section 10(14) of Income Tax act.
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.
Reimbursement Components
Reimbursement Components Details
Medical Rs. 15000 p.a. (for self, spouse and dependants)
Leave Travel Allowance (LTA)One month basic salaryTwo 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)a. Rs. 1800p.m. for small car (with 1.6cc)b. Rs. 2400 p.m. for big car (with above 1.6 cc)
Driver Recommended for senior management staff
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
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
Sample Salary Structure
Sample Salary Structure
Sample Salary Structure
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-compensation-structure.aspx
Next webinar series
ALIGNING PAY STRUCTURES WITH JOB EVALUATION