PF and ESIC contribution @ The HR Club Communities

HR Policies >> PF and ESIC contribution

Message From: Deepakhr	Total Posts: 1
Post Date: 01/10/2011 11:01:36

Is it ok if employer PF and ESIC contribution shown in the appointement Letter of empployee???

Message From: Deepak Mohanty	Total Posts: 1
Post Date: 01/10/2011 11:03:43

Legally there is nothing wrong in it, if employer wants to adopt CTC concept.

Message From: Asha Byralingaiah	Total Posts: 1
Post Date: 01/10/2011 11:05:12

Yes, that's true, CTC concept is the best way to project the transparency of compensation, fringe benefits and perks. there will not be any confusion between employee and employer.

Message From: Rakesh Dave	Total Posts: 3
Post Date: 10/10/2011 06:54:34

If your Gross and CTC is more than minimum wage you may showe PF and Esic contrubustion as part of CTC.
Rakesh Dave Sr,GM Hr

Message From: Site Admin	Total Posts: 293
Post Date: 07/04/2012 05:14:37

Ramachandran Iyer

Most of the Companies are now following the CTC concept as a result while negotiating the salaries the employer's leverage on the salary mostly by pep talk and the CTC concept. It is only when the employee lands he realises the net payment due to him and actually the CTC concept is the safest and better way of projecting the salary and the perks due to the employee ensuring transparency in the pay package

Message From: Site Admin	Total Posts: 293
Post Date: 07/04/2012 05:15:45

Asha Byralingaiah

Yes, that's true, CTC concept is the best way to project the transparency of compensation, fringe benefits and perks. there will not be any confusion between employee and employer.

Message From: Site Admin	Total Posts: 293
Post Date: 07/04/2012 05:17:17

Manjit Dey

I would seek a a small query here:Suppose the gratuity is part of this CTC which is being deducted from the employee's monthly salary and an employee is ASKED TO LEAVE by the company (for reasons not arising out of employee's performance but company's financial situation) say after 3 years (below 5 yes as stipulated) , can the employee ask the company to refund the gratuity deducted so far on full & final settlement?Are there any court verdicts on the same?
Would appreciate people responding to this query pls.

Message From: Site Admin	Total Posts: 293
Post Date: 07/04/2012 05:18:29

Sharat Kumar

Organisation these days look at employee compensation from CTC perspective. PF & ESI contribution by the employer is also cost to the Company. It fully justified on the part of the employer to show these components also in the appointment letter.

Message From: Site Admin	Total Posts: 293
Post Date: 07/04/2012 05:19:00

Kirit Bhatt

So far gratuity comes under CTC & as part of salary employee have right to ask company to refund the gratuity at the time of F & F settlement irrestpctive of no of years of service render by an employee.

Message From: Site Admin	Total Posts: 293
Post Date: 07/04/2012 05:19:34

Deepak Mohanty

Well ! Legally or in terms of HR/Statutory/Laws speaking...... I am not sure how employers can deduct the portion of gratuity from the monthly salary. Such thing is illegal, hence if deducted on record will have to be paid back during the separation, regardless of the period of service.
On the other hand, I seriously question the legality and authenticity of reflecting the gratuity component in the ctc of newly joined employee. Though everyone of us does that as an Indutry practice in IT/ITES/BPO sectors, we cannot say this is a transparent method. For example; actual gratuity start from the completion five continuous years of service and as far as calculation goes it is linked to BASIC/DA component of salary, then how does one predicts the increased component of BASIC/DA salary at that point of time ?? These are the questions I would like raise here for my colleagues in HR & HR fraternity...........

Message From: Site Admin	Total Posts: 293
Post Date: 07/04/2012 05:20:15

Deepak Pawar

"Thank you all for sharing your views. I would like to add my views about the query raised by Mr. Manjit. Since the employer is accepting the CTC concept, the gratuity is mentioned as part of CTC. Here, I would like to point out that, when an employer appoints any employee, it is appointed with the view that the employee will stay in the organization till his retirement and hence the employer is making provision of his gratuity expenses every year. So, that at the time of retirement when gratuity is payable the burden of expense on employer will be less.

As per the gratuity act 1972, the gratuity is payable only when the employee complets 5 years of continuos service. If employee leaves the organization before 5 years, it is totaly depend upon the policy of the organization whether to pay the grauity or not as it is not mandatory by the act even though it has been mentioned as part of CTC.

I think from employer's point of view, it is not wrong to mention the gratuity in CTC as now or later employer has to incurr that cost on employee if it becomes payable. Also it helps employer to retain employee in the organization atleast for 5 years which ultimately result in stability for employee.

Also I request to all the HR Fraternity on linked in, to confirm, that is it illegal or mentioned in the gratuity act that if the employer is showing gratuity as part of CTC in the appointment/incrment letter, then employer has to pay the gratuity to employee on his seperation from organization irrespective of completion of 5 years of service.

Message From: Site Admin	Total Posts: 293
Post Date: 07/04/2012 05:21:53

Cyrus Solania

Yes it can be shown as part of ctc.

Message From: Site Admin	Total Posts: 293
Post Date: 07/04/2012 05:22:43

Deepak Mohanty

This is absolutely perfect to mention/reflect the ESIC and PF contributions of employer in CTC. That is the very purpose of the concept of CTC. At the same time, I suggest all hiring professionals not to miss explaing the prospective employees about the statutory contributions/deductions ( as per the law) and the net take home before I.Tax, to avoid future confusion............

Message From: Site Admin	Total Posts: 293
Post Date: 07/04/2012 05:24:04

Sanjeev Kumar Sharma

Generally law abiding companies or doing good business are mentioning PF, ESI, Gratuity in appointment letters and in one of the companies I was part of this exercise. Rather I confirm here that I used to issue break up of total CTC covering everything, including PF / gratuity / ESIC / Bonus / Medical / Leaves (every type) / probation period and automatic confirmation of prob period etc etc. It is good habit. Trust me some companies are still following, if they are guided by honest, well practiced and matured Administrator or HR.

I would like to quote one interesting factor about the foreign mission, where I also worked. They are issuing yearly Service Contract Letter for everyone mentioning everything, whether applicable or not applicable and renewing the contact before hand with increased pay say by 10% to 15% to 25%, depending upon the CR of the individual. And they have the legal sanctity in court of law or before the concerned Ministries i.e. MOAF

Dear Ld. Colleagues, I full agree and endorse the comments of Mr. Ramachandran, Ms Asha, Mr. Kirti who have supported that Appointment Letter should reflect all in CTC.

When I was serving in GST Corporation at Okhla handling 350+ workforce, including managerial cadre also, started a practice to indicate break ups / components of total CTC, including Loyalty Bonus, separately, duly singed by the CMD / employee and countersigned by the competent authority i.e. me and it reflected each and every entry right from the name of the newly appointed candidate his address, date of appointment, and the break up of the total CTC togetherwith the future CTC, if possible (in the shape of royalty bonus). And on the basis of that I used to issue the Service Letter & the Experience Certificate at the time of leaving the organisation, but before that I used to clear his accounts by filing and signing all the requisite forms & register meant PF / ESI / Bonus register / Salary register / Gratuity register before clearing F&F. Moreover, we used to grant the minimum wages to our workforce from time to time and used to clear on receipt of the Orders from the respective departments, on regular intervals. That was the funda applied to keep the workforce healthy wealthy.
In my pers opinion, GST was the best place where all the Status, labour, guidelines use to follow in toto with the active coordination and assistance of the management.

If somebody need copies of such appointment letter and Service Certificates, I will put on the link, but with a specific request from my Ld. colleagues.

Message From: Site Admin	Total Posts: 293
Post Date: 07/04/2012 05:31:05

Akhil Vaishnav

Absolutely true,its rather mandatory to reflect such statutory deductions on document like Appointment letter and records too....

Message From: Site Admin	Total Posts: 293
Post Date: 07/04/2012 05:31:30

Sanjeev Kumar Sharma

Yes, it is absolutely ok. As per management understanding there should not be any problem in including PF & ESI deductions in Letter of Appointment. In fact, the people those who do not have the facility of PF & ESI, they generally writes in appointment letters that no PF & ESI will be given, as per company policy, to avoid any misinterpretation later on.

Message From: Site Admin	Total Posts: 293
Post Date: 07/04/2012 05:31:59

Ramachandran Iyer

Thanks for endorsing the views of the team members, its good motivation
to be involved in an active discussion and share experiences

Message From: Site Admin	Total Posts: 293
Post Date: 07/04/2012 05:32:31

Mahesh Gunjal

HI, you can show company contribution of ESIC & PF in your CTC salary structure , it should be separately attached in the appointment letter.only it cannot be shown in salary slip, hope you are satisfied with the answer.

Message From: Site Admin	Total Posts: 293
Post Date: 07/04/2012 05:32:55

Sanjeev Kumar Sharma

Yes, please. Actually some company are giving stress to add the statutory facilities being provided by them, as they are related with CSR activities. I was also doing when I was in one of the Medical Device Company (GST Corporation - A Pan India presence company). In my opinion it is always good to show these facilities in Offer Letter.