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5 Hidden Facts about CTC Your Employer Won Tell

The term CTC refers to Cost to Company which is believed to be a short sighted exercise performed by the employer. There are various hidden costs supplemented with the initial salary package when it later crashes the dream palace of the employees when they receive their first salary slips.

There are several buried facts about CTC which add extra costs to the company. Hence it is highly essential to be known to all the employees. They are:

Fact NO.1: Adding employers contribution in employees provident fund

While deducting the provident fund (PF) from employee’s salary every month, employers should also contribute the same amount. This amount of the employers is included to the CTC which will be no longer available to the employee.

Fact No.2: Addition of one-time joining bonus to CTC

Employers offer single time joining bonus along with the rider to cheat the highly qualified and experienced employers. If any employee happened to leave their job before the end of their tenure, he or she will have to refund the entire amount of their one-time joining bonus. Addition of this amount pumps up the CTC.

Fact No.3: Addition of Insurance premium, Gratuity, food coupons and transport facilities to CTC

Almost all the small, medium and high end companies offer food coupons, gratuity, and insurance premium and transport facilities as a part of their job. Indirectly they include the cost of all these amenities as a part of CTC and thereby inflate the salary package to make it more attractive in the job market. By any chance, these amenities will never get transferred into cash inflow but they go on reducing in their monthly salary.

Fact No.4: including a notional variable component in Cost To Company

There is a common practice of dividing the salary package into variable and fixed component. The idea is to cheat the employee by making the variable component larger which is totally dependent on the performance rating of the employee.  Only small fraction of employees will be lucky enough to obtain this full variable component. Remaining large population of employees should satisfy themselves with the less variable component by receiving less than the original promised annual CTC.

Fact No.5: Including Stock Options in CTC

Providing stock options is another tactic to attract well experienced and qualified employees. These stock options are delivered with preconditions that they cannot be sold before a prefixed tenure. The employee will get totally fixed with those options resulting in absence of cash inflow at the end of the month.

Thus, it is highly essential to understand the CTC carefully before joining any new venture.

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