Can you tell the difference between your cost to company and your take home salary?
The first thing you look forward to when starting a new job is your salary. After deducting all your expenses – rent, food, transport, and plan accordingly – you’re ready to get your take home salary.
The number reflected on your SMS is most likely nowhere near the number you expected. Chances are you confused your cost to company with your net salary. Net salary, also known as take-home salary, "is the amount of your gross income that remains after all payroll taxes and deductions are removed by your employer. It is called take-home pay because it is the actual amount of the paycheck or direct."
Compared to net salary, gross salary is your income which is typically stated on an annual basis, before any deductions or taxes come into effect.
The abbreviation CTC, which is often seen next to the stated salary package for the job offering, refers to the total amount that the employee will cost the company. That is the amount of money the company agrees to spend on you.
What’s on there?
Cost-to-company packages differ from company to company since each one has its own structure and salary components.
They are a way to help employees to understand the full value of their cash and benefits. They are not a way for you to earn tax-free remuneration or to increase or decrease your remuneration. Cost-to-company packages generally include:
What you should do to avoid confusion?
Okay, so now that you get the gist of what you can expect on your payslip, how will you determine whether you’ll be earning more than your current position?
First, make sure that when the opportunity comes, you’re ready to discuss it with HR. When a remuneration package is offered, make an appointment with the company’s HR manager and go through everything in detail. Make sure everything is correct - the hours you’ll work, the package you agreed on, and the likes. It’s also important to understand all your deductions and how often they’ll be deducted. This will ensure that the company is taking out the right amount at the right time.
There will be benefits that you and your employer will be responsible for paying. Check to see which of these benefits will be paid by you and which will be paid by the company. If your company also contributes towards your deductions, add these up to get an idea of how much the company is helping you offset the cost of your benefits.
Finally, if you have asked for any changes, such as restructuring your contributions, ensure that they’ve gone through when you get your payslip.
You work hard for your money, so make sure you take a few minutes to ensure you’re getting your labour’s worth.