Employees in both the government and private sectors have many benefits along with their salary. In fact, there are many people who do their jobs without knowing much about their pay scale. Similarly, only a few employees may have a real understanding of their salary and different kinds of allowances available to them. In this article, we seek to give you complete information on the salary and allowances.
Basic salary is nothing but fixed salary. It must be paid to an employee compulsorily. It is decided when an employee joins the job. As per the act, basic salary will be about 30 to 60 percent of the total salary.
All government employees have different pay scales depending on their level of job and rank. For example, 10000-470/6-12820-500/3-14320-560/7-18240 is a pay scale. Let's have a close look at the pay scale. Here, Rs.10,000 is the basic pay. This is the money an employee gets when he first joins the job. This excludes all allowances. The figure 470 indicates an increment given after one year. 470/6 indicates the annual increment of Rs 470 is given for six years. With this, the employee's salary after six years will be Rs.12820. 500/3 indicates an annual increment of Rs.500 which is given for the next three years (from 7th year). At this stage, the salary reaches Rs.14320. After that, an annual increment of Rs.560 is given for the next 7 years. With this, the salary reaches Rs.18240 after 16 years of joining a job. In fact, this is a final basic pay for the employee. In case of higher officials, the amount of increment will be high. As per the recommendations of the Seventh Pay Commission, the minimum salary of a Central government employee is Rs.18,000 and the maximum salary is Rs.2.5 lakhs.
When anyone applies for any job, one question is generally asked. It is about the present CTC (Cost To Company). It is the amount a company spends on a particular employee in a year. Without knowing this, several persons tell the monthly salary when asked about the CTC. It is wrong. The CTC is nothing but the salary consisting of all kinds of allowances like gross salary, EPF, bonus and subsidy.
The salary is nothing but the money given to an employee in the relation between an employee and company or organisation. The amount got by freelancers or those who work on contract basis is not considered as a salary. The income of these persons is considered as business income or professional income.
Basic salary is fixed. Gross salary is the combined figure of all the allowances without any deductions. An employee generally gets different kinds of allowances. Basic pay, grade pay, dearness allowance, transport allowance or pick up facility in a vehicle and other allowances (phone and travel allowance). Employees get HRA or free accommodation too. Further, the employees also get children education allowance, leave travel concession and other allowances. The grade pay depends on category of the employee.
Dearness Allowance: This is added to the basic pay to adjust for the increased cost of living effected by inflation. This is some percentage of the basic salary.
House Rent Allowance (HRA): This allowance depends on whether an employee is living in a city or a town. It is generally some percentage of the basic pay.
LTC/LTA : This is given to the employees of Central or state governments for every two years to go to their native places or any place in their States. The Central government employees can go to any place in the country at the expense of the government. Some corporate organisations are also offering the facility to their employees.
EPF : Twelve percent of the combined amount of basic salary and DA is diverted to the EPF. Some percentage of this amount is deposited in pension fund.
Conveyance Allowance (CA) : This is also called transport allowance. This is given for an employee to bear the expenses of reaching his office from his home. The amount of CA is decided after taking into consideration the facts like distance between office and home, kind of transport using and other related issues. However, this allowance is also decided based on the salary level. As per the Income-tax Act, there is a tax exemption for this allowance till Rs.800.
City Compensatory Allowance : This is given for the employees to bear the high cost of living in metro cities. However, this allowance comes under Income-tax.
Foreign Allowance : This allowance is given for the Central government employees who are working abroad.
Children Education Allowance : This allowance is given for the employees to bear the education expenditure of their children.
Overtime Allowance : This allowance is given for the employees who work overtime more than the normal working hours.
Retaining Allowance : This is given for the employees to retain them in the company itself when the company is not working.
Medical Allowance : This is given for the employees to bear all kinds of medical expenses as per the company policy.
Uniform Allowance : This is given for the employees in the uniform services like the police, fire brigade and others. The amount of the allowance is decided based on the rank.
Interim Allowance : This allowance may be given by some companies pending an agreement, against which it would eventually be adjusted.
Cash Allowance / Marriage Gift : When the employee of a company is married, some amount of money is given to them in the form of cash allowance. This may be given in the form of gifts too.
Fixed Medical Allowance : When the family members of an employee fall ill, this allowance is given to bear the medical expenditure.
Both Central and state governments offer something to their employees for free or with some form of concession. For example, some companies offer the facilities of residence and motor vehicle, paying back gas, electricity, telephone, paper and water bills, partial or total bearing of medical expenses and others. Some companies also offer the transport allowance that is needed for an employee in case of transfer from one place to another. Further, special allowance is given to employees keeping in mind the special needs of an employee as per Section 14(I). Several other companies are offering their respective employees several kinds of sops to get better performance from them.
As per the Payment of Bonus Act, 1965, every company has to give their employees some percentage of the profits earned. Recently, the Central government made some amendments to the Act. As per the Act, all those persons, who are getting the salary between Rs.10,000 and Rs.21,000, are eligible for bonus.
This is one benefit which must be given to the employees at the time of their retirement. The amount of gratuity is decided based on the number of years a person had worked in the organisation. As per the Gratuity Act, 15 days salary of a person per year is given for the number of years an employee worked in the organisation. Those companies, who have more than 10 employees, come under the act.
ESI / Group Health Insurance Policy
Companies have to provide ESI facility to their employees who are getting salary less than Rs.15,000 per month. Both employee and organisation have to pay some percentage of the salary every month for getting the ESI facility. The ESI facility provides all forms of medical treatment to the employees even if a particular treatment costs much.The companies are offering Group Health Insurance Policy to those employees who are getting a monthly salary of above Rs.15,000. Entire cost of medical expenditure is cut from the salary of the employee or the companies bear the expenditure partially or fully. Similarly, some companies are offering Personal Accident Policy too.
Generally, the Employees Provident Fund Organisation gives pension to those employees who have completed 10 years of service. Separate pension policy has to be taken by those who have no EPF facility or those who are expecting more pension.
Types of leave
Both job and personal life are important for anyone. One has to spend some time with his family members too while doing the job. For that purpose only, the facility of leave is arranged for all kinds of employees.
There are national holidays like January 26, August 15 and October 2.
Weekend Holidays : One or two holidays are given for some persons at the weekend based on the company policy. However, most companies give only one day as holiday.
Festivals : Holidays are given for the festivals belonging to different religions.
Earned Leave or Privilege leave (EL) : Every employee has some earned leaves in a year. Number of leaves are decided based on the number of days a particular employee worked in the previous year. If anyone does not use the earned leave, that person can get additional payment. However, the companies decide whether an employee has to opt for earned leave or payment.
Casual Leave : All organisations offer their employees casual leave. Number of the CLs are three days in most of the organisations. In some organisations, there is only one casual leave. As per Andhra Pradesh Shops and Establishments Act, 1988, all organisations have to give their employees 12 casual leaves in a year.
Sick leave or medical leave : If anyone falls ill and is unable to go to office, they can apply for this kind of leave. All organisations give their employees at least one day as casual leave in a month. If any employee does not use this leave in a month, they can use it later in another month.
The acts of various state governments provide the guidelines to the companies on the number of leaves of various types. The Andhra Pradesh Shops and Establishment Act, 1988, asks all companies to give 12 sick leaves for their employees in a year. Various related acts specify to all companies to give at least seven holidays in a year in the form of national holidays and festivals. Of these holidays, compulsory holidays have to be given on Republic Day, Independence Day and Gandhi Jayanti.
Compensatory Off (COff) : If anyone worked on holidays too, they will be paid salary or given holiday on some other day.
Maternity Leave : Women employees are given maternity leave during pregnancy. Number of days of leave is different for different companies. Some private companies offer this leave without salary. This leave is given for those women who have undergone abortion. It is given only for a short duration. The State Government Act specifies giving women six weeks leave before delivery and another six weeks after delivery.
Paternity Leave : Paternity leave is given for a person at the time of delivery of his wife
Quarantine Leave : If any employee is suffering from an infectious disease, then the employee will be given leave so that other employees won't get the disease.
Half-Pay Leave : At present, this leave is available for government employees only. However, such employees have to complete one year service to get the leave. Half salary is given to the employees who are on leave.
Study Leave : This leave is given to those employees who want to go for higher studies or for increasing professional skills. Salary is not given to the employees while they are on this leave. One can study after taking leave for some time.
Not only these leaves, there are several kinds of other leaves like child care leave, hospital leave, special disability leave, child adoption leave, commuted leave, leave without pay/loss of pay and other benefits like employees stock option etc.