Can Basic pay be reduced for increasing take home salary

iF BASIC PAY  IS REDUCED  YOUR NET PAY WOULD INCREASE BUT IN THE LONG TERM IT'D AFFECT YOUR RETIREMENT  BENEFITS.hOW TO INCREASE YOUR NET PAY  TIPS READ BELOW:

    between gross salary and net salary for instance but nevertheless, the two terms are different.

Outline for this Article:

• Basic Salary
• Gross Salary
• Net Salary
• Salary
• CTCBasic Salary or Gross Salary?

Basic Salary Scenario:

When you hire a new employee (you can use this jobs website in Ghana to that), you or your human resources professional will quote and agree to a basic pay amount for the new employee. The basic or base rate is the minimum amount of earnings that the employee is to receive. The employee may earn additional money by working overtime or by earning incentive bonuses. The amount of money that the employee earns when he/she works overtime does not increase her basic pay amount. If he/she receives incentive bonuses throughout the year, they will not change his/her basic pay amount. So the basic salary DOES NOT CHANGE unless there is negotiation to change it.

Gross Salary Scenario:

Gross pay represents wages received. It includes the employee’s base or basic salary and additional earnings and income. If the employee has worked overtime or been the recipient of an incentive bonus, the amounts will appear in his gross salary. Gross salary includes both taxable and nontaxable income. One source throws more light on the Gross pay as follows:

“Your gross salary is the TOTAL amount of compensation that you receive from your employer. Depending on the type of job that you have, this can include any bonuses, commissions, profit sharing plans, retirement plans and overtime pay. It is not uncommon for employees to make the majority of their compensation from non-base pay” (https://www.ehow.com/info_8165672_base-gross-salary-same.html).

Difference between Basic and Gross Salary

Basic salary is the agreed upon rate of pay discussed between employer and employee which does not include overtime or any other forms of extra compensation. Gross salary on the other hand is the salary paid before taxes or other deductions but include overtime pay, holiday pay, bonuses and shift differentials if applicable.

Is Basic Salary the same as Base Pay or Base Salary? The answer is YES!

Salary – What is it?

Businessdictionary.com defines salary as “agreed-upon and regular compensation for employment that may be paid in any frequency but, in common practice, is paid on monthly and not on hourly, daily, weekly, or piece-work basis”.

What this means is that, salary is for people in “employment” not for people on contract. It also means that salary is determined before an offer is accepted.

Those who work as consultants or on contract basis earn INCOME, not salary. We can also say that their Gross Salary could be the same as Net Salary (where no deductions are made). Such people are often allowed to make their own deductions.
Net Salary or Salary?

When statutory deductions such as taxes, social security contributions or loans are made from the Gross Salary, the remainder is known as Net Salary. It is the take home salary of the employee

For the mathematically savvy guys, Net Salary = Basic + Additions (bonuses, overtime etc) – Deductions (taxes, social security etc).

From the explanation given above, it’s becoming clearer what people mean when they ask “what’s the salary”? What the actually mean to ask is that “what is the NET SALARY”? “What is the take home pay”?

The take home pay is what really matters to so many employees. After all, it is what is going to put food on the table.

So is Net Salary the same as Salary? Well, yes and no. Yes because the two can be used interchangeably. No because technically, salary is a broader term which can mean a number of things. However, when people say “salary” they mean, their take home pay.

CTC or Cost to Company

The phrase "Cost to Company" or CTC, as it is commonly known, means different figures to different people.

For the Company, CTC is a term which essentially implies the amount of expenses the company will spend on an employee in a particular year. Bear in mind however that what may be an expense for the company need not necessarily be salary for the employee?
For employees, Cost to company is an amount projected by the company as salary but is never what is actually received by the employee in cash.
For the Finance Manager it is the total cost incurred to hire, maintain, retain the employees and may also include a part of overhead cost allocation.

• Recruitment Cost
• Base salary
• Bonuses
• Administrative
• Office Space
• Benefits

Components of CTC

• Salary like Basic, DA, HRA, Allowances
• Perquisites and Reimbursements given to employees (i.e.) - bonus, incentives, reimbursement of conveyance/medical/telephone/, benefits extended through various schemes like housing/vehicle/furniture/ Air-conditioners etc.
• Contributions that the company makes for the employees like Gratuity, Medical Insurance, etc.
• Reasonable estimates of Leave Encashment, Stock Option Plans and Non cash concessions

Difference Between CTC & Net Salary (Take Home Salary)

And for most people it is plain confusion! Most of us do not understand that there is a big difference between the following.

• CTC
• Net salary (Take Home Salary)

Cost to company (CTC) is the total cost that an employee is incurring in a company. Net Salary is what an employee get to his/her hand after deductions. (This is the take home salary)
The relation between the two:

• CTC = Gross Salary + Other benefits (from the company’s perspective).
• Net Salary = Gross – Deductions (from the employee’s perspective).

Conclusion:

Salary is often loosely used to mean Net Salary. Net Salary is your take home pay and it is what you get after all statutory deductions have been made. Gross Salary is your basic salary + Additions. Basic Salary is fixed; it is an agreed amount paid regularly at a fixed date usually monthly

Has the reduction in Basic Pay effected with your informed consent?

Pls respond to the point raised by Mr. P. Venu.

EPFO otherwise may not agree to such reduction.

You have confirmed that the relationship if of employer-employee.

The employer and its attorney’s may claim that supply of annexure in advance and later acceptance of salary by you, amounts to acceptance of change by you.

Did you resent in writing or on record or can you establish it?

The change with prior notice and acceptance might be possible.

Note down carefully on which date you represented to whom and how and narration may be required.

However  employer and/or its attorney's may react.

In future prefer to transact in writing.