5 CTC tricks employers can use in Offer letter to fool you

Job seekers are always expecting to get offers above their expected CTC from employers. To attract talented candidates, many employers try to play with the CTC figures that they offer to new joiner. By which candidates will fill like, they are getting better offer compare to others and join them. If your dig a bit into the CTC offer, you will find difference between per annum CTC and your take home pay.

CTC is cost to the company which your employer incurs by employing you in their organization. Many companies use to add their expenses and other expected benefits that they incur or about to incur for you. Expenses or benefits like gratuity,higher education, training, food at your office place or employer’s contribution to EPF can be part of your CTC.  We have listed 5 CTC tricks in this article to help you understand the tricks that many employers are playing in job market while drafting your offer letter.

Variable Payments

5 CTC tricks employer can use in your Offer letter to fool youVariable Payment in CTC includes your yearly or quarterly bonus that you may get after company’s decision in its board meeting. Most of these employers use to include variable portion to your CTC on the assumption that you will be getting it in future. They may argue by saying, these are the standard payments that we have maintained in past and will be continuing in future. But let me tell you, variable is always variable and you never know whether you will get it or not. This part is calculated based on so many factors and performance which not a single employer will disclose you.

If you are about to accept an offer compare to other offers on the basis of variable portion in your CTC then we suggest you to talk to some of the existing employees who are working in that company and try to understand what they are paying them. Most of these companies do not pay 100% of the variable payments that they include in CTC. While comparing offers, we suggest you to compare offers on the basis of fixed pay not variable pay.

Also Read: Understanding different components of your Salary

Employer’s Contribution to EPF

As per Indian law, employers have to make equal contribution that employees are contributing to their EPF account. This is the extra amount which employers make from its own source and not deducted from employee’s salary. To make the CTC offer little higher than the actual, employers some time use to add their contribution to your CTC. It’s not part of your salary even though you will be getting this amount at the time of retirement or withdrawal. If one employer has included it and others have not then you may find the first employer’s offer little attracting because of this inclusion. To have a comparison either you take it in both cases or do not consider it.

Gratuity

You will be eligible for gratuity only after completion of 5 or more years of service. If your employer has included it to your CTC then do not consider it as a take home salary. However, if you are planning for more than 5 years job with the employer then include gratuity amount to all offer letter that you are carrying at present and then take a call on it.

Medical Insurance Benefits

Employers use to pay group medical premium for their employees and their family members. However some employers are even adding the benefit that employees will be getting because of such premium paid by employer. This is too much. You have to take precaution before fall into this trap.

ESOP and Other facilities

ESOP or employee stock option is another perquisite which is added to your CTC. ESOPs are offered to employees to avail an option of buying employer’s share at fixed price on a future date which is lower than the market price. With this offer you have a right to buy the stock at the fixed price on the offer date. However it’s not a regular payment and to get it you have to pay a price. Having this offer is a good thing but do not consider it while comparing between offer letters. Many companies have their transport facilities for employees to compute between office and city. You have an option of availing these facilities after joining the company. However some employer uses to include it to your salary as a benefit that they offer to you. If you are planning to commute with your own car or own vehicle then this facility may not be interesting to you. Be wise while selecting an offer. In case of any clarification you can write a mail or contact any of the employer’s HR representatives on this. You can also let us know in case of any clarification. Good Luck!

One thought on “5 CTC tricks employers can use in Offer letter to fool you

  1. Jyoti Swarup

    Offer of ESOP as a part of CTC:
    How company can offer ESOP as a part of CTC? As per SEBI Guideines, 2009, para 6.1 No ESOS can be offered to employees of a company unless the shareholders of the company approve ESOS by passing a special resolution in the general meeting.

    A candidate is not an employee and ESOP as a part of CTC is plain and simple cheatting and fraud? How such cases need to be handled?

    Reply

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