There are two issues - Monthly gross and CTC. Employer's contribution to PF is a part of CTC not a part of gross monthly salary and Pay Slip. As new labor Code is knocking at the door, better to start with CTC. If the employee is covered under ESIC, then deduct the ESIC amount and any other insurance contribution if any from CTC. Make it 50% which will be Basic. From rest 50% distribute to annual components and monthly components including employer's portion of PF. Pay slip will include monthly gross amount only. Example:-
CTC - 5,00,000/- per year. Insurance premium - mediclaim ETC. 20,000/- per year. Therefore, CTC excluding insurance premium per year will be 4,80,000/-. 50% of the same is Basic i.e 2,40,000/- per year and per month 20,000/-. Other items are also 20,000/- per month including employer's PF. Now to arrive monthly gross let us consider Statutory Bonus 1000/-per month ( 8.33% of minimum wages 12,000/- per month ), Employers' PF contribution @12% on 15,000/- or 20,000/- will be 1800/- per month or 2400/- per month. Annual leave en-cashment may be 15 days basic i.e 10,000/- per year or 833/- per month.
All above will not appear in monthly gross as those are yearly components or employer's portion of PF. Now, if we deduct the above from other 50% i.e 20,000/- , the left over amount will be 20000 - 1800 - 1000 - 833 = 16367/- per month.
Now, monthly gross and pay slip amount will be 20,000 + 16367 = 36,367 . It may be possible to distribute 16,367/- in to different pockets - HRA, CCA, SPL. ALLW, CEA etc. etc.
Depending on remuneration structure of different organizations , the calculation will also vary.
S K Bandyopadhyay ( WB, Howrah),
CEO- USD HR Solutions