Contents of a Pay Slip - Defining Salary Structure

Contents of a Pay Slip - Defining Salary Structure:

The Code on Wages Bill, 2019 which is recently passed by both houses of parliament defines the term wages as follows:-

“All remuneration, whether by way of salary, allowances or otherwise, expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment, and includes,—

(i) Any remuneration payable under any award or settlement between the parties or order of a court;

(ii) Any remuneration to which the person employed is entitled in respect of overtime work or holidays or any period of leave;

(iii) Any additional remuneration payable under the terms of employment, whether called a bonus or by any other name;

(iv) Any sum which by reason of the termination of employment of the person employed is payable under any law, contract or instrument which provides for the payment of such sum, whether with or without deductions, but does not provide for the time within which the payment is to be made;

(v) Any sum to which the person employed is entitled under any scheme framed under any law for the time being in force;

(vi) Any house rent allowance,

But does not include––

(A) any bonus payable under this Code, which does not form part of the remuneration payable under the terms of employment or which is not payable under any award or settlement between the parties or order of a court or Tribunal;

(B) the value of any house-accommodation, or of the supply of light, water, medical attendance or other amenity or of any service excluded from the computation of wages by a general or special order of the appropriate Government;

(C) any contribution paid by the employer to any pension or provident fund, and the interest which may have accrued thereon;

(D) any travelling allowance or the value of any travelling concession;

(E) any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment; or

(F) any gratuity payable on the termination of employment in cases other than those specified in sub-clause (iv):

ELEMENTS OF SALARY:

Normally a salary structure consists of the following elements:

1.                   Basic Wages

2.                   Dearness Allowance

3.                   Overtime wages

4.                   House Rent Allowance

5.                   Leave Travel Allowance

6.                   Conveyance Allowance

7.                   Medical Allowance

8.                   Incentives

9.                   Perquisites

10.                Reimbursement

11.                Contribution to Employee’s Provident Fund

12.                Contribution to Employee’s State Insurance

13.                Other Deductions

14.                Professional Tax

15.                Attendance

16.                Income Tax (Tax Deducted at Source)

17.                Gross Salary

18.                Net Salary

19.                Take Home Salary

20.                Cost To Company

Benefits of a Salary Slip:

1.                     It is an Evidence of Employment.

2.                     It is an Evidence of Earning for the purpose of borrowing

3.                     It is an Evidence of Past Work Experience.

4.                     It is an Evidence of Last Drawn Wages.

5.                     It is an Evidence of Contribution to Employee Welfare Funds such as ESIC or EPF.

6.                     It is an Evidence of Pending Wages.

7.                     It is Evidence of Tax Deducted.