The amount mentioned on the letter does have the adequate number of zeroes following the threes and fours, but that is your CTC or cost to the company. You must make sure you are completely aware how that translates into what is called a “take home” amount.
Your CTC is a gross amount that takes into account many variables that while fattening your pay package make little difference to your actual salary.
Here are some of them
While it is not a variable, it is important an individual is clearly aware what their basic salary is. This is the baseline against which all other aspects of the salary are calculated. Usually the largest portion of a salary, the basic is the absolute minimum that a company owes an individual at the end of a salary cycle.
- Performance linked pay
With almost every employer making a substantial part of an individual’s salary performance based, it becomes difficult to maintain 100% productivity every month and thus that portion of the salary is forfeit.
Most companies make claims on medical bills, mobile bills and other expenses a part of your salary structure. They decide how much it will be each month. They also refuse to pay it, if the bills are not submitted in time. Thus, despite looking great on the offer letter, the reality is quite different.
Here is where the company will give you a portion of your salary, while simultaneously taking it away from you! Provident funds, pension plans and medical insurance lay claim on a substantial chunk of your salary. You see it on your pay slip but that’s the last you see of it, for the time being at least. They will reward you with your hard earned money only when you retire or choose to leave after serving a stipulated period with them.
There are many more creative ways for an offer letter and your salary to be totally incongruous. You just need to clarify all these issues before signing on the dotted line.