Salary Components

Salary / Earning Component

What is salary or earning components?

Employees are getting paid salaries for the time and effort they have rendered to the employer in exchange for their services. Salary payment is usually paid in a structure with multiple earning components included in it such as basic, different allowances, perquisites, etc. The total cost to the company (CTC) of an employee’s salary is divided into multiple salary/ earning components is called the employee salary CTC structure.

What is the difference between fixed and variable pay?

The salary of an employee will have both fixed and variable pay. The fixed components won’t change, they will remain fixed irrespective of the employee’s performance, whereas the variable pay such as incentives, commissions, and performance bonuses, etc., So it would be difficult to say how much the cost to the company of an employee salary if the employee has many variable components.

What are the salary / Earning components?

There are many salary components both fixed and variable and we have listed the most common salary components below.

← PreviousLoans Next →What is the Basic Salary

Back to Payroll