The least glamorous part of a job-seeking journey is perhaps for most candidates, the number crunching of their current earnings. If the variations found in salary structures and employment contract components offered by companies are not adding “spice” to your job hunting life, then this write-up may provide a foundation to navigate your numbers from and manage your expectations realistically.
Level 1 – READ your Payslip and Employment Contract
Grasping the main elements of a Payslip or Salary Advice is the first step towards calculating your total earnings figure. (If you are one of the lucky few where 1 + 1 = 2 and actually reflects as such on your salary advice, do not scroll past, because your potential new remuneration structure from your next offer of employment may not be as elementary.)
TCTC – Total Cost to Company
This number reflects the total company offering inclusive of all quantifiable benefits listed in the Employment Contract as well as the Payslip. Please note that both documents should be under review when calculating the TCTC as often company perks like Free Housing, Staff Rates, Petrol Cards or Subsidised Meals do not reflect on the Payslip itself, but may appear only in the Contract of Employment.
CTC – Cost to Company
The figure listed on your payslip which reflects the sum of all the remuneration amounts that form part of your total salary package for payroll purposes. Total Earnings or Total Remuneration are alternative descriptions for this number and could be named as such listed at the top or bottom of your salary advice document.
CC – Company Contributions
Also referred to as Employer Contributions (EC) or Employer contribution to Remuneration, (ER) on the Payslip, the company contributions may include benefits like Medical Aid, Pension Fund, Provident Fund, Group Life Insurance, Risk Benefits and Death Benefits. These offerings are often split into contributions made by the employer and contributions made by the employee, although in some companies the full contribution to benefits is provided for by the organisation with no contribution amounts from the employee.
Gross Package
A gross salary refers to the number, usually on the left-hand side of the payslip, calculated, after all Company Contributions are deducted, but before tax and employee contributions are subtracted. An alternative term for a gross package is Pensionable Earnings, and the percentage of Pension and Provident Fund contributions are calculated using this figure.
Allowances
Allocation of funds towards housing, cell phone expenses, internet costs or subsidies provided for electricity and fuel, are reflected as allowances on the left-hand side of the salary advice in the same column as the Basic Salary.
Basic Salary
Cash Earnings or Cash Salary are alternative terms to Basic Salary which is the figure in the salary structure, before any employee deductions have been taken off.
Deductions
This term refers to the sum of all subtractions from the Basic Salary for instance Employee Contributions, Tax, Garnishee Orders and Company Loans.
EC – Employee Contributions
Candidate payments towards benefits like Medical Aid, Pension Fund, Provident Fund, Life Insurance or Death Benefits form part of this contribution amount. As per Company Contributions explained earlier, Employee Contributions towards benefits may be shared by Company and Candidate or be fully paid by the Employee or entirely contributed to by the organisation.
PAYE – Tax
I guess you can figure out what this means: A compulsory payment to the Tax Man! The value thereof is determined by specific tax brackets related to your level of earnings.
Nett Salary
Finally, the amount landing up in your bank account at the end of the day, for you to spend (hopefully wisely) to your heart’s content.
Although not all of the categories listed above may be evident on your payslip now, or the dummy payslip included in your new offer letter, the aim is to provide you with a comprehensive view rather than a limited salary framework as to compare “apples with apples” and make the best possible decision for your immediate career future.
Level 2 – Hidden Quantifiable Earnings
Now in this section, things get interesting. It is essential to determine whether you are receiving benefits from your organisation, not reflecting on your monthly payslip. The following items serve as examples of hidden earnings, not presented on your monthly payslip:
Staff Rates
These rates are most common in the banking industry where employees receive interest rate savings on loans held at the bank. These could be Personal Loans, Vehicle Finance or Home Loans. To provide more perspective: For a home loan of R 1 500 000 million and Vehicle Finance of R 200 000, the interest rate saving could be as much as R 5000 per month, which constitutes a significant saving towards an employee’s Nett Gain figures.
Employee Discounts
Discounts for permanent staff members may include reduced payments towards short-term or car insurance if employed by an insurance company, groceries at cost price if they work at a major retailer or even fuel benefits if employed at a petroleum company.
Company Housing
In the mining and manufacturing industries employees often receive a company house at no cost to them as part of their remuneration package. Rent is one of the biggest expenses for most salaried employees and not having to contribute towards lease expenditures accounts for significant monthly savings, which gets added to an individual’s monthly spent figure should they move to an organisation not offering free housing.
Digital Equipment
These may range from laptops to tablets and mobile devices, which must be returned to the organisation at the end of the employment period. Free wireless connection devices and perks like uncapped internet, are some of the extras given by organisations adding to an employee’s total Nett Gain figure.
In-House Perks
Free meals, gym memberships, creche facilities and onsite medical services are benefits that companies offer as part of employee retention strategies. Although the monetary value of such benefits may be insignificant in relation to the monthly salary number, the convenience factor value of these should not be disregarded when evaluating a remuneration package.
Do you realise that your Nett Salary and your Nett Gain figure could be different? The Nett Gain figure refers to all the quantifiable monetary benefits you are receiving which constitute a saving of expenses you would have otherwise paid from your Nett Salary.
Level 3 – Once Off, Per Annum and Irregular Earnings
Candidates are usually requested to provide a copy of their payslips during the selection, shortlisting or interview process. Some remuneration related payments occur only once in a year or even every 3-5 years and may then not reflect on the Payslip sent to the prospective employment company.
Guaranteed 13th Cheque
This payment forms part of the annual Total Cost to Company and adds an extra month’s salary to the total CTC figure. The 13th cheque is usually paid out during December or in the month of the company’s financial year-end.
Retention Bonuses
Payments towards employee retention schemes can be made bi-annually, annually or every 3-5 years. The focus is on retaining the employee’s services as a tactic to deter them from seeking opportunities elsewhere.
Performance Bonuses
This type of bonus is not guaranteed and based on individual and company performance. Performance bonuses are generally paid out once or twice per year and may coincide with the organisation’s financial year-end dates.
Share Schemes and Profit Sharing
Allocation of shares or profits to employees on senior level is a common retention strategy pursued by organisations. These share scheme programmes could pay out annually or every 3-5 years.
Sign-on Bonuses
The practice where an employee receives a lump sum payment when joining an organisation is called a sign-on bonus. This bonus is often given as a settlement amount to compensate against the value of a future share payment or pending bonus that the candidate will forfeit, due to the timing of his or her resignation.
As can be seen from the explanations above, these infrequent payments can add up to a substantial amount of the Total Cost to Company, and the timing and potential loss of these funds should be taken into consideration upfront when considering other job opportunities.
Level 4 – Calculating Expectations
Everyone has a price, right? Before cementing your salary expectations and committing your mind to a specific number, please refer again to your motivations for moving for just a second. Where does the priority of Remuneration rank when compared to Stimulation, Assurance, Crowd, Elevation, and Domain? Be honest with yourself upfront regarding your salary expectations and remain realistic when calculating your “moving” numbers.
Find out about market-related packages for your industry, qualifications, and level of experience from reputable sources (not just friends and colleagues) and refrain from setting your expectations at unrealistic levels. Increases of 30%-50% do not happen anymore: Nada, Nein, Negative, Aikona!!! The current average Total Cost to Company increases are in the region of 10% – 15%. (Say what now?) Yes….deal with it. Your career progression is far more important than a short-term monetary gain and choosing Remuneration as your first motivation for moving is never a wise idea.
There is an age-old African Proverb that states: “Make money, but don’t let money make you!”
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