When a job is advertised, the abbreviation CTC - cost to the company - is often seen next to the salary package. Often, job seekers may be startled to find out that their nett salary is considerably less than the advertised salary. For example, if a career opportunity for a Software Developer, CFO or Site Agent is advertised and the total CTC is R1 million, it may not be the actual salary one will receive at the end of the month. This is because there is a difference between your CTC and your nett salary.
The CTC is the entire amount a company is willing to pay for an employee, whereas your nett salary is your take-home pay after deductions such as tax, medical aid, UIF etc. The CTC amount includes the following:
Your CTC includes your guaranteed / fixed amounts such as:
- Your basic / cash salary / gross salary is the actual salary you receive for rendering your services to the company - bear in mind that is amount is taxable.
- The company's contribution such as:
- Guaranteed 13th cheque
- Medical aid
- Pension or Provident Fund
- Death and disability
- Car / travel allowance
- Company car
- Company phone
When considering a career move in the IT, Finance or Engineering sectors, candidates need to understand the structure of their salary package as each company structures their salary packages differently. Most employees starting a new job are keen to engage in career development and growth opportunities, and earning a higher salary is often part of this process. However, if you don't fully understand your remuneration package, you may not be able to negotiate the right remuneration and benefit package at the initial stages of the negotiation process, and could likely enter into a new role earning less that you expected.
Consider identifying what your basic salary is and what your nett salary is before you accept a job offer. Only make a decision about a job offer once you have a clear understanding of what you will be earning. The HR department should also be able to aid you in understanding your payslip and the different elements it contains.
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