Cost to Company vs. Salary
One critical issue concerning total employee compensation is an understanding of Cost to Company (CTC) versus gross salary or employee remuneration.
Cost to company is the sum total of what the company spends on an employee. This includes cost of the physical infrastructure and equipment used by the company, costs of recruitment and training, employers’ contribution to social security, Medicare, and pension plans, payment of unemployment tax and other payroll taxes, cost of benefits provided, value of paid leaves, and all other expenses for the employee, besides the employees’ gross salary.
Employers look at the cost to the company when considering the value the employee adds to the company whereas, the employee primarily looks at the total pay plus benefits, and more specifically, take home pay when considering whether working in the company is worthwhile.
The difference between the cost to company and gross salary varies from company to company, and there is no fixed standard. Generally, the more benefits enjoyed by the employee, the greater the difference between cost to company and total salary.