Whalesbook
Employees at Tata Consultancy Services (TCS) are raising concerns about their recent appraisal results, with many reporting a reduction in their Cost to Company (CTC) and lower performance ratings. These changes have led to discussions about a noticeable drop in take-home pay, which is reportedly linked to adjustments made after new labor codes were implemented.
The main point of contention for employees is the exclusion of gratuity from the CTC in TCS's updated compensation structure.
A TCS spokesperson, however, has strongly denied any reduction in employee pay. "There has been no reduction in employees' gross pay or net pay," the spokesperson told TOI. The company maintains that its revised salary structure follows three key principles: aligning with new labor codes, standardizing pay scales for its Indian workforce, and maintaining employee take-home salaries while ensuring tax efficiency.
Employees have questioned why gratuity is no longer listed in their latest compensation letters. TCS explained that employees might see a higher gratuity amount in their June payslips. This is because of changes under the Code on Social Security, 2020, which now calculates gratuity based on "wages" rather than just basic pay.
Under the updated system, components such as basic pay, city allowance, and personal allowance are now considered wages subject to the new labor codes. In contrast, house rent allowance (HRA), conveyance allowance, Provident Fund (PF) contributions, superannuation/NPS contributions, and statutory bonus are listed as exclusions. Performance-based variable pay, company-provided health insurance premiums, ESIC contributions, and other performance incentives are treated as separate items, not part of the defined wages.
TCS states that employees will receive gratuity under either the existing TCS Gratuity Scheme or the Social Security Code framework, whichever provides a greater benefit. The specific gratuity multiplier will depend on an employee's tenure as of July 1st. Some employees may not see any change if the current TCS gratuity structure remains more favorable. Regarding the exclusion of gratuity from CTC, TCS clarified, "Earlier, gratuity was shown as part of CTC. Under the new wage code, gratuity accruals have increased because calculations are now linked to wages rather than just basic salary. Employees will see higher gratuity accruals reflected in their pay slips."