Bengaluru: TCS's latest appraisal letters have triggered significant reactions among employees, with some alleging reductions in their cost-to-company (CTC) and downgrades in performance bands. Discussions have also intensified around a drop in take-home salaries following changes linked to the implementation of new labour codes.
Revised Compensation Structure
The debate centers on the exclusion of gratuity from CTC under TCS's revised compensation framework. The company stated that the new salary structure is built on three key principles: compliance with the new labour codes, standardization of wage structures across its India workforce, and protection of employee take-home salaries while retaining flexibility for tax efficiency.
TCS has denied any reduction in employee compensation. A spokesperson told TOI, "There has been no reduction in employees' gross pay or net pay."
Employee Concerns Over Gratuity
Several employees questioned why gratuity was excluded from the latest compensation letters. TCS explained that employees may see a higher gratuity value reflected in their June payslips following changes under the Code on Social Security, 2020, which links gratuity calculations to "wages" rather than only basic pay.
Revised Wage Structure Details
Documents reviewed by TOI show that under the revised wage structure, components such as basic pay, city allowance, and personal allowance are classified as part of wages under the new labour codes. In contrast, house rent allowance (HRA), conveyance allowance, provident fund (PF) contributions, superannuation/NPS contributions, and statutory bonus are classified as exclusions. Performance-linked variable pay, company-paid health insurance premiums, ESIC contributions, and other performance-based incentives are treated separately and are not considered part of wages.
Gratuity Calculation Changes
TCS said employees would receive gratuity under either the TCS Gratuity Scheme or the Social Security Code framework, depending on whichever provides a greater benefit. The gratuity multiplier will depend on an employee's tenure as of July 1 this year, and some employees may not see any change if the existing TCS gratuity structure remains more beneficial.
Addressing concerns around the exclusion of gratuity from CTC, the spokesperson said: "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."
