Cost to Company (CTC)

Meaning & Definition

CTC (Cost to Company) is an employer’s cost to employ a single employee on an annual basis. This includes the fixed component of their salaries, variable components, bonuses, contributions by an employer to benefits, and any other forms of compensation and other benefits. The CTC of an employee is their complete compensation package from the employer, not just their net pay.

Significance of Cost to Company

• Serves to provide a complete perspective on employee pay.
• Allows companies to properly create budgeted payroll plans.
• Contributes to open communication regarding wage negotiations and wage offers.
• Allows employees to fully grasp the total dollar value associated with their benefits.
• Assists Human Resources with formulating organized compensatory systems.

Governance & Policy Alignment

• This term has no defined relationship to any specific statute.
• The way compensation and salaries are handled internally are defined by organizations’ policies for payroll and compensation.
• Payroll items should only comprise elements which conform to approved salary structures and benefit programs.
• Breakdown of the total cost of personalised procurement will help ensure accurate payroll processing.

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