Cost-To-Company Conversion/Package Structuring

Cost-to-Company (CTC) Conversion

Cost-to-Company, also known as CTC or Guaranteed Package / Pay, is the most used pay approach across Southern Africa. It is the calculated as the sum of all fixed income (including Basic Salary), fixed allowances & benefits as well as the employer contributions to Employee Benefits. CTC packages are typically driven by internal equity, external market competitiveness and flexibility for the individual.

When an organisation wishes to move its employees to a Cost-to-Company structure. The purpose of such a move would be to achieve the benefits and advantages mentioned below. It would also serve the purpose of benefiting its employees without necessarily increasing costs and thereby retaining a skilled workforce in a labour competitive environment. Key reasons / advantages of this approach, in order of importance follow:

• Greater remuneration flexibility for employees;
• Easier to structure packages in accordance with individual needs;
• Fixed and known guaranteed employment costs;
• More equitable and defensible approach to remuneration;
• Simplified and accurate market comparisons and benchmarking;
• Simplified administration; and
• Safety in the event of a tax audit.

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