Job offer? Here’s how to avoid unpleasant surprises on payday

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Whether you’re in the process of applying for a job you applied for with another employer, looking at the first job posting just out of college, or being offered a promotion As an internal candidate for a job, if you don’t know the ins and outs of a compensation package, you may well be disappointed on payday. It’s easy to be impressed by the healthy sum offered to you as cost to business (CTC), but before you burst the bubbles, find out exactly what will hit your bank account on payday, benefits and how to negotiate and compare offers.

Definition of cost to business (CTC)

Your CTC is calculated by combining the amount of cash, benefits, and employer contributions an employer is willing to spend on you over a given period. “Historically, the majority of South African companies used the concept of gross pay, where employees and unions focused more on negotiating cash payable to them rather than intangible benefits,” notes Given Seolwana, Managing Director. of VHG HR and Payroll Consulting. She attributes competition in the global job market to the CTC concept gaining momentum here and explains that it has benefits for employees that its predecessor did not.

“An employee has the flexibility to choose the components of their salary that best suit their needs,” she says. For example, if you don’t need medical help because you are already on your partner’s plan, that amount would be ‘fed back’ into your salary. With salary increases, the calculations are also based on your CTC, not your base salary (as would have been the case with the gross compensation model). Seolwana says, however, that she has seen an increase in the number of employers returning to making pension or provident and medical aid benefits mandatory, so that in difficult times all employees are covered.

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Your benefits

Employee benefits are any non-monetary benefits your employer gives you, while company contributions are costs covered by your employer on your behalf. These include, for example, the skills development tax, contributions to your unemployment insurance fund (UIF), medical aid, pension fund and risk cover.

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Focusing on pension contributions, Seolwana emphasizes the importance of understanding where your chosen pension or provident contributions actually go. She says: “You can expect the full contributions to accrue to your retirement savings, but that’s not correct, as provident or pension funds normally have part of the amount that goes into benefits. group benefits and administration costs.” So when it comes to choosing your deduction, it’s helpful to ask to see a mock payslip to really get an idea of ​​what’s going towards your savings.

The same goes for medical help, if you choose to get it through your employer. “Although most companies can offer a 50% contribution on medical aid, most of them have a limit, and before deciding which medical aid plan you want to take, it is recommended to know if there is a cap on medical aid contributions, then you can be sure that you can afford the plan you have chosen,” says Seolwana.

Benefits can include housing, company vehicles, mobile devices, fuel cards and more. These can vary from company to company and are key considerations when evaluating your overall job offer.

The right offer for you

Congratulations! A potential employer has made you an attractive offer. But now is not the time to rush a decision. Most career experts advise against immediately accepting and signing an offer, no matter how good. Why? Because that’s when you can have a significant influence on what your package will be for the next two months at least, and whether it matches the true value you’ll bring to your employer.

Between 70% and 80% of employers expect candidates to negotiate job offers, so it’s time to research and decide on the figure that best reflects fair compensation for your role and responsibilities.

“Many people don’t research new job and salary ranges enough to understand their value,” Seolwana points out. “Now there are salary benchmarking apps. You can also check recruitment agency portals to understand what the market is offering for the same position,” she adds. Understanding entry level, median and high points will help you position yourself better.

What if you are lucky enough to consider more than one offer at a time? Pay attention to the basic variables and what is most valuable to you at this stage of life. For example, a childcare allowance could be helpful to parents; a housing subsidy can be interesting if you have to move for work. It all depends on your needs as much as the needs of the organization towards you.

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