CTC salary: Cost to company, NETT & gross packages explained
Anybody earning an income within the corporate industry is subject to various factors that alter your income. Your CTC salary is not the same income you take home monthly, with factors like any funds or allowances changing the value you take home. We discuss your CTC salary in South Africa and other essential details here.
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When a company hires you, you are given a specific value as a salary offer based on various factors. Factors impacting your salary offer include your work experience, education, and the company you may be working for.
Apart from what you may offer as an employee regarding experience and knowledge, your salary is also determined by your CTC, which stands for cost to company. This article details the cost to company meaning, how to work out your cost to the company, and other essential information.
CTC salary expectations
What is the expected salary of CTC? Your cost to the company is determined by the organisation you wish to work for after they have determined how all included benefits and deductions will impact what you will cost to hire.
However, you also have a say in the value of being an employee. According to Indeed, you can provide your potential employer with what you expect your CTC salary to be based on your current salary, skills, qualifications, and job market.
CTC in salary with an example
The current cost to the company meaning can be best defined as what you, as an employee, cost to the organisation. These costs usually include, but are not limited to, the following:
- Company benefits: These may include medical aid, vehicle and petrol allowance, a 13th cheque, and a pension fund.
- Government-mandated factors: These external expenses include the Unemployment Insurance Fund (UIF) and the amount you are taxed on your salary based on your tax bracket.
Is CTC monthly or yearly?
Your cost to the company could be calculated through an annual CTC or monthly. Most companies calculate your CTC salary monthly, as the relevant government-mandated deductions and other expenses to the company are taken off monthly.
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CTC salary vs gross salary
A gross salary is slightly different to your cost to the company. Testbook defines a gross salary as the money an employee earns before any deductions or taxes are removed, which does not include any internal company perks such as any allowances, medical aid, or 13th checks.
In comparison, your NETT salary is what you, as an employee, take home monthly after all of the relevant deductions taken by the company and government, from your mandated deductions to the perks that companies deduct from your gross salary as part of your cost to the company.
How to calculate CTC in South Africa
The employer usually calculates your total cost to the company, as they have the relevant deduction values that may only be available to the company's accounts department. If you want to work out your CTC salary per month, you can use a CTC salary calculator.
You can use the many calculators available, simply asking you for your gross salary value plus benefits to work out your total cost to the company. However, you may not have access to these values if you are not yet employed at the company and wish to estimate what your CTC salary at the company would be like if you were hired.
The following example is a way to gauge how your potential employer may calculate your cost to the company, along with what costs may arise:
| Factors that impact CTC | Monthly value in ZAR |
| CTC | 25,000 |
| Petrol allowance | 2,000 |
| Travel and leisure allowance | 1,500 |
| Medical aid | 3,000 |
| Gym allowance | 500 |
| House rent allowance | 2,000 |
| Provident fund | 2,000 |
The total value of expenses incurred by the company through hiring you would be R11,000, and the remaining R14,000 would be your NETT. It is essential that you clarify with your employer what your expected NETT salary is and not your CTC salary to avoid disappointment or confusion.
What does an all-inclusive salary package mean?
Some may be confused about what an all-inclusive salary package means, as it is not described as your cost to the company. However, an all-inclusive salary means it came as your CTC, with all the related deductions and perks.
What is the CTC for a R15,000 salary?
Some job seekers who fall within the income bracket of R15,000 or less frequently search for what their cost to the company could be online. You cannot determine your CTC on income alone, as this can only be calculated by your potential employers.
A general cost to the company cannot be given on a general salary, as each company's CTC is different. Some companies may offer perks that others do not, such as medical aid included or a 13th cheque being excluded.
Source: Getty Images
How can you calculate your UIF contribution?
The Unemployment Insurance Fund (UIF) is a set deduction that all employees, including those employed as general/casual workers, must pay towards. According to Labour Guide South Africa, all employers must pay UIF contributions of 2% of the value of each worker's monthly salary.
The employer and employee each contribute 1%, which is done via your employers, who directly contribute to the fund on your behalf. These contributions are paid directly to the Unemployment Insurance Fund (UIF) or the South African Revenue Services (SARS).
What tax bracket do you fall under?
Your relevant tax bracket also determines how much SARS will be deducted from you as part of government-mandated deductions. According to Sage Software, the following table showcases the relevant tax brackets for the 2024/25 tax season:
| Taxable income | Rates of tax |
| R0 – R237,100 | 18% of taxable income |
| R237,101 – R370,500 | R42,678 + 26% of taxable income above R237,100 |
| R370,501 – R512,800 | R77,362 + 31% of taxable income above R370,500 |
| R512,801 – R673,000 | R121,475 + 36% of taxable income above R512,800 |
| R673,001 – R857,900 | R179,147 + 39% of taxable income above R673,000 |
| R857,901 – R1,817,000 | R251,258 + 41% of taxable income above R857,900 |
| R1,817,001 and above | R644,489 + 45% of taxable income above R1,817,000 |
Knowing what a CTC salary means helps employees better understand what their expected income should be listed as, avoiding any unintended lowering of their NETT salary through misunderstandings. You can give employers your expected cost to the company based on what you already earn or what you feel you are worth based on your experience or any essential skills that may benefit them.
DISCLAIMER: This article is intended for general informational purposes only and does not address individual circumstances. It is not a substitute for professional advice or help and should not be relied on to make decisions. Any action you take based on the information presented in this article is strictly at your own risk and responsibility!
READ ALSO: 5 roles and responsibilities of the CCMA in South Africa
The Commission for Conciliation, Mediation and Arbitration, best known as the CCMA, is an independent entity that focuses on resolving workplace conflict. Briefly.co.za wrote an article that went into more detail regarding what employers and employees can expect from the CCMA.
What does the CCMA do, specifically? Read on for five roles and responsibilities of the CCMA in South Africa.
Source: Briefly News
