We normally start our engagement building a Testing Calculator containing all your specific employee information. This forms part of the business case which is crucial for the executive team / remuneration committee to understand and approve before implementation The main purpose is that the business wants to see real data and computations, to understand how the risk in changing employment conditions and remuneration structures will be seamlessly managed.
We note below the normal components of the testing model, which then also forms the basis for the Package Structuring Tool (PST) that will be used for conversion and future employee decision making:
- Current Remuneration. Employees are provided with a detailed “current” total guaranteed package statement, including current earnings and benefits breakdown, per employee on an individual basis and that can be segmented.
- Selection Page. This allows selections to be made of the various flexible options allowed by employers. This will also show previous levels of remuneration, to allow an apples-with-apples comparison.
- Travel Allowance Model. This serves the purpose of not paying an employee an excessive travel allowance, with the result that there should be no pay-in or otherwise surprises for the employee on end of the year personal tax assessment.
- Dummy payslip. This provides the payroll, remuneration, general human resources and other stakeholders, with an easy-to-use model for making offers, computation of take-home, disclosure of employee benefit costs (to the employer) and the actual benefits (for example, the actual amount of life cover, risk cover and core retirement funding) to the employee.
- Employees’ tax computation. This provides a detailed line-by-line employees’ tax computational breakdown, which allows immediate internal and external audit on the accuracy of the computation. The employee can also self-check and compute the employees’ tax position.
- Allocation Schedule/Employee Agreement. This would contain the employee sign-off on specific remuneration selections made.
- Comparison Sheet. This gives an employee a line-by-line, apples-with-apples, comparison of old (“basic plus”) vs. new remuneration (CTC), based on the selections made.
The additional purposes of the testing calculator may be summarised as follows:
- Determine the true Total Guaranteed Package of employees. There will be components such as allowances, 13th cheques etc. which will require decision making on whether they should be included or not into CTC.
- Have a complete working model to show the Board, make informed decision making on benefit flexibility, show rollout protocol as well as to show how the Total Guaranteed Package methodology will be correctly managed into the future.
As part of this exercise, we further provide assistance on ancillary matters, including:
- Assistance with the negotiation and agreement of flexible benefit funds with employee benefit brokers.
- Drafting and communicating employee notices, new contractual clauses for new contracts, addendum for old agreement and other documents explaining the CTC rollout methodology
- Facilitate group presentations and meet with senior management for the actual CTC rollout exercise.
- Assistance with miscellaneous issues, such as notional salary for incentive computations, setting-up of payroll parameters, etc.
