Social charges comprise leaves, group insurance and medical. Typical medical/group insurance is about 5% of gross salary. Other social benefits may include contribution to employee’s children’s education, club membership, leave fare assistance etc. Such benefits may be about 5.8%. Leaves are 18.2% of gross salary.
Social Charges in Salary and How It Calculated
Total social charges therefore may be = 18.2 + 5 + 5.8 = 29% of gross salary. Other companies may have more social benefits. The 29% social charges are quite common.
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The salary of an employee is as follows:
Basic salary = 10,000 Rs.
Allowances = 5,000 Rs.
What is the cost of the company on account of leaves (18.2%), group
insurance/medical (5%) and other social benefits (5.8%)?
Leaves cost = 0.182 x 15000 = 2,730 Rs.
Group insurance/medical = 0.05 x 15000 = 750 Rs.
Other social benefits = 0.058 x 15000 = 870 Rs.
Total social charges = 2730 + 750 + 870 = 4,350 Rs.