Remuneration
Total remuneration and total cost to company
Total cost to company is the single figure an employer commits to for an employee. It is often quoted in offers and just as often misunderstood, because it is not what lands in the employee's bank account.
What sits inside total cost to company
- Basic salary
- Fixed allowances such as travel or cellphone allowances
- Employer retirement fund contributions
- Employer medical scheme subsidy and group risk premiums
- Guaranteed 13th cheque, where the package includes one
- In some structures, statutory employer costs such as UIF and SDL
TCTC versus take-home pay
The gap between cost to company and net pay is made up of employee contributions, PAYE and UIF. Two employees on identical packages can take home materially different amounts because of medical scheme membership, retirement contribution rates and tax credits.
Why employers use a TCTC model
A TCTC structure fixes the employer's cost while letting employees choose how the package is allocated within policy limits. Budgeting becomes predictable and increases are applied to one number rather than to a stack of separate components.
Where TCTC gets misused
- Quoting TCTC in an offer without showing the estimated net pay, which leads to disappointment on the first payslip
- Including statutory employer costs in some packages but not others, making comparisons meaningless
- Assuming benchmark data is on the same basis when it may be basic salary, guaranteed package or TCTC
Frequently asked questions
What is total cost to company?
Total cost to company is the full annual cost of employing someone: basic salary, allowances, employer contributions to retirement and medical benefits, and any other guaranteed employer-funded components.
Is cost to company the same as gross salary?
No. Gross salary is generally the cash portion before deductions. Cost to company also includes employer contributions and benefits that never appear as cash to the employee.
Why is my take-home pay so much lower than my cost to company?
Because employee contributions to retirement and medical benefits, plus PAYE and UIF, are subtracted from the cash portion. The larger the benefit component, the wider the gap.
Should statutory employer costs be included in TCTC?
It is a policy choice. What matters is consistency: apply the same definition to every package and state the basis clearly in offers and benchmarking exercises.
The Net Pay Simulator shows what a package costs you and what the employee actually receives.
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Related topics
- Remuneration →
What remuneration means in South African payroll, tax and employment practice.
- Employer cost →
The true cost of employment: contributions, statutory levies and cost beyond the salary line.
- Net pay →
How take-home pay is derived from gross remuneration, deductions and tax.
- Package structure →
Structuring packages: guaranteed pay, variable pay, benefits and flexible components.
Related insights
- Understanding total remuneration →
How to read a cost-to-company offer and compare it fairly against another.
- Employer cost vs net pay →
Why the employer's cost and the employee's take-home differ so widely.
- Net Pay Simulator (NPS) →
Remuneration and net-pay intelligence.