Dear Seniors,
I would like to know what the relation is between the minimum wage and the percentage of the minimum basic wage. Please also let me know how the minimum wage, which is upgraded from time to time, changes the minimum percentage of the basic salary.
As per my knowledge, the basic salary may range between 40% - 60%. Is there any law that defines the percentage of the minimum or maximum basic salary in India?
Thanks in advance!
From India, Delhi
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5I would like to know what the relation is between the minimum wage and the percentage of the minimum basic wage. Please also let me know how the minimum wage, which is upgraded from time to time, changes the minimum percentage of the basic salary.
As per my knowledge, the basic salary may range between 40% - 60%. Is there any law that defines the percentage of the minimum or maximum basic salary in India?
Thanks in advance!
From India, Delhi
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Dear Kusum,
There is no law that defines the percentage of the minimum or maximum basic salary in India. Moreover, it depends on management. The government revises Minimum Wages every six months, and employers should keep in mind that their employees' basics should be more than what the government fixes and revises from time to time. This is only for the basic; the rest of the components are decided by management decisions and company policies.
Thanks,
Sakshi
From France, Voreppe
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There is no law that defines the percentage of the minimum or maximum basic salary in India. Moreover, it depends on management. The government revises Minimum Wages every six months, and employers should keep in mind that their employees' basics should be more than what the government fixes and revises from time to time. This is only for the basic; the rest of the components are decided by management decisions and company policies.
Thanks,
Sakshi
From France, Voreppe
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Let me make a correction that Minimum Wages are not revised every six months but are normally revised after every five years. At the same time, dearness allowance, which is a component of minimum wages, is revised. This revision need not necessarily occur every six months but may take place every month depending upon the increase or decrease in cost of living indices.
Minimum Wages are the bare minimum wages payable to an employee to survive. We know that every day the prices of essential commodities are increasing. Therefore, the government cannot fix a wage for five years because a wage fixed now may become negligible after a year or two. It is with a view to avoiding such situations and to account for the cost of living that Dearness Allowance, which is variable according to changes in the consumer price index, is made a component of statutory minimum wages.
Regards, Madhu.T.K
From India, Kannur
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Minimum Wages are the bare minimum wages payable to an employee to survive. We know that every day the prices of essential commodities are increasing. Therefore, the government cannot fix a wage for five years because a wage fixed now may become negligible after a year or two. It is with a view to avoiding such situations and to account for the cost of living that Dearness Allowance, which is variable according to changes in the consumer price index, is made a component of statutory minimum wages.
Regards, Madhu.T.K
From India, Kannur
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Dear Mr. Madhu,
Thank you for your reply, but I am still in a state of confusion. Recently, the government of Delhi revised the minimum wage to Rs. 310 per day (Rs. 8,060 per month for 26 days).
Could you please correct me if I am wrong? You mentioned that the government revises the D.A. component of the minimum basic wage based on consumer price indices, which automatically increases the minimum wage.
With the new revision, is an employer also required to adjust the basic salary of their graduate employees to Rs. 8,060 and consider this amount as the base for PF & PS calculations?
In my company (Pvt. Ltd.), the employer only provides a basic salary without D.A. Do we also need to raise the basic salary to Rs. 8,060 for a graduate employee?
Regards,
Kusum
WAITING FOR YOUR ANSWER..........
From India, Delhi
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Thank you for your reply, but I am still in a state of confusion. Recently, the government of Delhi revised the minimum wage to Rs. 310 per day (Rs. 8,060 per month for 26 days).
Could you please correct me if I am wrong? You mentioned that the government revises the D.A. component of the minimum basic wage based on consumer price indices, which automatically increases the minimum wage.
With the new revision, is an employer also required to adjust the basic salary of their graduate employees to Rs. 8,060 and consider this amount as the base for PF & PS calculations?
In my company (Pvt. Ltd.), the employer only provides a basic salary without D.A. Do we also need to raise the basic salary to Rs. 8,060 for a graduate employee?
Regards,
Kusum
WAITING FOR YOUR ANSWER..........
From India, Delhi
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If you do not give DA but the total salary paid is not less than the minimum wages fixed, it is okay. You need not pay anything extra like DA. With regard to PF contribution, if the minimum wages are Rs. 8060, you need not pay a contribution on that amount because as per PF schemes, you can restrict your contribution on a salary of Rs. 6500. The direction to pay a contribution at least on minimum wages does not mean that it should be paid on the actual salary if it is above Rs. 6500.
Regards,
Madhu.T.K
From India, Kannur
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Regards,
Madhu.T.K
From India, Kannur
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Dear experts, Can I consider my basic pay as 100% of salary (without any allowances) ? Is it legal or not ? Please advise.
From India, Jamnagar
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From India, Jamnagar
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Yes, usually minimum wage is being confused. First, clear yourself - state government every 2 years fixes the minimum wage to be paid to the daily labor, which includes dearness allowance. Usually, it is higher than the basic minimum wage of any private company worker.
It's a lengthy answer, please talk: 09963218536.
From India, Nellore
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It's a lengthy answer, please talk: 09963218536.
From India, Nellore
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Could some expert please clarify the original question of the thread as it is also giving me a headache at my organization level?
Taking the example of U.P. where the minimum wage is 7300 as of today.
Case 1:
Is it legal to keep the basic salary as 50% of the above amount, i.e., 7300/2 = 3650? And then do all the necessary PF deductions, etc.
So the salary becomes:
Basic: 3650
HRA: 3650
EPF deduction employee = 12% * 3650 = 438/-
Employer share = 438
ESIC Employee Share = 1.75% * (100% of Gross i.e., 7300) = 127.75
ESIC Employer = 4.75 * (100% of Gross i.e., 7300) = 346.75
Total in-Hand salary of the worker = Basic + HRA - EPF Share of the employee - ESIC Share of the employee
Total in-Hand salary of the worker = 3650 + 3650 - 438 - 127.75 = 6734.25 Rs/-
Is it fine?
Also, please answer the main question:
Is it legal to keep the basic salary as 50% of the above amount, i.e., 7300/2 = 3650? And then do all the necessary PF deductions, etc.
From India, Delhi
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Taking the example of U.P. where the minimum wage is 7300 as of today.
Case 1:
Is it legal to keep the basic salary as 50% of the above amount, i.e., 7300/2 = 3650? And then do all the necessary PF deductions, etc.
So the salary becomes:
Basic: 3650
HRA: 3650
EPF deduction employee = 12% * 3650 = 438/-
Employer share = 438
ESIC Employee Share = 1.75% * (100% of Gross i.e., 7300) = 127.75
ESIC Employer = 4.75 * (100% of Gross i.e., 7300) = 346.75
Total in-Hand salary of the worker = Basic + HRA - EPF Share of the employee - ESIC Share of the employee
Total in-Hand salary of the worker = 3650 + 3650 - 438 - 127.75 = 6734.25 Rs/-
Is it fine?
Also, please answer the main question:
Is it legal to keep the basic salary as 50% of the above amount, i.e., 7300/2 = 3650? And then do all the necessary PF deductions, etc.
From India, Delhi
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Dear Mr. Atul,
Please note that in reference to Section 4 under the MW Act, it mentions that minimum wages may be inclusive of basic pay and with a special allowance on which it is based. Though in practice, we concentrate on the basic pay in private concerns, we do not have DA. In a few companies, the Special Allowance is a component in wages, while in others, they do not have any SA. Therefore, in response to your query, I would like to clarify that:
1. If the MW is 7500/-, then the following will be its structure:
a. Basic - 7500/-
b. HRA - (7500*50/100) = 3750/-
c. PF - Employee= 900/-, Employer= 1002/- (Basic*13.36%)
d. ESIC - Employee= 197/-, Employer= 534/-
e. Total in hand = 10547/-
If you follow this structure, then it can be considered as compliant.
From India, Kolkata
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Please note that in reference to Section 4 under the MW Act, it mentions that minimum wages may be inclusive of basic pay and with a special allowance on which it is based. Though in practice, we concentrate on the basic pay in private concerns, we do not have DA. In a few companies, the Special Allowance is a component in wages, while in others, they do not have any SA. Therefore, in response to your query, I would like to clarify that:
1. If the MW is 7500/-, then the following will be its structure:
a. Basic - 7500/-
b. HRA - (7500*50/100) = 3750/-
c. PF - Employee= 900/-, Employer= 1002/- (Basic*13.36%)
d. ESIC - Employee= 197/-, Employer= 534/-
e. Total in hand = 10547/-
If you follow this structure, then it can be considered as compliant.
From India, Kolkata
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Dear Pradipta Nath Sir,
I highly appreciate you for taking out time to reply to my query. Can I not keep the basic salary as 3750 in case the MW is 7500 and do all deductions on this basic, or do I have to compulsorily keep 7500 itself as the basic and do necessary deductions?
Anticipating your kind reply.
Thanks,
Atul
From India, Delhi
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I highly appreciate you for taking out time to reply to my query. Can I not keep the basic salary as 3750 in case the MW is 7500 and do all deductions on this basic, or do I have to compulsorily keep 7500 itself as the basic and do necessary deductions?
Anticipating your kind reply.
Thanks,
Atul
From India, Delhi
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