I joined a proprietor-based company as an HR executive, where I found that employees had different basic salaries with no uniformity. For example, it could be 20% for some and 30% for others. It may vary from person to person, such as 15.75% or 14%. This means that salaries may be represented as Rs 300, Rs 1000, or Rs 1500. Now, they have asked me to design the appointment letter considering that basic amount and also design the gross salary of new employees. However, the 12% on the basic salary should not exceed Rs 150. In this situation, how do I determine the minimum percentage to consider when calculating the basic salary, given that one person's salary is Rs 7500 and another's is Rs 14000 per month? I am confused about what I should do.
From India, Aurangabad
Acknowledge(0)
Amend(0)
From India, Aurangabad
Acknowledge(0)Amend(0)
Hi, As per minimum wages act we need to provide the basic to the employees.So discuss with your Management and advise them to change the basic of the employees.
From India, Mumbai
Acknowledge(0)Amend(0)
429From India, Mumbai
Acknowledge(0)Amend(0)
Hi, Basic should be more than minimum wages of your state act, but you just consider 40 or 50 % it will be cover under MW act.
From India, Mumbai
Acknowledge(0)Amend(0)
From India, Mumbai
Acknowledge(0)Amend(0)
The basic/DA salary/wages cannot be less than the Minimum Wages in terms of the Notification issued by the State Government. In the state of West Bengal, the MW Notification stipulates that the entire amount, i.e., minimum wages as declared, is basic & DA. To be on the safer side, it is advisable to follow the MW Act as well as the MW Notification. Most small companies show a lower basic/DA salary/wages with the intention of paying a reduced amount of the employer's PF contribution @13.61% because the PF contribution is calculated on basic/DA.
You may bring this matter to the attention of your top management and help them understand the legal position to avoid future litigation/liabilities.
Regards,
Sibabrata Majumdar
Management Consultant Legal & HR
[Email Removed For Privacy Reasons]
From India, Calcutta
Acknowledge(0)Amend(0)
You may bring this matter to the attention of your top management and help them understand the legal position to avoid future litigation/liabilities.
Regards,
Sibabrata Majumdar
Management Consultant Legal & HR
[Email Removed For Privacy Reasons]
From India, Calcutta
Acknowledge(0)Amend(0)
Mr. S. Mujamdar's observation is very timely since some managements do not ensure to cover minimum wages even after adding basic plus DA, especially for lower-level employees. When labor and PF authorities inspect, they have found violations, i.e., a deficiency of minimum wages even after adding both basic plus DA, and have penalized the employer. Hence, it is safer to check and fix basic plus DA slightly above the minimum.
Regards,
From India, Bangalore
Acknowledge(0)Amend(0)
Regards,
From India, Bangalore
Acknowledge(0)Amend(0)
Fixation of Basic Pay
There is no hard and fast rule for the fixation of Basic Pay in the Act. One should pay the minimum wages fixed by the Government. Basic Pay is fixed by the company according to their policies. There is no minimum level fixed in any act. However, according to the position in the company or cadre, they will fix the Basic Pay. Normally, it will be 50%. However, in some cases of field or marketing jobs, the basic pay will be less, and the allowances are more.
Regards
From India, Hyderabad
Acknowledge(0)Amend(0)
There is no hard and fast rule for the fixation of Basic Pay in the Act. One should pay the minimum wages fixed by the Government. Basic Pay is fixed by the company according to their policies. There is no minimum level fixed in any act. However, according to the position in the company or cadre, they will fix the Basic Pay. Normally, it will be 50%. However, in some cases of field or marketing jobs, the basic pay will be less, and the allowances are more.
Regards
From India, Hyderabad
Acknowledge(0)Amend(0)
Understanding Salary Design and Minimum Wage Compliance
If your management states that 12% of the basic salary should not exceed Rs. 150, it implies that the basic salary should not be above Rs. 1250, translating to Rs. 41.66 per day. This indicates that your employer is requesting you to design the salary below the minimum wage guidelines. Please try to convince your management; otherwise, you might encounter significant issues.
Regards
From India, Ahmadabad
Acknowledge(0)Amend(0)
If your management states that 12% of the basic salary should not exceed Rs. 150, it implies that the basic salary should not be above Rs. 1250, translating to Rs. 41.66 per day. This indicates that your employer is requesting you to design the salary below the minimum wage guidelines. Please try to convince your management; otherwise, you might encounter significant issues.
Regards
From India, Ahmadabad
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
Minimum Wage of UP & UK.pdf