My question is, as per the Minimum Wages Act, is it true that Basic+DA should be equal to minimum wages? I am confused whether the payable amount should be equal to minimum wages, and if all other allowances are included in minimum wages or not?
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From India, Ahmedabad
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From India, Ahmedabad
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Actually, I've consulted regarding this with many consultants and senior HR professionals, but it seems that nobody is clear on this act as nothing concrete is mentioned in the Payment of Wages Act. Many of the companies are making minimum wage the basic salary, while many consider that as gross salary and then bifurcate it into different salary heads. As per the PF Act, minimum wages can't be bifurcated into different salary heads, but that's not mentioned in the Minimum Wages Act.
Manish
From India, Ahmedabad
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Manish
From India, Ahmedabad
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Hi Manish,
I have reviewed many salary slips, and I've noticed that most organizations are not maintaining Basic + DA equal to minimum wages. I am still confused about whether it is legal for Basic + DA to be less than minimum wages.
My question is, nobody wants a lower net take-home pay. If we set minimum wages as Basic + DA, the PF deduction for low-salaried individuals will be higher, resulting in a lower net take-home pay. On the other hand, the law stipulates that we must keep 40% to 50% of the basic salary as part of the gross salary. If the gross salary is ₹10,000 per month, how can we align this with minimum wages? We are faced with a dilemma of following either the percentage rule or the minimum wage requirement. What does the law actually mandate? Please provide your suggestions.
According to the Minimum Wages Act (Reference ILO), "Wages mean all remuneration capable of being expressed in terms of money, which would be payable to a person employed in respect of his employment or work done in such employment, if the terms of the contract of employment, express or implied, were fulfilled." The law does not explicitly state that "Basic + DA = Minimum wages."
It is urgent for me to resolve this query.
Thank you.
From India, Ahmedabad
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I have reviewed many salary slips, and I've noticed that most organizations are not maintaining Basic + DA equal to minimum wages. I am still confused about whether it is legal for Basic + DA to be less than minimum wages.
My question is, nobody wants a lower net take-home pay. If we set minimum wages as Basic + DA, the PF deduction for low-salaried individuals will be higher, resulting in a lower net take-home pay. On the other hand, the law stipulates that we must keep 40% to 50% of the basic salary as part of the gross salary. If the gross salary is ₹10,000 per month, how can we align this with minimum wages? We are faced with a dilemma of following either the percentage rule or the minimum wage requirement. What does the law actually mandate? Please provide your suggestions.
According to the Minimum Wages Act (Reference ILO), "Wages mean all remuneration capable of being expressed in terms of money, which would be payable to a person employed in respect of his employment or work done in such employment, if the terms of the contract of employment, express or implied, were fulfilled." The law does not explicitly state that "Basic + DA = Minimum wages."
It is urgent for me to resolve this query.
Thank you.
From India, Ahmedabad
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If the employer bifurcates the salary of employees covered by the Minimum Wages Act into only basic + DA, then it should be equal to or more than the minimum wages applicable to the class of employee concerned. If the employer bifurcates the salary into basic + other allowances (like DA, HRA, or conveyance allowance, etc.), then the total of such emoluments shall be equal to or more than the minimum wages applicable to the class of employee concerned.
B. Sakumar
Navi Mumbai
From India, Mumbai
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B. Sakumar
Navi Mumbai
From India, Mumbai
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Read Section 4 of the Act regarding the minimum rate of wages.
4. Minimum Rate of Wages - (1) Any minimum rate of wages fixed or revised by the appropriate Government in respect of scheduled employments under Section 3 may consist of:
(i) a basic rate of wages and a special allowance at a rate to be adjusted, at such intervals and in such a manner as the appropriate Government may direct, to accord as nearly as practicable with the variation in the cost of living index number applicable to such workers (hereinafter referred to as the "cost of living allowance"); or
(ii) a basic rate of wages with or without the cost of living allowance, and the cash value of the concessions in respect of supplies of essential commodities at concession rates, where so authorized; or
(iii) an all-inclusive rate allowing for the basic rate, the cost of living allowance, and the cash value of the concessions, if any.
This should address the query.
From India, Pune
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4. Minimum Rate of Wages - (1) Any minimum rate of wages fixed or revised by the appropriate Government in respect of scheduled employments under Section 3 may consist of:
(i) a basic rate of wages and a special allowance at a rate to be adjusted, at such intervals and in such a manner as the appropriate Government may direct, to accord as nearly as practicable with the variation in the cost of living index number applicable to such workers (hereinafter referred to as the "cost of living allowance"); or
(ii) a basic rate of wages with or without the cost of living allowance, and the cash value of the concessions in respect of supplies of essential commodities at concession rates, where so authorized; or
(iii) an all-inclusive rate allowing for the basic rate, the cost of living allowance, and the cash value of the concessions, if any.
This should address the query.
From India, Pune
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Minimum wages notified by the respective governments have two components: Basic Pay and DA. Neither the Act nor the notifications in this regard make it compulsory to fix the salary at the same amount as long as the total amount is paid. Many organizations have resorted to keeping Basic Pay and DA at ridiculously low levels and allowing items like conveyance, telephone, or HRA at abnormally high levels to primarily avoid PF liability. The EPFO has clarified that splitting wages for the purpose of PF contribution is not permissible (Ref. No. Coord./4(6) 2003/Clarification Vol-II/7394 dated 23.05.2011).
From India, Mumbai
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From India, Mumbai
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Dear Hrcritivon.Trexgen,
I think that the question of what industrial salary structure, comprising more components than the statutory structure of minimum wages, fulfills compliance has already been well settled by the Supreme Court in Airfreight Ltd. vs. State of Karnataka and Others [AIR 1999 SC 2459] and [1999 LLJ (2) 705 SC]. I recommend that you go through the entire judgment. The ratio decidendi of the judgment is that if the sum total of the industry wages minus the excluded items of the definition of the term "wages" defined under Section 2(h) of the Minimum Wages Act, 1948, is equal to the sum total of the minimum wages fixed under the Act, it is perfect compliance.
Please let me know if you need further clarification.
Thank you.
From India, Salem
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I think that the question of what industrial salary structure, comprising more components than the statutory structure of minimum wages, fulfills compliance has already been well settled by the Supreme Court in Airfreight Ltd. vs. State of Karnataka and Others [AIR 1999 SC 2459] and [1999 LLJ (2) 705 SC]. I recommend that you go through the entire judgment. The ratio decidendi of the judgment is that if the sum total of the industry wages minus the excluded items of the definition of the term "wages" defined under Section 2(h) of the Minimum Wages Act, 1948, is equal to the sum total of the minimum wages fixed under the Act, it is perfect compliance.
Please let me know if you need further clarification.
Thank you.
From India, Salem
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