Hi,
Does the new code on wages - "As per the new rules, the allowance component cannot exceed 50 percent of the total salary," applicable to senior management employees also? Please suggest.
From India, Navi Mumbai
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Does the new code on wages - "As per the new rules, the allowance component cannot exceed 50 percent of the total salary," applicable to senior management employees also? Please suggest.
From India, Navi Mumbai
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Dear Samvedana,
Since the definition of "wages" in section 2(y) of the Code on Wages 2019 uses the term "person employed," I believe it will apply to all employees.
Furthermore, considering that the definition of "employee" in clause (k) of section 2 of the Act 2019 encompasses employees in managerial and administrative positions, I am of the view that the provision limiting certain components to not exceed 50% will also be applicable to senior management employees.
S. K. Mittal
9319956443
From India, Faridabad
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59Since the definition of "wages" in section 2(y) of the Code on Wages 2019 uses the term "person employed," I believe it will apply to all employees.
Furthermore, considering that the definition of "employee" in clause (k) of section 2 of the Act 2019 encompasses employees in managerial and administrative positions, I am of the view that the provision limiting certain components to not exceed 50% will also be applicable to senior management employees.
S. K. Mittal
9319956443
From India, Faridabad
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Dear Mr. Mittal,
Can you please help me understand this New Code on Wages. The Act says, "Wages means all remuneration by way of:
1. Salaries
2. Allowances
3. Otherwise, expressed in terms of money or capable of being so expressed... and includes (Inclusionary part of the definition):
i. Basic Pay
ii. Dearness Allowance
iii. Retaining Allowance
It says wages include Basic, DA, Retaining Allowance. This means no other components form part of wages (if basic + DA + Retaining Allowance is 50% or more of the total remuneration).
However, if bonus (or performance bonus) is part of your CTC/mentioned in your appointment letter, it will be a part of the wages, and the wage components will be Basic + DA + Retaining allowance and Performance Bonus (payable under terms of employment or HR policy).
If basic + DA + Retaining allowance is 40%, and other excluded components (HRA, Conveyance, Special/General Allowance, the so-called employer share of PF) make up 60% of the total remuneration, then 10% from the excluded components will be considered as wages for the purpose of Provident Fund, Gratuity, ESIC, Bonus, and Leave Salary, etc. The wages thus arrived at will be considered to make the employee eligible for PF/ESIC/Bonus, etc. Please confirm.
Will the following components be included in total remuneration for computing the 50% threshold limits:
1. Lunch Coupons - Payment by employer to a meal providing company
2. Subsidy by employer to his employees in different services
3. Notice Period buyout - Payment to employee
4. Staff Health Insurance - Payment by employer to an insurance company
5. Payment to employees (not all employees) for taking on some additional responsibility for a specified period of time
6. Payment in Flexi basket (Books and Periodicals/Telephone Reim/Leave Travel Allowance)
Regards,
Puran
From India, New Delhi
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Can you please help me understand this New Code on Wages. The Act says, "Wages means all remuneration by way of:
1. Salaries
2. Allowances
3. Otherwise, expressed in terms of money or capable of being so expressed... and includes (Inclusionary part of the definition):
i. Basic Pay
ii. Dearness Allowance
iii. Retaining Allowance
It says wages include Basic, DA, Retaining Allowance. This means no other components form part of wages (if basic + DA + Retaining Allowance is 50% or more of the total remuneration).
However, if bonus (or performance bonus) is part of your CTC/mentioned in your appointment letter, it will be a part of the wages, and the wage components will be Basic + DA + Retaining allowance and Performance Bonus (payable under terms of employment or HR policy).
If basic + DA + Retaining allowance is 40%, and other excluded components (HRA, Conveyance, Special/General Allowance, the so-called employer share of PF) make up 60% of the total remuneration, then 10% from the excluded components will be considered as wages for the purpose of Provident Fund, Gratuity, ESIC, Bonus, and Leave Salary, etc. The wages thus arrived at will be considered to make the employee eligible for PF/ESIC/Bonus, etc. Please confirm.
Will the following components be included in total remuneration for computing the 50% threshold limits:
1. Lunch Coupons - Payment by employer to a meal providing company
2. Subsidy by employer to his employees in different services
3. Notice Period buyout - Payment to employee
4. Staff Health Insurance - Payment by employer to an insurance company
5. Payment to employees (not all employees) for taking on some additional responsibility for a specified period of time
6. Payment in Flexi basket (Books and Periodicals/Telephone Reim/Leave Travel Allowance)
Regards,
Puran
From India, New Delhi
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Code on Wages 2019.pdf