Hello, guys, I need some advice from you. I am starting a Pvt Ltd company. My question is, I have to appoint 20 employees, but my company will not make a profit for 8 to 10 months. Still, I have to pay the employees. What is the limit of salary, by rules, I can pay them?
From India, Pune
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From India, Pune
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You can start your activities by complying with the minimum wages notified by the State Govt. for your industry and as per the skill levels of the employees being inducted. In addition, you need to comply with PF & ESI Scheme, Labour Welfare Fund & Professional Tax requirements as applicable. So, prepare a proper estimate on all these factors to ensure the required legal compliances. You may plan accordingly.
From India, Mumbai
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1593From India, Mumbai
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If you have registered your company, the next steps would be planning, organizing, directing, and controlling. As far as HR is concerned, based on the state in which you operate, there are a number of rules to be followed. Compliance is a big deal in India to run any business smoothly. At times, people may find it easy to make a profit but tough to fulfill compliance requirements.
Recommend a quick fix for you. With this, you will get expert advice, a reliable platform to store employee data, manage salaries, take care of compliance, and all sorts of reports. You might have heard about greytHR. It is one of the most popular online HR Payroll Solutions for Small Businesses and Startups. There is a starter plan (Free plan with limited features) and probably it suits you for the next 10 months. In case of advanced requirements, you can upgrade to higher plans, anytime.
From India, Bangalore
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Recommend a quick fix for you. With this, you will get expert advice, a reliable platform to store employee data, manage salaries, take care of compliance, and all sorts of reports. You might have heard about greytHR. It is one of the most popular online HR Payroll Solutions for Small Businesses and Startups. There is a starter plan (Free plan with limited features) and probably it suits you for the next 10 months. In case of advanced requirements, you can upgrade to higher plans, anytime.
From India, Bangalore
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You need to pay your staff and workers a salary that is above the minimum wages specified for your industry in your state. Note that this is revised every 6 months, and you need to pay the higher wages as soon as they become applicable.
In addition, you will need to pay overtime if they work beyond 9 hours a day or 48 hours a week. They are entitled to a bonus at 8.33% of Basic + DA, payable once a year (8 months from the end of the financial year), and you also need to pay statutory dues (PF, ESIC, PT).
Please note that you may not be able to get people to work for you at minimum wages; you need to check the market wages for your industry.
From India, Mumbai
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In addition, you will need to pay overtime if they work beyond 9 hours a day or 48 hours a week. They are entitled to a bonus at 8.33% of Basic + DA, payable once a year (8 months from the end of the financial year), and you also need to pay statutory dues (PF, ESIC, PT).
Please note that you may not be able to get people to work for you at minimum wages; you need to check the market wages for your industry.
From India, Mumbai
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Dear Colleague,
As rightly guided by our colleagues, you need to pay the Statutory Minimum Wages under the provisions of The Minimum Wages Act 1948 applicable to your nature of industry. Check whether you are able to get talents for this wage level. You need to mandatorily cover the employees for PF and ESI.
What is best possible is that you may have a mix of workforce like regular employees who have experience and support your business from day one (pay them slightly more than the minimum wages of the Minimum Wages Act) + a few probationers for one year (pay them minimum wages exactly or a consolidated pay not less than minimum wages) + a few apprentices or trainees on a stipend basis for one year (the stipend may be less than Minimum Wages). In the second year, these trainees can become probationers and then regular in the 3rd year. This mix will give you some cost advantage until you reach your break-even point and stabilize your business. You may also consider taking a few off-roll options by paying minimum wages through manpower agencies (contract arrangement) for those activities that are essential but not bringing revenue to your business or are non-core to your business.
All the very best for your successful endeavor and success.
From India, Chennai
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As rightly guided by our colleagues, you need to pay the Statutory Minimum Wages under the provisions of The Minimum Wages Act 1948 applicable to your nature of industry. Check whether you are able to get talents for this wage level. You need to mandatorily cover the employees for PF and ESI.
What is best possible is that you may have a mix of workforce like regular employees who have experience and support your business from day one (pay them slightly more than the minimum wages of the Minimum Wages Act) + a few probationers for one year (pay them minimum wages exactly or a consolidated pay not less than minimum wages) + a few apprentices or trainees on a stipend basis for one year (the stipend may be less than Minimum Wages). In the second year, these trainees can become probationers and then regular in the 3rd year. This mix will give you some cost advantage until you reach your break-even point and stabilize your business. You may also consider taking a few off-roll options by paying minimum wages through manpower agencies (contract arrangement) for those activities that are essential but not bringing revenue to your business or are non-core to your business.
All the very best for your successful endeavor and success.
From India, Chennai
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The emoluments and entitlements that an employee must receive depend on the type of business you are in and should be in line with government rules and regulations under various applicable laws.
Minimum wages, DA, special allowances, HRA, EPF, ESI, MLWF, Leave with wages, bonus, and other fringe benefits as applicable will give you an idea to calculate the cost to company (CTC) of employees.
You can seek assistance from business consultants in this regard.
From India, Vadodara
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Minimum wages, DA, special allowances, HRA, EPF, ESI, MLWF, Leave with wages, bonus, and other fringe benefits as applicable will give you an idea to calculate the cost to company (CTC) of employees.
You can seek assistance from business consultants in this regard.
From India, Vadodara
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Dear "Anonymous" CitHr Member,
Nothing more needs to be said than what our expert contributing members have noted in their opinions above. As for me, I appreciate most the comments of Dr. P. Sivakumar as it demonstrates the best solution.
At the same time, I would request Mr/Ms Anonymous to validate the comments of contributing members who have dedicated their valuable time and expertise for you. You posted your thread on 12.01.2022 but until date i.e. 19.01.2022, you have not validated any of the comments. Your validation will be a booster for the contributing experts.
Regards and good wishes,
Chandra Mani Lal Srivastava
Master Consultant 9315516083
New Delhi
From India, New Delhi
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Nothing more needs to be said than what our expert contributing members have noted in their opinions above. As for me, I appreciate most the comments of Dr. P. Sivakumar as it demonstrates the best solution.
At the same time, I would request Mr/Ms Anonymous to validate the comments of contributing members who have dedicated their valuable time and expertise for you. You posted your thread on 12.01.2022 but until date i.e. 19.01.2022, you have not validated any of the comments. Your validation will be a booster for the contributing experts.
Regards and good wishes,
Chandra Mani Lal Srivastava
Master Consultant 9315516083
New Delhi
From India, New Delhi
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Hi Sir,
My company is a private limited company and has started a project with a government company in U.P. They have requested the PF and ESIC details of employees working for their project on a monthly basis. The employees are laborers, and we pay a monthly gross salary of Rs. 11,000 to them. The segregation under our company policy is as follows:
- Basic: Rs. 4840
- Grade pay: Rs. 1320
- CCA: Rs. 2915
- HRA: Rs. 1265
- Special Allowance: Rs. 660
Deductions:
- PF: Rs. 581
- ESI: Rs. 83
Therefore, the net salary we pay is Rs. 10,336.
However, the government company has rejected this segregation of wages. Please advise me on the minimum gross salary, net salary, and basic pay I need to provide to unskilled laborers under the Minimum Wages Act. The per-day minimum wage was revised in October 2021 to Rs. 546 for unskilled labor in Area B.
The government company insists on a minimum wage of around Rs. 13,000. What should be the basic pay and deductions like PF for these employees? Taking into account the revised per-day minimum wage for unskilled labor, please guide me on the minimum basic, net, and gross salary that I must maintain monthly under this criterion.
From India, Lalkua
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My company is a private limited company and has started a project with a government company in U.P. They have requested the PF and ESIC details of employees working for their project on a monthly basis. The employees are laborers, and we pay a monthly gross salary of Rs. 11,000 to them. The segregation under our company policy is as follows:
- Basic: Rs. 4840
- Grade pay: Rs. 1320
- CCA: Rs. 2915
- HRA: Rs. 1265
- Special Allowance: Rs. 660
Deductions:
- PF: Rs. 581
- ESI: Rs. 83
Therefore, the net salary we pay is Rs. 10,336.
However, the government company has rejected this segregation of wages. Please advise me on the minimum gross salary, net salary, and basic pay I need to provide to unskilled laborers under the Minimum Wages Act. The per-day minimum wage was revised in October 2021 to Rs. 546 for unskilled labor in Area B.
The government company insists on a minimum wage of around Rs. 13,000. What should be the basic pay and deductions like PF for these employees? Taking into account the revised per-day minimum wage for unskilled labor, please guide me on the minimum basic, net, and gross salary that I must maintain monthly under this criterion.
From India, Lalkua
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First thing you need to know is that PF is paid not on basic but on full salary, excluding HRA, overtime, and other allowances that are specifically for reimbursement of the cost of employment and not given to all employees or all employees in a particular group of employees.
Therefore, on a salary of 11,000, PF will be at 1,168 per month. ESIC is on gross wages, so the deduction will be 192.5 per month.
If the minimum wage is at ₹546 per day, then the monthly salary will be ₹14,196. The component breakup will make little difference except for the HRA part. Your PF, ESIC, etc., must be paid accordingly.
Incidentally, this is for an 8-hour work shift per day and 6 days of work per week.
From India, Mumbai
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Therefore, on a salary of 11,000, PF will be at 1,168 per month. ESIC is on gross wages, so the deduction will be 192.5 per month.
If the minimum wage is at ₹546 per day, then the monthly salary will be ₹14,196. The component breakup will make little difference except for the HRA part. Your PF, ESIC, etc., must be paid accordingly.
Incidentally, this is for an 8-hour work shift per day and 6 days of work per week.
From India, Mumbai
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Dear Ms Soniya-Choudhary,
Welcome to the “Sharing & Learning” forum of Cite HR.
Instead of adding your query in a running discussion, ideally you should put the query with “Start A New Discussion” in which you can properly mentioned subject as well.
Your client (govt company) is absolutely right. You should pay the Basic Salary as per the applicable Minimum Wages. Splitting of Basic (less than Minimum Wages) is not allowed.
You have to pay the PF-ESI and other statutory obligations at least on the Minimum Wages. The Minimum Wages is paid for 26 days (being exclusive of W/off in the month). If any person do duty on Weekly Off or other OT, same has to be paid @ twice rate.
Through the comment it seems your client comes under “Central Govt”, hence insisting to pay Rs. 546 (Area B). Pls check if it is correct, than OK otherwise you are liable to pay UP State Govt Minimum Wages only (which are far lesser than Central Govt.).
The Minimum Wages will be your Gross Wages from which after deducting PF-ESI, LWF, PT you can have Net Salary.
I am attaching both notifications which are applicable wef Oct’21 (UP Govt. and Central Govt).
Hope this will help you to take better decision.
From India, Delhi
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Welcome to the “Sharing & Learning” forum of Cite HR.
Instead of adding your query in a running discussion, ideally you should put the query with “Start A New Discussion” in which you can properly mentioned subject as well.
Your client (govt company) is absolutely right. You should pay the Basic Salary as per the applicable Minimum Wages. Splitting of Basic (less than Minimum Wages) is not allowed.
You have to pay the PF-ESI and other statutory obligations at least on the Minimum Wages. The Minimum Wages is paid for 26 days (being exclusive of W/off in the month). If any person do duty on Weekly Off or other OT, same has to be paid @ twice rate.
Through the comment it seems your client comes under “Central Govt”, hence insisting to pay Rs. 546 (Area B). Pls check if it is correct, than OK otherwise you are liable to pay UP State Govt Minimum Wages only (which are far lesser than Central Govt.).
The Minimum Wages will be your Gross Wages from which after deducting PF-ESI, LWF, PT you can have Net Salary.
I am attaching both notifications which are applicable wef Oct’21 (UP Govt. and Central Govt).
Hope this will help you to take better decision.
From India, Delhi
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Minimum Wage of UP & UK.pdf