When can Variable Dearness Allowance (VDA) be removed from the worker’s salary? Please tell me any rule of the Supreme Court ruling.
From India, Ghaziabad
From India, Ghaziabad
The Minimum Wages payable to workers comprise of two components, viz, a basic wage and a dearness allowance variable according to changes in the consumer price index (CPI). The purpose of paying VDA which will change with changes in cost of living is to ensure that the workers do not suffer due to increase in cost of living. So long as your total salary is above the minimum wages, and the same is subject to increase with increase in cost of living there is no need to pay VDA as a separate component of salary. This was confirmed by the Apex Court in AirFrieght India Vs State of Karnataka. But what is to be ensured is that at any point of time, the salary that you pay should not be less than the basic wages and DA fixed by the government. In states like Tamil Nadu CPI based DA is revised once in a year but there are states where it is revised every six months or even every month. In such eventuality it is good if you follow a system of basic wages and DA for those workers whose wages is almost equal to statutory minimum wages. At the same time, if there is a margin of say Rs 500 you can drop the DA component from the salary structure.
From India, Kannur
4242From India, Kannur
Hi, What Mr. Madhu said is absolutely true. As long as you are paying more than the minimum wage of the respective state and ensuring that every year you are taking care of changes in the consumer price index, you need not show the DA component. However, you need to ensure that the basic salary is more than the minimum wage. Say, for example, that your minimum wage is Basic 13500 + DA 3000 PM, then your basic salary should be more than Rs. 16500. Minimum wage cannot be distributed to other components like HRA, conveyance, washing allowance, etc.
From India, Bengaluru
From India, Bengaluru
In my opinion, Minimum wages is dependent upon the Consumer Price Index released by the respective State Governments from time to time.
The subgroup considered in arriving at Consumer Price Index includes Food items of respective regions, Clothing, Housing, Transport, Health, Education etc.,
Hence, as long as your wage is above the Minimum Wage prescribed by the Government, there is nothing wrong in splitting the Minimum wages into HRA, Conveyance etc.,
However, you need to take care is the Basic Pay indicated in the Minimum wage has to be maintained and the DA component can be split into HRA, Conveyance etc.,
In case the new labour code is enacted, you need to ensure that the Basic pay is 50% of the total pay package.
Regards
MVK
From India, Madras
The subgroup considered in arriving at Consumer Price Index includes Food items of respective regions, Clothing, Housing, Transport, Health, Education etc.,
Hence, as long as your wage is above the Minimum Wage prescribed by the Government, there is nothing wrong in splitting the Minimum wages into HRA, Conveyance etc.,
However, you need to take care is the Basic Pay indicated in the Minimum wage has to be maintained and the DA component can be split into HRA, Conveyance etc.,
In case the new labour code is enacted, you need to ensure that the Basic pay is 50% of the total pay package.
Regards
MVK
From India, Madras
Mr Kannan,
Minimum wage means it is Basic and DA. At any point of time DA component cannot be converted as other allowance, it needs to be added to the Basic only. When you are paying more than minimum wages, the excess amount you can distribute to other allowances like HRA, Conveyance etc.
From India, Bengaluru
Minimum wage means it is Basic and DA. At any point of time DA component cannot be converted as other allowance, it needs to be added to the Basic only. When you are paying more than minimum wages, the excess amount you can distribute to other allowances like HRA, Conveyance etc.
From India, Bengaluru
The minimum wages published by various state govts. & central Labour dept. contains the basic components and FDA/VDA both separately and total stated as minimum wages. As such these components are revised periodically by notifications, category wise. All these periodical notifications are available for download from the web site of simpliance.com
However there is no mention about other allowances. It's left to the employers to have their own policies. However Code on Wages as and when implemented will amplify few things.
From India, Bangalore
However there is no mention about other allowances. It's left to the employers to have their own policies. However Code on Wages as and when implemented will amplify few things.
From India, Bangalore
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VARIABLE PAY.doc
Variable DA on Minimum Wages as on 01-10-2017.pdf
Dearness Allowance.xls