Suppose there are four employees—A, B, C, and D—each with the following gross salaries:
Employee A: ₹15,001
Employee B: ₹16,000
Employee C: ₹17,000
Employee D: ₹30,000
Each employee’s salary structure is proposed as follows:
Basic + DA: ₹15,001 for all employees (A, B, C, D)
HRA: ₹0 for Employee A, ₹999 for Employee B, ₹1999 for Employee C, and ₹14999 for Employee D
Given that all employees are new and there are no deductions for Provident Fund (PF), and since Employee State Insurance (ESI) is calculated based on the gross salary, there are no compliance issues regarding statutory deductions.
Questions:
1. Can each employee have a different HRA amount while having the same Basic + DA of ₹15,001?
2. Is it possible for all employees to have the same Basic + DA of ₹15,001 while their gross salaries vary due to different HRA amounts?
3. Can this salary structure be applied to other new joining employees as well?
4. Are there any potential issues with this salary distribution structure?
5. Can someone explain how to prepare a salary sheet for this structure, as I’m unfamiliar with the process? Is this ok -
The salary structure includes the Actual Basic Wage (including DA), Actual HRA, Actual Gross Wages, No. of Days Worked, Wages Earned (including DA), HRA Earned, Total Earned, PF, ESI, Net Payable, and a Signature for verification.
6.Can salary calculation be shown in such a way that the gross salary is prorated based on the number of days in the month, excluding Sundays? For example, for September (30 days), the calculation would be: Gross Salary divided by 25 (30 days minus 5 Sundays) to get the per-day salary. Is this method valid and compliant?
Employee A: ₹15,001
Employee B: ₹16,000
Employee C: ₹17,000
Employee D: ₹30,000
Each employee’s salary structure is proposed as follows:
Basic + DA: ₹15,001 for all employees (A, B, C, D)
HRA: ₹0 for Employee A, ₹999 for Employee B, ₹1999 for Employee C, and ₹14999 for Employee D
Given that all employees are new and there are no deductions for Provident Fund (PF), and since Employee State Insurance (ESI) is calculated based on the gross salary, there are no compliance issues regarding statutory deductions.
Questions:
1. Can each employee have a different HRA amount while having the same Basic + DA of ₹15,001?
2. Is it possible for all employees to have the same Basic + DA of ₹15,001 while their gross salaries vary due to different HRA amounts?
3. Can this salary structure be applied to other new joining employees as well?
4. Are there any potential issues with this salary distribution structure?
5. Can someone explain how to prepare a salary sheet for this structure, as I’m unfamiliar with the process? Is this ok -
The salary structure includes the Actual Basic Wage (including DA), Actual HRA, Actual Gross Wages, No. of Days Worked, Wages Earned (including DA), HRA Earned, Total Earned, PF, ESI, Net Payable, and a Signature for verification.
6.Can salary calculation be shown in such a way that the gross salary is prorated based on the number of days in the month, excluding Sundays? For example, for September (30 days), the calculation would be: Gross Salary divided by 25 (30 days minus 5 Sundays) to get the per-day salary. Is this method valid and compliant?
Depending upon the basic salary the HRA should always be different. If you have a constant basic + DA but different HRAs for different employees, there should be some justification. It is permissible if these employees are placed in different cities. But in the same city of posting you cannot have different HRAs for different Basic salaries.
There can be scale like Rs 15001 to Rs 30000 for the same kind of work but the difference in scale should be due to difference in the skill set, say, education and previous experience. Therefore, for freshers you cannot have different scales of pay. It can be Rs 15001 for a fresher, Rs 16000 for those who have at least one year experience and so on.
So far you are satisfying the notified minimum wages fixed by the government in respect of each category of employment there is no issue with a salary structure which offers fixed basic pay and DA and an HRA.
When you fix a salary with basic pay, DA and HRA components, these are expected to be fixed for a month. It will be payable if the employee was not on leave without pay irrespective of the number of calendar days in the month. That is, the salary will be same for February, March, April etc. If there is any day of absence then salary on gross salary shall be deducted based on the calendar days in the month. Some companies take a common divisor, ie, 30 for all the months but some others take days in the calendar month. Even in respect of workers who are given overtime allowance for extra work done, there can be a system of dividing the gross salary by 26 to arrive at daily average of wages.
Depending upon the earned amount against each component of salary, you will get earned Basic, earned DA etc and finally earned salary on which the PF, ESI etc will be decided.
Not forming part of the comment (!!!)
What is the need of keeping Rs 15001 and why not Rs 15000? may be to avoid PF. Fine. But tomorrow if the EMP &MP Act is amended and it is brought to Rs 25000, then what will you do? Will you increase the salary to rs 25001?
From India, Kannur
4222There can be scale like Rs 15001 to Rs 30000 for the same kind of work but the difference in scale should be due to difference in the skill set, say, education and previous experience. Therefore, for freshers you cannot have different scales of pay. It can be Rs 15001 for a fresher, Rs 16000 for those who have at least one year experience and so on.
So far you are satisfying the notified minimum wages fixed by the government in respect of each category of employment there is no issue with a salary structure which offers fixed basic pay and DA and an HRA.
When you fix a salary with basic pay, DA and HRA components, these are expected to be fixed for a month. It will be payable if the employee was not on leave without pay irrespective of the number of calendar days in the month. That is, the salary will be same for February, March, April etc. If there is any day of absence then salary on gross salary shall be deducted based on the calendar days in the month. Some companies take a common divisor, ie, 30 for all the months but some others take days in the calendar month. Even in respect of workers who are given overtime allowance for extra work done, there can be a system of dividing the gross salary by 26 to arrive at daily average of wages.
Depending upon the earned amount against each component of salary, you will get earned Basic, earned DA etc and finally earned salary on which the PF, ESI etc will be decided.
Not forming part of the comment (!!!)
What is the need of keeping Rs 15001 and why not Rs 15000? may be to avoid PF. Fine. But tomorrow if the EMP &MP Act is amended and it is brought to Rs 25000, then what will you do? Will you increase the salary to rs 25001?
From India, Kannur
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