Subject: Salary Components For Unregistered Company.
Dear All,
I am working in Outsourcing company, i want Prepare the salary structure of the employees but the company is unregistered for PF,ESIC then which components have to take in salary structure..
and kindly provide the explanation about that components.
Thanks and Regrads,
Chetan Thorat
From India, Mumbai
3Dear All,
I am working in Outsourcing company, i want Prepare the salary structure of the employees but the company is unregistered for PF,ESIC then which components have to take in salary structure..
and kindly provide the explanation about that components.
Thanks and Regrads,
Chetan Thorat
From India, Mumbai
dear mr chetan,
In case you are covered by ESI and PF acts, you have to obtain their code no and do the deduction from basic and DA. You have to pay the salary to the employees as per their categories in the scheduled employment as per Minimum wages act. If you are having more than 50 employees 5% minimum house rent allowance is required to be paid if the establishment is located in maharashtra.The special allowance declared by the Govt every 6 months will be applicable. In addition you have to make a provision for gratuity if the worker works beyond 5 years. Bonus payment has also to be earmarked at minimum 8.33% or above. If you are looking to pay more perks you can pay as attendance allowance or conveyance allowance for day attended.
From India, Pune
In case you are covered by ESI and PF acts, you have to obtain their code no and do the deduction from basic and DA. You have to pay the salary to the employees as per their categories in the scheduled employment as per Minimum wages act. If you are having more than 50 employees 5% minimum house rent allowance is required to be paid if the establishment is located in maharashtra.The special allowance declared by the Govt every 6 months will be applicable. In addition you have to make a provision for gratuity if the worker works beyond 5 years. Bonus payment has also to be earmarked at minimum 8.33% or above. If you are looking to pay more perks you can pay as attendance allowance or conveyance allowance for day attended.
From India, Pune
now a days 18 people are working..
if i am paying HRA, MED allow, LTA, Conv. is it mandatory to show proof of house rent, traveling bills and other related bills,
because my manager told me that we cant pay above components without registration of company..
is it Right or Wrong ? if wrong then Suggest me a proper Components.
From India, Mumbai
if i am paying HRA, MED allow, LTA, Conv. is it mandatory to show proof of house rent, traveling bills and other related bills,
because my manager told me that we cant pay above components without registration of company..
is it Right or Wrong ? if wrong then Suggest me a proper Components.
From India, Mumbai
Sub- basic components of salary
The salary should provide a standard family a wage that answers the needs of his family. This wage was termed as fair wage by the Apex Court in Express News Papers' case. The Apex Court in All India Reserve Bank Employees’ Association V. Reserve Bank of India & anr 1965 II LLJ 175 defined fair wage as one that shall be able to provide a standard family with food, shelter, clothing, education and health care. Therefore the basic components of salary shall consist of the following :
1) Basic pay
2) Dearness allowance
3)House rent allowance
4) Conveyance allowance
Apart from this, a company may provide for schemes for reimbursement of medical expenses and educational expenses to enable an employee to meet his needs on this front and this may not be part of the salary.
Then the question arises as to how much will be the basic pay and dearness allowance for a particular category of employees. The following guidelines may be of help in this regard.
1) As DMC123 has suggested, the state Governments notify basic pay and special allowances (D.A ) under Minimum Wages Act for each category of employees employed in different categories of establishments like shops, commercial establishments, factories etc. You can take it as basis for fixing the quantum of various components of salary.
2) The second alternative will be to fix wages on Region –cum- industry principle. For this, collect the data about the salary structure of the employees, employed in industries/concerns comparable to yours in the region in which your industry is located so as to arrive at a basis.
3) if there is no industry or concern comparable to yours is not existing in the region, you can fix the wage son the basis of Industry-cum- region principle. In this you will collect data of the salary structure of all the industries located in your region so as to arrive at a prudent structure for your company.
B.Saikumar
HR & labour Law Consultant
Chipinbiz Consultancy Pvt Ltd.
Mumbai
From India, Mumbai
The salary should provide a standard family a wage that answers the needs of his family. This wage was termed as fair wage by the Apex Court in Express News Papers' case. The Apex Court in All India Reserve Bank Employees’ Association V. Reserve Bank of India & anr 1965 II LLJ 175 defined fair wage as one that shall be able to provide a standard family with food, shelter, clothing, education and health care. Therefore the basic components of salary shall consist of the following :
1) Basic pay
2) Dearness allowance
3)House rent allowance
4) Conveyance allowance
Apart from this, a company may provide for schemes for reimbursement of medical expenses and educational expenses to enable an employee to meet his needs on this front and this may not be part of the salary.
Then the question arises as to how much will be the basic pay and dearness allowance for a particular category of employees. The following guidelines may be of help in this regard.
1) As DMC123 has suggested, the state Governments notify basic pay and special allowances (D.A ) under Minimum Wages Act for each category of employees employed in different categories of establishments like shops, commercial establishments, factories etc. You can take it as basis for fixing the quantum of various components of salary.
2) The second alternative will be to fix wages on Region –cum- industry principle. For this, collect the data about the salary structure of the employees, employed in industries/concerns comparable to yours in the region in which your industry is located so as to arrive at a basis.
3) if there is no industry or concern comparable to yours is not existing in the region, you can fix the wage son the basis of Industry-cum- region principle. In this you will collect data of the salary structure of all the industries located in your region so as to arrive at a prudent structure for your company.
B.Saikumar
HR & labour Law Consultant
Chipinbiz Consultancy Pvt Ltd.
Mumbai
From India, Mumbai
dear chetan
sub- salary components
What needs to be understood is that once you become covered by P.F/ESI. You need to register your comapny under the respective Acts. So far as teh P.F is concerned, once the comapny is registered, you need pay contribution under Sec6 of the P.F Act on the basic wages + D.A + Retaining allowance.+cash value of food concession, if any given by your comapny. Even though thehe definition of basic wages under Sec.2(b) of the P.F Act excludes HRA, bonus, commission or any other similar allowance and thus excludes them from being counted for cotribution, the hon'ble High Court of Gujrat in Gujrat Cypromete Ltd V. Assistant P.F.commissioner, 2004 III CLR 485 held that the' basic wages' under Sec.2(b) of the Act includes various allowance like lunch,medical,conveyance allowance except HRA.thus the position is that except HRA, bonus or commission, many other allowances may count for contribution of P.F.
So far as ESI is concerned, the law is more liberal and contribution is payable on all emoluments which are payable on fulfilling the terms of employment and thus it is to be payable on Basic Pay, Dearness Allowance, House Rent Allowance, Night Shift Allowance, Heat, Gas And Dust Allowance as laid down in Harihar Polyfibres v. ESIC 1984 II LLJ (S.C).ii).
This apart, contribution is also payable on over-time wages as laid down in Indian Drugs Pharmaceuticals Ltd v. ESIC, 1997 II LLJ 475 (S.C) or on Travelling or Conveyance Allowance if it is paid under a settlement(Dy. Director ESIC v. Amrutanjan Ltd & Ors. (APHC) 2009 LIC 2354).
B.Saikumar
HR & labour Law Consultant
Chipinbiz Consultancy Pvt Ltd.
Mumbai
From India, Mumbai
sub- salary components
What needs to be understood is that once you become covered by P.F/ESI. You need to register your comapny under the respective Acts. So far as teh P.F is concerned, once the comapny is registered, you need pay contribution under Sec6 of the P.F Act on the basic wages + D.A + Retaining allowance.+cash value of food concession, if any given by your comapny. Even though thehe definition of basic wages under Sec.2(b) of the P.F Act excludes HRA, bonus, commission or any other similar allowance and thus excludes them from being counted for cotribution, the hon'ble High Court of Gujrat in Gujrat Cypromete Ltd V. Assistant P.F.commissioner, 2004 III CLR 485 held that the' basic wages' under Sec.2(b) of the Act includes various allowance like lunch,medical,conveyance allowance except HRA.thus the position is that except HRA, bonus or commission, many other allowances may count for contribution of P.F.
So far as ESI is concerned, the law is more liberal and contribution is payable on all emoluments which are payable on fulfilling the terms of employment and thus it is to be payable on Basic Pay, Dearness Allowance, House Rent Allowance, Night Shift Allowance, Heat, Gas And Dust Allowance as laid down in Harihar Polyfibres v. ESIC 1984 II LLJ (S.C).ii).
This apart, contribution is also payable on over-time wages as laid down in Indian Drugs Pharmaceuticals Ltd v. ESIC, 1997 II LLJ 475 (S.C) or on Travelling or Conveyance Allowance if it is paid under a settlement(Dy. Director ESIC v. Amrutanjan Ltd & Ors. (APHC) 2009 LIC 2354).
B.Saikumar
HR & labour Law Consultant
Chipinbiz Consultancy Pvt Ltd.
Mumbai
From India, Mumbai
Dear All, Good morning!!!! before the regi.can i take below components in salary structure. 1) Basic 2) HRA 3) Conv. 4) Medi. All. 5) CCA 6) Other Allow 7) Bonus
From India, Mumbai
From India, Mumbai
dear mr chetan
what do you mean by unregistered co.? Under labour laws you ought to get shop and commercial establishment licence, the minimum wages of your area i.e. location where your estt is located as per the zone of scheduled employment plus special allowance as declared by govt. is the bare minimum which is mandatory and in case your strength is beyond 50 5% hra is also mandatory. But with this meagre salary obtaining manpower will be a big challenge for you.
From India, Pune
what do you mean by unregistered co.? Under labour laws you ought to get shop and commercial establishment licence, the minimum wages of your area i.e. location where your estt is located as per the zone of scheduled employment plus special allowance as declared by govt. is the bare minimum which is mandatory and in case your strength is beyond 50 5% hra is also mandatory. But with this meagre salary obtaining manpower will be a big challenge for you.
From India, Pune
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SALARY CAN BE SPLIT INTO COMPONENTS BUT NOT LESS THAN THE MINIMUM WAGES.docx