Dear All
I am working with a company as HR Exe.
As i am in the same line since last 4 years. I have a doubt that can be bifurcate minimum wages into 2 or 3 allowances as per company salary structure i.e,
Minimum Wages in Chandigarh Rs. 3550/-.
After Bifurcation
Basic = 1775/-
HRA = 888/-
Con. = 888/-
Total = 3551/-
As per EPF Act (Basic + DA)
I have searched so many books but result till nil. If you have any notification or judgment then pls forward to me or suggest me but will be the right in this case.
I have also worked with Consultant and audited so many companies and they are also bifurcating the minimum wages. Even in a case when i was handling the EPF inspection i have asked to the inspector that if they have in written that we cannot bifurcate minimum wages then pls show to us. But after some time the topic is closed so now i want to know from all of the members of this site.
Amit
HR Exe
From India, New Delhi
I am working with a company as HR Exe.
As i am in the same line since last 4 years. I have a doubt that can be bifurcate minimum wages into 2 or 3 allowances as per company salary structure i.e,
Minimum Wages in Chandigarh Rs. 3550/-.
After Bifurcation
Basic = 1775/-
HRA = 888/-
Con. = 888/-
Total = 3551/-
As per EPF Act (Basic + DA)
I have searched so many books but result till nil. If you have any notification or judgment then pls forward to me or suggest me but will be the right in this case.
I have also worked with Consultant and audited so many companies and they are also bifurcating the minimum wages. Even in a case when i was handling the EPF inspection i have asked to the inspector that if they have in written that we cannot bifurcate minimum wages then pls show to us. But after some time the topic is closed so now i want to know from all of the members of this site.
Amit
HR Exe
From India, New Delhi
Dear Friend There is one judgment popularly known as Air-Freight Case wherein Supreme court has decided that Min. Wages should be treated as one component only and not to be divided... Regards
From India, Vadodara
21From India, Vadodara
Dear Amit,
Minimum Wages can be further broken down into various components, but the Basic+Fixed DA portion should comprise of majority percentage, unless there is an union agreement/ settlement in this regard, taking a progressive view.
For example:
Basic + Fixed DA= 55% of Minimum Wages
VDA +HRA+ other Allowances= 45% of Minimum Wages
Minimum Wages is the minimum total gross wages an organisation must pay to employ people in industries covered under Minimum Wages Act. The definition of wages is as given in the Act, we need not go to any other sources to interpret the term wages.
Regards,
SC
From India, Thane
Minimum Wages can be further broken down into various components, but the Basic+Fixed DA portion should comprise of majority percentage, unless there is an union agreement/ settlement in this regard, taking a progressive view.
For example:
Basic + Fixed DA= 55% of Minimum Wages
VDA +HRA+ other Allowances= 45% of Minimum Wages
Minimum Wages is the minimum total gross wages an organisation must pay to employ people in industries covered under Minimum Wages Act. The definition of wages is as given in the Act, we need not go to any other sources to interpret the term wages.
Regards,
SC
From India, Thane
Dear Friends
If we read para 19 it include the following words
"The idea of fixing such wage in the light of the cost of living at a particular juncture of time and of neutralising the rising prices of essential commodities by linking up scales of minimum wages with the cost of living index is provided for in Section 4 but VDA is part and parcel of wages. Once rates of minimum wages are prescribed under the Act, whether as all-inclusive under Section 4(1)(iii) or by combining basic plus dearness allowance under Section 4(1)(i), are not amenable to split up. It is one pay package. Neither the scheme nor any provision of the Act provides that the rates of minimum wages are to be split up on the basis of the cost of each of the necessities taken into consideration for fixing the same."
It may pls be noted that the definition of Wages under the Act never say so that the Minimum wages can be bifurcated under various heads...
Regards
From India, Vadodara
If we read para 19 it include the following words
"The idea of fixing such wage in the light of the cost of living at a particular juncture of time and of neutralising the rising prices of essential commodities by linking up scales of minimum wages with the cost of living index is provided for in Section 4 but VDA is part and parcel of wages. Once rates of minimum wages are prescribed under the Act, whether as all-inclusive under Section 4(1)(iii) or by combining basic plus dearness allowance under Section 4(1)(i), are not amenable to split up. It is one pay package. Neither the scheme nor any provision of the Act provides that the rates of minimum wages are to be split up on the basis of the cost of each of the necessities taken into consideration for fixing the same."
It may pls be noted that the definition of Wages under the Act never say so that the Minimum wages can be bifurcated under various heads...
Regards
From India, Vadodara
Dear All,
The term wages is defined as below:
According to Section 2(h) "wages" means all remuneration capable of being expressed in terms of money which would if the terms of the contract of employment express or implied were fulfilled be payable to a person employed in respect of his employment or of work done in such employment and includes house rent allowance but does not include -
(i) the value of -
(a) any house accommodation supply of light water medical attendance or
(b) any other amenity or any service excluded by general or special order of the appropriate government;
(ii) any contribution paid by the employer to any person fund or provident fund or under any scheme of social insurance;
(iii) any traveling allowance or the value of any traveling concession;
(iv) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or
(v) any gratuity payable on discharge;
(i) "employee" means any person who is employed for hire or reward to do any work skilled or unskilled manual or clerical in a scheduled employment in respect of which minimum rates of wages have been fixed; and includes an out-worker to whom any articles or materials are given out by another person to be made up cleaned washed altered ornamented finished repaired adapted or otherwise processed for sale for the purposes of the trade or business of that other person where the process is to be carried out either in the home of the out-worker or in some other premises not being premises under the control and management of that other person; and also includes an employee declared to be an employee by the appropriate government; but does not include any member of the Armed Forces of the Union.
and you can bifurcate and spread it across the components described. What we cannot do is deny payment of any component after bifurcation. The cap is on payment and not bifurcation.
For example in West Bengal you need to pay 5% of Basic as HRA, as per West Bengal House Rent Allowance Act, so should we include it in Minimum Wages or should it be pay additional to Minimum Wages? Since an all inclusive rate is given in West Bengal, we take it that HRA is included in Minimum Wages.
Regards,
SC
From India, Thane
The term wages is defined as below:
According to Section 2(h) "wages" means all remuneration capable of being expressed in terms of money which would if the terms of the contract of employment express or implied were fulfilled be payable to a person employed in respect of his employment or of work done in such employment and includes house rent allowance but does not include -
(i) the value of -
(a) any house accommodation supply of light water medical attendance or
(b) any other amenity or any service excluded by general or special order of the appropriate government;
(ii) any contribution paid by the employer to any person fund or provident fund or under any scheme of social insurance;
(iii) any traveling allowance or the value of any traveling concession;
(iv) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or
(v) any gratuity payable on discharge;
(i) "employee" means any person who is employed for hire or reward to do any work skilled or unskilled manual or clerical in a scheduled employment in respect of which minimum rates of wages have been fixed; and includes an out-worker to whom any articles or materials are given out by another person to be made up cleaned washed altered ornamented finished repaired adapted or otherwise processed for sale for the purposes of the trade or business of that other person where the process is to be carried out either in the home of the out-worker or in some other premises not being premises under the control and management of that other person; and also includes an employee declared to be an employee by the appropriate government; but does not include any member of the Armed Forces of the Union.
and you can bifurcate and spread it across the components described. What we cannot do is deny payment of any component after bifurcation. The cap is on payment and not bifurcation.
For example in West Bengal you need to pay 5% of Basic as HRA, as per West Bengal House Rent Allowance Act, so should we include it in Minimum Wages or should it be pay additional to Minimum Wages? Since an all inclusive rate is given in West Bengal, we take it that HRA is included in Minimum Wages.
Regards,
SC
From India, Thane
Dear Friend
The definition clearly states that Min Wages include HRA and make it one component itself and specifically exclude the other five things. I and not even Supreme court think that it can be bifucated or trifurcated.
Regards
From India, Vadodara
The definition clearly states that Min Wages include HRA and make it one component itself and specifically exclude the other five things. I and not even Supreme court think that it can be bifucated or trifurcated.
Regards
From India, Vadodara
Dear Kuljit, I want only one clarification, say for example the Minimum Wages is Rs. 100 what will be PF Contribution amount? Regards, SC
From India, Thane
From India, Thane
Dear Friend
Both PF Act and MW Act are different statutes and so dealt accordingly.
I got ur intention to ask this question as PF to be deducted on Basic salary only,
Minimum wages includes HRA, but basic salary under PF Act excludes HRA
But we should go with the judgment to clear the ambiguity and treat Minimum wages as one component and deduct PF on 100 Rs.
What u say???
With Highest Regards
From India, Vadodara
Both PF Act and MW Act are different statutes and so dealt accordingly.
I got ur intention to ask this question as PF to be deducted on Basic salary only,
Minimum wages includes HRA, but basic salary under PF Act excludes HRA
But we should go with the judgment to clear the ambiguity and treat Minimum wages as one component and deduct PF on 100 Rs.
What u say???
With Highest Regards
From India, Vadodara
Hi
Kuljit is right. In a situation like that take the total wages as consolidated single salary component and don't bifurcate. If it goes down the prescribed wages, then you have to adhere to PF/ESI fwherein employer has to contribute on their own. Alwasy when it comes to salary fixation, please don't just stick on to the base line so tight.
Advise the management to relax by little higher value to freely exercise incase of unexpected contingency due to amendment changes in Act.
Many employers do unwanted expenses and pay little or no attention when it comes to statutory compliance. It is quite difficult to change their attitude unless the respective statutory commissioners take the whip into their hands to reprimand.
Regards,
Chandru
From India, Madras
Kuljit is right. In a situation like that take the total wages as consolidated single salary component and don't bifurcate. If it goes down the prescribed wages, then you have to adhere to PF/ESI fwherein employer has to contribute on their own. Alwasy when it comes to salary fixation, please don't just stick on to the base line so tight.
Advise the management to relax by little higher value to freely exercise incase of unexpected contingency due to amendment changes in Act.
Many employers do unwanted expenses and pay little or no attention when it comes to statutory compliance. It is quite difficult to change their attitude unless the respective statutory commissioners take the whip into their hands to reprimand.
Regards,
Chandru
From India, Madras
In addition to this discussion that Minimum Wages can be bifurcate or not, please advise the minimum wages is applicable on contract labour/semi-contract labour or it applies on all the employees on roll also (including office staff, admin etc.). Becasue in case it is applicable to employees as well then i have seen many cases where the basic is less than minimum wages and rest other components (fixed every month) are like HRA, conveyance, sepcial allowance comes to more than minimum wage. Dear Friends please resolve.
Thanks & Regard,
Deepak
From India, Gurgaon
Thanks & Regard,
Deepak
From India, Gurgaon
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Delhi - Minimum Wages w.e.f. 01.10.2012 (1).pdf
Minimum Wages in Maharashtra for the period January 2018 to June 2018.xls