Hi all,
I am Samir working in BPO &
I just came across few problems ( five ) during Salary Structuring & I need your help for the same.
1. Do we have to show DA (dearness Allowance or Cost of leaving allowance) separately?
2. And is DA ( cost of living allowance) & HRA different?
3. As at present our mgmt does not intend to go for PF nor ESIC registration so I have prepare a structure with Basic+ DA greater than 7500.
But if later on mgmt intends to go for registration for PF ,
a. Is it possible to reduce the Basic & DA once given?
b. If we prepare a structure in which we do not show DA seperately how could PF be calculated?
4. Also I have seen few BPO's include monthly gratuity contribution (calculation) in employee's salary is it correct method?
As far I know that, it is company's responsibility & could be given after the employee completes 5 yrs or there is permanent disability to work or if the pt dies on the job. And employer cannot include that contribution or LIC premium ( gratuity policy) in employees salary from beginning it self.
5. I have also come across few structures in BPO in which the Basic, DA is less than the govt specified rates,
Is this not breach of Minimum Wages Act.
Please shed some light on how salary is calculated under Minimum Wages Act.
Waiting for your response,
thanks,
samir.
From India, Surat
I am Samir working in BPO &
I just came across few problems ( five ) during Salary Structuring & I need your help for the same.
1. Do we have to show DA (dearness Allowance or Cost of leaving allowance) separately?
2. And is DA ( cost of living allowance) & HRA different?
3. As at present our mgmt does not intend to go for PF nor ESIC registration so I have prepare a structure with Basic+ DA greater than 7500.
But if later on mgmt intends to go for registration for PF ,
a. Is it possible to reduce the Basic & DA once given?
b. If we prepare a structure in which we do not show DA seperately how could PF be calculated?
4. Also I have seen few BPO's include monthly gratuity contribution (calculation) in employee's salary is it correct method?
As far I know that, it is company's responsibility & could be given after the employee completes 5 yrs or there is permanent disability to work or if the pt dies on the job. And employer cannot include that contribution or LIC premium ( gratuity policy) in employees salary from beginning it self.
5. I have also come across few structures in BPO in which the Basic, DA is less than the govt specified rates,
Is this not breach of Minimum Wages Act.
Please shed some light on how salary is calculated under Minimum Wages Act.
Waiting for your response,
thanks,
samir.
From India, Surat
Hi Samir,
Sure would endeavour to solve as much as we can..
1. Do we have to show DA (dearness Allowance or Cost of leaving allowance) separately?
Yes
2. And is DA ( cost of living allowance) & HRA different?
Yes, they are different..
3. As at present our mgmt does not intend to go for PF nor ESIC registration so I have prepare a structure with Basic+ DA greater than 7500.
But if later on mgmt intends to go for registration for PF ,
a. Is it possible to reduce the Basic & DA once given?
b. If we prepare a structure in which we do not show DA seperately how could PF be calculated?
PF registration is mandatory and statutory requirement..Rs 7500 would help you to skip ESIC contribution but not PF..
IF Registered for PF
a. Yes, you can but not too often as a part of the rationalisation of the salaries if done once a year. This is a must to justify to the PF authorities to justify your action in case of a query or PF audit..but it would n't make much difference..avoid this if you can..first have a game plan for your compensation strategy..
b. If no DA is shown seperately that means no DA therefore PF would be calculated on the basis of 12% on Basic.(otherwise Basic + DA).
4. Also I have seen few BPO's include monthly gratuity contribution (calculation) in employee's salary is it correct method?
Frankly even i don't subscribe to the same but it was well justified by one the members Anilanand..in response to my query on this matter. ( Please do search gratuity contribution for his response..)
As far I know that, it is company's responsibility & could be given after the employee completes 5 yrs or there is permanent disability to work or if the pt dies on the job. And employer cannot include that contribution or LIC premium ( gratuity policy) in employees salary from beginning it self.
Yes, i subscribe to the same...LIC policy is a benefit and it should be out of purview..but if the numbers of employees are substantial..then it may be considered as a part of CTC depending upon the Management's view.
5. I have also come across few structures in BPO in which the Basic, DA is less than the govt specified rates,
Is this not breach of Minimum Wages Act.
Am not aware of this..would check and revert..please share the structure for us to comment on the same..
Hope this helps..
Cheers,
Rajat
From India, Pune
101Sure would endeavour to solve as much as we can..
1. Do we have to show DA (dearness Allowance or Cost of leaving allowance) separately?
Yes
2. And is DA ( cost of living allowance) & HRA different?
Yes, they are different..
3. As at present our mgmt does not intend to go for PF nor ESIC registration so I have prepare a structure with Basic+ DA greater than 7500.
But if later on mgmt intends to go for registration for PF ,
a. Is it possible to reduce the Basic & DA once given?
b. If we prepare a structure in which we do not show DA seperately how could PF be calculated?
PF registration is mandatory and statutory requirement..Rs 7500 would help you to skip ESIC contribution but not PF..
IF Registered for PF
a. Yes, you can but not too often as a part of the rationalisation of the salaries if done once a year. This is a must to justify to the PF authorities to justify your action in case of a query or PF audit..but it would n't make much difference..avoid this if you can..first have a game plan for your compensation strategy..
b. If no DA is shown seperately that means no DA therefore PF would be calculated on the basis of 12% on Basic.(otherwise Basic + DA).
4. Also I have seen few BPO's include monthly gratuity contribution (calculation) in employee's salary is it correct method?
Frankly even i don't subscribe to the same but it was well justified by one the members Anilanand..in response to my query on this matter. ( Please do search gratuity contribution for his response..)
As far I know that, it is company's responsibility & could be given after the employee completes 5 yrs or there is permanent disability to work or if the pt dies on the job. And employer cannot include that contribution or LIC premium ( gratuity policy) in employees salary from beginning it self.
Yes, i subscribe to the same...LIC policy is a benefit and it should be out of purview..but if the numbers of employees are substantial..then it may be considered as a part of CTC depending upon the Management's view.
5. I have also come across few structures in BPO in which the Basic, DA is less than the govt specified rates,
Is this not breach of Minimum Wages Act.
Am not aware of this..would check and revert..please share the structure for us to comment on the same..
Hope this helps..
Cheers,
Rajat
From India, Pune
Thank you,
Rajat Sir for your views,
I have another question ,
Do we have to give DA compulsory for all ?
Say if we don't give DA does this invite penalties ?
And please find below pay structure in one BPO in mumbai , giving name would be not proper,
Below is the description of salary for a Associate for the month of July 2004.
Month Arrears Total
Basic 2888.00 95.00 2983.00
HRA 1155.00 57.00 1212..00
conv 1200.00 39.00 1239.00
other all 1325.00 34.00 1359.00
Medical Rem 625.00 27.00 652.00
LTA .00 8.00 8.00
Performance Reward 241.00 8.00 249.00
Incentive 1000.00 0.00 1000.00
Meal All 750.00 24.66 774.66
CCA 750.00 0.00 750.00
Gross Earnings 10226.66
Deductions
PF 347.00 11.00 358.00
PT 200.00 .00 200.00
Gross Deductions 558.00
Net Salary 9668.66
And I have Mim Wages Rates Declared for Oct 2005 to March 2006
Basic DA HRA Total
Skilled 3300 275 181 3756
Semi Skilled 3230 275 176 3681
Un Skilled 3131 275 171 3577
Although we cannot compare July 2004 & Oct 2005 structure but this does gives a fair idea.
Also I have seen a recent opened Domestic Call Center gave 1800 Basic .
Please help me to understand the structure better.
Again Thanks,
samir.
From India, Surat
Rajat Sir for your views,
I have another question ,
Do we have to give DA compulsory for all ?
Say if we don't give DA does this invite penalties ?
And please find below pay structure in one BPO in mumbai , giving name would be not proper,
Below is the description of salary for a Associate for the month of July 2004.
Month Arrears Total
Basic 2888.00 95.00 2983.00
HRA 1155.00 57.00 1212..00
conv 1200.00 39.00 1239.00
other all 1325.00 34.00 1359.00
Medical Rem 625.00 27.00 652.00
LTA .00 8.00 8.00
Performance Reward 241.00 8.00 249.00
Incentive 1000.00 0.00 1000.00
Meal All 750.00 24.66 774.66
CCA 750.00 0.00 750.00
Gross Earnings 10226.66
Deductions
PF 347.00 11.00 358.00
PT 200.00 .00 200.00
Gross Deductions 558.00
Net Salary 9668.66
And I have Mim Wages Rates Declared for Oct 2005 to March 2006
Basic DA HRA Total
Skilled 3300 275 181 3756
Semi Skilled 3230 275 176 3681
Un Skilled 3131 275 171 3577
Although we cannot compare July 2004 & Oct 2005 structure but this does gives a fair idea.
Also I have seen a recent opened Domestic Call Center gave 1800 Basic .
Please help me to understand the structure better.
Again Thanks,
samir.
From India, Surat
Hi Samir,
DA is compulsory for the workers but not for staff in the private sector.
The structure is okay doesn't voilate the laws as such..here the basic is on the lower side to reduce the statutory dues..
Minimuw wages is for the workers..
Hey let me confirm your doubts once again through others..
Regards,
Rajat
From India, Pune
DA is compulsory for the workers but not for staff in the private sector.
The structure is okay doesn't voilate the laws as such..here the basic is on the lower side to reduce the statutory dues..
Minimuw wages is for the workers..
Hey let me confirm your doubts once again through others..
Regards,
Rajat
From India, Pune
Hi Sameer,
Please call me just Rajat..not sir..as we all are students..even you are teaching me as well... :)
Checked up with the consultants esp on minimum wages & DA..
We confirm that DA is not compulsory..
Secondly the salary structure
And please find below pay structure in one BPO in mumbai , giving name would be not proper,
Below is the description of salary for a Associate for the month of July 2004.
Month Arrears Total
Basic 2888.00 95.00 2983.00
HRA 1155.00 57.00 1212..00
conv 1200.00 39.00 1239.00
other all 1325.00 34.00 1359.00
Medical Rem 625.00 27.00 652.00
LTA .00 8.00 8.00
Performance Reward 241.00 8.00 249.00
Incentive 1000.00 0.00 1000.00
Meal All 750.00 24.66 774.66
CCA 750.00 0.00 750.00
Gross Earnings 10226.66
Deductions
PF 347.00 11.00 358.00
PT 200.00 .00 200.00
Gross Deductions 558.00
Net Salary 9668.66
And I have Mim Wages Rates Declared for Oct 2005 to March 2006
Basic DA HRA Total
Skilled 3300 275 181 3756
Semi Skilled 3230 275 176 3681
Un Skilled 3131 275 171 3577
Since the salary of the Associate exceeds the minimum wages that is Rs 3756/- therefore one doesn't violate the act..
Cheers,
Rajat
From India, Pune
Please call me just Rajat..not sir..as we all are students..even you are teaching me as well... :)
Checked up with the consultants esp on minimum wages & DA..
We confirm that DA is not compulsory..
Secondly the salary structure
And please find below pay structure in one BPO in mumbai , giving name would be not proper,
Below is the description of salary for a Associate for the month of July 2004.
Month Arrears Total
Basic 2888.00 95.00 2983.00
HRA 1155.00 57.00 1212..00
conv 1200.00 39.00 1239.00
other all 1325.00 34.00 1359.00
Medical Rem 625.00 27.00 652.00
LTA .00 8.00 8.00
Performance Reward 241.00 8.00 249.00
Incentive 1000.00 0.00 1000.00
Meal All 750.00 24.66 774.66
CCA 750.00 0.00 750.00
Gross Earnings 10226.66
Deductions
PF 347.00 11.00 358.00
PT 200.00 .00 200.00
Gross Deductions 558.00
Net Salary 9668.66
And I have Mim Wages Rates Declared for Oct 2005 to March 2006
Basic DA HRA Total
Skilled 3300 275 181 3756
Semi Skilled 3230 275 176 3681
Un Skilled 3131 275 171 3577
Since the salary of the Associate exceeds the minimum wages that is Rs 3756/- therefore one doesn't violate the act..
Cheers,
Rajat
From India, Pune
thank you,
Rajat :D
That was a very good point to remember that DA is not compulsory, great... :)
And Now I understood,
So we have to see the total of Basic+ DA+HRA (combine) & see that it is above the govt specified standard,
Irrelevant that basic in particular is below , but the combine of all 3 is above , then it is not violating minimum wages act,
Am I right?
Please guide me,
samir.
From India, Surat
Rajat :D
That was a very good point to remember that DA is not compulsory, great... :)
And Now I understood,
So we have to see the total of Basic+ DA+HRA (combine) & see that it is above the govt specified standard,
Irrelevant that basic in particular is below , but the combine of all 3 is above , then it is not violating minimum wages act,
Am I right?
Please guide me,
samir.
From India, Surat
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