Hi, Does the new code on wages- "As per the new rules, the allowance component cannot exceed 50 percent of the total salary", applicable to senior management employees also? Please suggest.
From India, Navi Mumbai
From India, Navi Mumbai
Dear Samvedana,
Since the definition of "wages" in section 2 (y) of the Code on Wages 2019 uses the word "person employed", in my opinion, it will apply to all employees.
Since the definition of "employee" in clause (k) of section 2 of the Act 2019 includes employees employed in managerial and administrative posts also, I am of the opinion that the provision of certain components not to exceed 50% will apply to senior management employees also.
S. K. Mittal
9319956443
From India, Faridabad
50Since the definition of "wages" in section 2 (y) of the Code on Wages 2019 uses the word "person employed", in my opinion, it will apply to all employees.
Since the definition of "employee" in clause (k) of section 2 of the Act 2019 includes employees employed in managerial and administrative posts also, I am of the opinion that the provision of certain components not to exceed 50% will apply to senior management employees also.
S. K. Mittal
9319956443
From India, Faridabad
Dear Mr. Mittal,
Can you please help me understand this New Code on Wages.
The Act says" Wages means all remuneration by way of
1.Salaries
2.Allowances
3.Otherwise , expressed in terms of money or capable of being so expressed..... and includes
(Inclusionary part of the definition)
i. Basic Pay
ii. Dearness Allowance
iii. Retaining Allowance
It says wages includes Basic, DA, Retaining Allowance.
Means no other components form part of wages (If basic+ DA+ Retaining Allowance is 50% or more of the total remuneration).
But if bonus( or performance Bonus) is part of your CTC/mentioned in your appointment letter, it will be a part of the wages and the wages components will be Basic+ DA+ Retaining allowance and Performance Bonus(payable under terms of employment or HR policy).
If basic+ DA+ Retaining allowance is 40% , and other excluded components ( HRA, Conveyance, Special/General Allowance, so called employer share of PF) is 60% of total remuneration, then 10% from excluded components will be considered as wages for the purpose of Provident Fund, Gratuity, ESIC, Bonus and Leave Salary etc .
and wages thus arrived , will be considered to make employee eligible for PF/ESIC/Bonus etc Please confirm.
Will the following components be included in total remuneration for computing 50% threshold limits
1. Lunch Coupons- Payment by employer to Meal providing company
2. Subsidy by employer to his employees in different services.
3.Notice Period buy out- Payment to employee
4 Staff Health Insurance- Payment by employer to Insurance company
5. Payment to employee(not all employee) for taking on some additional responsibility for a specified period of time
6 Payment in Flexi basket( Books and Periodicals/ Telephone Reim/ Leave Travel allowance)
Regards
Puran
From India, New Delhi
Can you please help me understand this New Code on Wages.
The Act says" Wages means all remuneration by way of
1.Salaries
2.Allowances
3.Otherwise , expressed in terms of money or capable of being so expressed..... and includes
(Inclusionary part of the definition)
i. Basic Pay
ii. Dearness Allowance
iii. Retaining Allowance
It says wages includes Basic, DA, Retaining Allowance.
Means no other components form part of wages (If basic+ DA+ Retaining Allowance is 50% or more of the total remuneration).
But if bonus( or performance Bonus) is part of your CTC/mentioned in your appointment letter, it will be a part of the wages and the wages components will be Basic+ DA+ Retaining allowance and Performance Bonus(payable under terms of employment or HR policy).
If basic+ DA+ Retaining allowance is 40% , and other excluded components ( HRA, Conveyance, Special/General Allowance, so called employer share of PF) is 60% of total remuneration, then 10% from excluded components will be considered as wages for the purpose of Provident Fund, Gratuity, ESIC, Bonus and Leave Salary etc .
and wages thus arrived , will be considered to make employee eligible for PF/ESIC/Bonus etc Please confirm.
Will the following components be included in total remuneration for computing 50% threshold limits
1. Lunch Coupons- Payment by employer to Meal providing company
2. Subsidy by employer to his employees in different services.
3.Notice Period buy out- Payment to employee
4 Staff Health Insurance- Payment by employer to Insurance company
5. Payment to employee(not all employee) for taking on some additional responsibility for a specified period of time
6 Payment in Flexi basket( Books and Periodicals/ Telephone Reim/ Leave Travel allowance)
Regards
Puran
From India, New Delhi
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Code on wages (TN) rules 2022.pdf