Hello everyone,
This is my first post on this forum, although I have been a long-time member, learning a lot from your valuable discussions. I am seeking clarity on the topic of minimum wages, particularly regarding certain technicalities where I have encountered varying opinions but have not yet reached a satisfactory conclusion.
As we know, the government regularly issues Minimum Wage notifications that adjust for the Cost of Living across different types of employment. The notification specifies Basic and Variable Dearness Allowance (VDA), which together make up the minimum wage for each employment type and skill grade in a given state.
According to Section 2(h) of the Minimum Wages Act, 1948:
“Wages means all remuneration, capable of being expressed in terms of money, which, if the terms of the contract of employment (express or implied) were fulfilled, would be payable to a person employed in respect of his employment or of work done in such employment, and includes house rent allowance...”
From this, I understand that "wages" is a summation of Basic + Allowances, including HRA, with certain exclusions.
Now, considering a salary structure for a private company, for example:
Basic: ₹13,500/-
HRA: ₹1,000/-
Other Allowances: ₹1,000/-
Gross Salary: Basic + HRA + Other Allowances = ₹15,500/-
Here, is the "Gross Salary" equivalent to the "Wages" as defined in the Act? (Question 1)
Further, let’s assume that the Government Notification for the relevant industry specifies:
Basic: ₹11,500/-
VDA: ₹2,500/-
Total Minimum Wage: ₹14,000/-
I've come across two different interpretations regarding compliance with the minimum wage requirements:
Opinion 1: Since the Gross Salary (i.e., ₹15,500/-) is higher than the Total Minimum Wage (₹14,000/-), everything is in order and can be processed.
Opinion 2: The Basic component must be at least equal to Basic + VDA specified in the notification, i.e., ₹14,000/-. Only then can we add a minimum of 5% for HRA, with the remaining amount allocated to other allowances, in order to be legally compliant.
Could you please help me understand which opinion is legally correct, with reference to the relevant Acts, rules, or any judicial precedents?
NOTE: PF amount is calculated on Basic + Other Allowances (For the scenario)
Your insights and guidance would be highly appreciated.
Thank you.
Best Regards,
Azhar
From India, Wada
This is my first post on this forum, although I have been a long-time member, learning a lot from your valuable discussions. I am seeking clarity on the topic of minimum wages, particularly regarding certain technicalities where I have encountered varying opinions but have not yet reached a satisfactory conclusion.
As we know, the government regularly issues Minimum Wage notifications that adjust for the Cost of Living across different types of employment. The notification specifies Basic and Variable Dearness Allowance (VDA), which together make up the minimum wage for each employment type and skill grade in a given state.
According to Section 2(h) of the Minimum Wages Act, 1948:
“Wages means all remuneration, capable of being expressed in terms of money, which, if the terms of the contract of employment (express or implied) were fulfilled, would be payable to a person employed in respect of his employment or of work done in such employment, and includes house rent allowance...”
From this, I understand that "wages" is a summation of Basic + Allowances, including HRA, with certain exclusions.
Now, considering a salary structure for a private company, for example:
Basic: ₹13,500/-
HRA: ₹1,000/-
Other Allowances: ₹1,000/-
Gross Salary: Basic + HRA + Other Allowances = ₹15,500/-
Here, is the "Gross Salary" equivalent to the "Wages" as defined in the Act? (Question 1)
Further, let’s assume that the Government Notification for the relevant industry specifies:
Basic: ₹11,500/-
VDA: ₹2,500/-
Total Minimum Wage: ₹14,000/-
I've come across two different interpretations regarding compliance with the minimum wage requirements:
Opinion 1: Since the Gross Salary (i.e., ₹15,500/-) is higher than the Total Minimum Wage (₹14,000/-), everything is in order and can be processed.
Opinion 2: The Basic component must be at least equal to Basic + VDA specified in the notification, i.e., ₹14,000/-. Only then can we add a minimum of 5% for HRA, with the remaining amount allocated to other allowances, in order to be legally compliant.
Could you please help me understand which opinion is legally correct, with reference to the relevant Acts, rules, or any judicial precedents?
NOTE: PF amount is calculated on Basic + Other Allowances (For the scenario)
Your insights and guidance would be highly appreciated.
Thank you.
Best Regards,
Azhar
From India, Wada
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