Hi, Request your support to clarify the following:
We are contracting company executing projects PAN India. We get orders from Major Corporates and the same will be subcontracted to different contractors. We ensure that statutory compliances are adhered by all the subcontractors, like PF, ESI, PT, LWF, Minimum Wages, etc.,
In turn we submit our Compliance documents to our client. Now one of our client wants us to provide the attendance and salary workings only for 26 days instead of 30 days. Rather they informed what we are following is wrong and they also advised to change the HR.
Can somebody guide me on this? Do we have any support to justify the 26-day calculation instead of 30 days? Will there be any issues in future?
Thanking you in advance.
Regards
Mary
From India, Madras
2We are contracting company executing projects PAN India. We get orders from Major Corporates and the same will be subcontracted to different contractors. We ensure that statutory compliances are adhered by all the subcontractors, like PF, ESI, PT, LWF, Minimum Wages, etc.,
In turn we submit our Compliance documents to our client. Now one of our client wants us to provide the attendance and salary workings only for 26 days instead of 30 days. Rather they informed what we are following is wrong and they also advised to change the HR.
Can somebody guide me on this? Do we have any support to justify the 26-day calculation instead of 30 days? Will there be any issues in future?
Thanking you in advance.
Regards
Mary
From India, Madras
It is true that as per Minimum Wages Act, an employee shall be paid for 26 days. If the employee is paid monthly, the daily rate is found by dividing the monthly pay by 26. The overtime is calculated by dividing the monthly salary (whatever is the wages qualifying salary) by 26. Gratuity, anyway, is calculated by on a daily salary arrived at by dividing the monthly salary by 26.
Acts which provides for health, safety and welfare of workers employed (say it be Factories Act, Shops and Commercial Establishments Act....) say that after 6 days work the employee shall be given one full day rest. Whether it is to be a paid day is not mentioned. But if the monthly rate is converted into daily rate by dividing the former by 26, naturally, the payment for the weekly holidays would be ensured. Still, if the companies are ready to pay four days' salary for their weekly holidays, what is the big problem in it? Why should you change the Personnel Manager???
When you show 26 days in ESI and EPF portals, the employee will lose certain benefits. Each month will account for four days' non contributory periods and that will result in around 52 days a year. This will probably reduce his pension. Similarly, for various benefits under ESI, the number of days worked should qualify. Moreover, in respect of regular employees, there exists a regular contract of employment which starts on the date of joining and extends till the date of leaving. It is not like, till Saturday he is an employee and on Sunday he is not an employee! If something happens to an employee on Sunday, the employer will disown all responsibilities including EDLI payable by the EPFO.
In a practical scenario, in respect of workers engaged on a daily basis, the system of 26 days will work. But in respect of workers who are on your rolls, the 26 days will not work. They may be contract workers for the principal employer but for you they are your regular employees.
From India, Kannur
Acts which provides for health, safety and welfare of workers employed (say it be Factories Act, Shops and Commercial Establishments Act....) say that after 6 days work the employee shall be given one full day rest. Whether it is to be a paid day is not mentioned. But if the monthly rate is converted into daily rate by dividing the former by 26, naturally, the payment for the weekly holidays would be ensured. Still, if the companies are ready to pay four days' salary for their weekly holidays, what is the big problem in it? Why should you change the Personnel Manager???
When you show 26 days in ESI and EPF portals, the employee will lose certain benefits. Each month will account for four days' non contributory periods and that will result in around 52 days a year. This will probably reduce his pension. Similarly, for various benefits under ESI, the number of days worked should qualify. Moreover, in respect of regular employees, there exists a regular contract of employment which starts on the date of joining and extends till the date of leaving. It is not like, till Saturday he is an employee and on Sunday he is not an employee! If something happens to an employee on Sunday, the employer will disown all responsibilities including EDLI payable by the EPFO.
In a practical scenario, in respect of workers engaged on a daily basis, the system of 26 days will work. But in respect of workers who are on your rolls, the 26 days will not work. They may be contract workers for the principal employer but for you they are your regular employees.
From India, Kannur
Hi
It depends upon the nature of work or the nature of employment relationship. If the employment relationship is on permanent basis weekly off becomes compulsory. So you need to ascertain the nature of employment (whether work executed is on full time basis or piece-rate basis with flexible hours?). Accordingly an Employee who is contributing to the employer on regular basis should be allowed a day of rest for every week. In that case 30 or 31 days salary process would be ideal based on the month.
From India, Madras
It depends upon the nature of work or the nature of employment relationship. If the employment relationship is on permanent basis weekly off becomes compulsory. So you need to ascertain the nature of employment (whether work executed is on full time basis or piece-rate basis with flexible hours?). Accordingly an Employee who is contributing to the employer on regular basis should be allowed a day of rest for every week. In that case 30 or 31 days salary process would be ideal based on the month.
From India, Madras
Workmen are eligible for weekly holidays. The workmen working on weekly holidays are never count as days of working but to show as over time.
From India, Mumbai
From India, Mumbai
You need not be concerned as long as you are not paying less than the Minimum Wage, because the statutory average wage (minimum wage) for a day is determined taking into account the weekly off, which is why the monthly wage is divided by 26 to reach a daily rate.
You give earnings columns in your payroll such as Days worked, Weekly offs, Paid Holiday/s, Leave, Absent, and so on, and show total days as 28/29/30/31 depending on the month. This will account for PF NCP days and ESI for the average daily salary. This system is not objectionable to any Auditor.
You can describe this in the following way.
Example 1: If a worker's monthly income is Rs.13000, his daily average is 13000/26=500.
When you present the same monthly wage as 13000 and subtract 1 day's salary in September, your monthly calculation is 13000x29/30=12566.67(433.33 per day), therefore you will be deducting only Rs.433.33 as against Rs.500, and you will not be doing any injustice to your labour. However, according to the law, you must only pay Rs.500 in overtime wages, not Rs.433.33. You can display per-day salaries for OT calculations in the payroll system by dividing 26 by the Minimum Wage.
I hope the aforementioned system will assist you with statutory compliance.
Suresh
From India, Thane
You give earnings columns in your payroll such as Days worked, Weekly offs, Paid Holiday/s, Leave, Absent, and so on, and show total days as 28/29/30/31 depending on the month. This will account for PF NCP days and ESI for the average daily salary. This system is not objectionable to any Auditor.
You can describe this in the following way.
Example 1: If a worker's monthly income is Rs.13000, his daily average is 13000/26=500.
When you present the same monthly wage as 13000 and subtract 1 day's salary in September, your monthly calculation is 13000x29/30=12566.67(433.33 per day), therefore you will be deducting only Rs.433.33 as against Rs.500, and you will not be doing any injustice to your labour. However, according to the law, you must only pay Rs.500 in overtime wages, not Rs.433.33. You can display per-day salaries for OT calculations in the payroll system by dividing 26 by the Minimum Wage.
I hope the aforementioned system will assist you with statutory compliance.
Suresh
From India, Thane
In Bharat, variable dearness allowance is paid to workmen in private sector on the basis of average consumer price index and based on their
(A) place of work
(B) type of work
(C) unskilled or semi-skilled or skilled or highly skilled category of work
(D) any one of the above as per ministry of labour norms
Please read this https://lnkd.in/gGKZhH9V dated 03.04.2023 and readers, HR professionals can post their queries if any!
https://www.linkedin.com/posts/ak56_in-bharat-variable-dearness-allowance-is-activity-7111620457941934080-imdL?utm_source=share&utm_medium=member_desktop
From India, Bengaluru
(A) place of work
(B) type of work
(C) unskilled or semi-skilled or skilled or highly skilled category of work
(D) any one of the above as per ministry of labour norms
Please read this https://lnkd.in/gGKZhH9V dated 03.04.2023 and readers, HR professionals can post their queries if any!
https://www.linkedin.com/posts/ak56_in-bharat-variable-dearness-allowance-is-activity-7111620457941934080-imdL?utm_source=share&utm_medium=member_desktop
From India, Bengaluru
HI Mary,
There is no non-compliance on your part. In this connection please refer to Section 23 (4) of the Minimum Wages (Central ) Rules, 1950 excerpts of which are given below:
Quote:
PROVIDED that where the minimum daily rate of wages of the employee as notified
under the Act has been worked out by dividing the minimum monthly rate of wages by twentysix, or where the actual daily rate of wages of the employee has been worked out by dividing the monthly rate of wages by twenty-six and such actual daily rate of wages is not less than the notified minimum daily rate of wages of the employee, no wages for the rest day shall be payable, and in case the employee works on the rest day and has been given a substituted rest day, he shall be paid, only for the rest day on which he worked, an amount equal to the wages payable to him at the overtime rate.......
From India, Delhi
There is no non-compliance on your part. In this connection please refer to Section 23 (4) of the Minimum Wages (Central ) Rules, 1950 excerpts of which are given below:
Quote:
PROVIDED that where the minimum daily rate of wages of the employee as notified
under the Act has been worked out by dividing the minimum monthly rate of wages by twentysix, or where the actual daily rate of wages of the employee has been worked out by dividing the monthly rate of wages by twenty-six and such actual daily rate of wages is not less than the notified minimum daily rate of wages of the employee, no wages for the rest day shall be payable, and in case the employee works on the rest day and has been given a substituted rest day, he shall be paid, only for the rest day on which he worked, an amount equal to the wages payable to him at the overtime rate.......
From India, Delhi
Hi Mary,
It seems like you're facing a specific request from your client regarding the calculation of attendance and salary. To address this situation, you can take the following steps:
Review Employment Agreements and Contracts: Ensure that your employment agreements with the subcontractors clearly define the terms of employment, including working days and payment terms. If there's no specific mention of the number of working days, consult legal counsel to understand your options.
Check Local Labour Laws: Verify the labour laws applicable in the regions where the projects are being executed. Different states in India may have varying regulations regarding working days, overtime, and minimum wage calculations.
Engage in a Discussion with the Client: It's essential to have open communication with your client. Understand their rationale behind the request for 26 days instead of 30. It's possible they have specific internal policies or compliance requirements that they are adhering to.
Consult with a Labour Consultant or Legal Expert: If you're uncertain about the legality or implications of adjusting the calculation, seek advice from a labour consultant or legal expert. They can provide guidance based on the specific laws and regulations in your region.
Documentation and Transparency: Keep detailed records of all communications with the client regarding this matter. This includes emails, meeting notes, and any official documents exchanged. This can serve as evidence of your efforts to comply with their request.
Consider the Practical Implications: Evaluate the impact of using a 26-day calculation on your subcontractors and your business. Ensure that it doesn't result in any legal or ethical issues for either party.
Propose a Solution: If it's feasible and legally compliant, propose a solution that aligns with both parties' needs. This could involve adjusting your HR practices or finding a compromise that satisfies your client's requirements.
Implement Changes Gradually: If you decide to make changes to your HR practices, do so gradually and communicate clearly with all stakeholders, including subcontractors.
Remember, it's crucial to consult with professionals who are well-versed in Indian labour laws and employment practices to ensure that you're making informed decisions. Always prioritize compliance with local regulations and maintain transparency in your business relationships.
Regards.
From India, Bangalore
It seems like you're facing a specific request from your client regarding the calculation of attendance and salary. To address this situation, you can take the following steps:
Review Employment Agreements and Contracts: Ensure that your employment agreements with the subcontractors clearly define the terms of employment, including working days and payment terms. If there's no specific mention of the number of working days, consult legal counsel to understand your options.
Check Local Labour Laws: Verify the labour laws applicable in the regions where the projects are being executed. Different states in India may have varying regulations regarding working days, overtime, and minimum wage calculations.
Engage in a Discussion with the Client: It's essential to have open communication with your client. Understand their rationale behind the request for 26 days instead of 30. It's possible they have specific internal policies or compliance requirements that they are adhering to.
Consult with a Labour Consultant or Legal Expert: If you're uncertain about the legality or implications of adjusting the calculation, seek advice from a labour consultant or legal expert. They can provide guidance based on the specific laws and regulations in your region.
Documentation and Transparency: Keep detailed records of all communications with the client regarding this matter. This includes emails, meeting notes, and any official documents exchanged. This can serve as evidence of your efforts to comply with their request.
Consider the Practical Implications: Evaluate the impact of using a 26-day calculation on your subcontractors and your business. Ensure that it doesn't result in any legal or ethical issues for either party.
Propose a Solution: If it's feasible and legally compliant, propose a solution that aligns with both parties' needs. This could involve adjusting your HR practices or finding a compromise that satisfies your client's requirements.
Implement Changes Gradually: If you decide to make changes to your HR practices, do so gradually and communicate clearly with all stakeholders, including subcontractors.
Remember, it's crucial to consult with professionals who are well-versed in Indian labour laws and employment practices to ensure that you're making informed decisions. Always prioritize compliance with local regulations and maintain transparency in your business relationships.
Regards.
From India, Bangalore
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