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z_sachinkhare
4

Dear Seniors,

In my Organization (Principal Employer) an IT Company (contractor / vendor) has been given basic wages to his workers less than minimum wages, since last 6 months, but now when we enforced to the company to pay arrears (difference of basic wages) to all their workers for all 6 months. On our instructions vendor has ready to pay arrears but now he has restructured the Salary Sheet and made the wages equal to current minimum wages by shifting amount from allowances to Basic wages. So we have accepted the same but now vendor also recovering all the allowances from workers' wages, which was being paid to their employees since last 6 months.

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Below is the calculation :

Basic Wages was 3167/- PM (from Apr'14 to Sep'14) but it should be 8112/-PM, therefore, diff. is Rs. 4945/- (Apr'14 to Sep'14). and HRA, Travel Allowances or Other any allowances also being paid with Basic wages.

So now vendor is ready to pay arrears to workers by 4945/- x 6 Month = 29670/- (for Apr'14 to Sep'14) and from Oct'14 he has fixed basic 8112/- (as per minimum wages) by shifting allowances in basic. now all allowance are zero (0).

But vendor also deducting the amount of total allowances from Rs. 29670/- (arrears amount) which he had given to workers in last six month i.e. apr'14 to sep'14.

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So, my query is that is vendor have rights or is it correct to shift allowances (HRA, Travel Allowances or Other any allowances) in Basic wages for the purpose of minimum wages, in place of made a separate increment in Basic Salary.

and is vendor can recover the allowances which the company has already pay to the workers in previous months.

Pl advice and give your valuable suggestion.

From India, Pune
rhinoramanan
158

dear mr sachin
god bless you
1. the contractor / vendor has no legal rights to merge allowances into basic wages.
2. as an organisation pl do not force him leading to any illegality.
3. how much are you paying him per capita?
4. normally the agreement with the contractor for manpower supply is made in clear terms.
5. pl read the agreement signed .
lastly how can any contractor be asked to literally double u the salalry
it is also not clear how approx 4000 .00 rs of allaownces can be paid to a contract wager.?
if you need any more clarifications please send a copy of the agreement and salary sheet of the staff provided by the contractor.

From India, Indore
jitendersyadav
68

Dear Sachin,
Understood the following points from your post : -
1. That the vendor has made the PF contribution on less than the Govt declared minimum wages.
Answer : He is liable to make the PF contribution on full minimum wages declared by state government.
2. And as an employer you are insisting him to make the contribution on full minimum wages.
Answer : he will claim the differential contribution from you(Employer Contribution) & recover employee's share from employees.
3. Allowance are merged with Basic Wages & all the Allowance got ZERO.
Answer : Decision lie with you, if you want to pay the enhanced wages to employees then ask the vendor to revise the basic wages without impacting any allowance part. Where wages of employees would be enhance unexpectedly.
Rgds/Jitender

From India, New Delhi
saswatabanerjee
2392

Sachin,

What your contractor is doing is illegal.

If he and you think that pretending to pay arrears and then taking it away by recovery of the same is going to let you off the hook, then all I can say is that either you don't know anything about law or that you think the government officials are fools.

First, minimum wages is defined in terms of basic + da. So it has to be more than the minimum wages (in your case ₹8112). Since th amount paid is less, the differential is payable by the contractor. In addition, he is required to pay differential on PF also on the same. I think the law would require penalty on the PF account, but your consultants will be able to figure how to show it in a manner to avoid penalty.

Second, you can not change the salary structure in this manner. You can not now make the allowances zero. This would be change of terms of employment and you need to follow the rules laid down under Industrial Disputes Act. All contract workers must agree to the change in structure (specifically, in all reductions of any component)

You can restructure during and increase, but not the way you have done, as it will amount to unfair labour practice, illegal deduction or even payroll fraud, depending on how a complain is filed.

Third, you can definitely not remove allowances with retrospective effect and try to recover the same. If you have paid higher amount by mistake, that's your fault. Recovery can be made only for a genuine mistake identified within a month (max 2 months) except those caused by fraud or suppression of information by employees.


From India, Mumbai
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