Dear Expert,
Wanted to know on the below points:
1. In Maharashtra, Dearness Allowance is mandatory to keep in salary structure for a worker who is working in factory production even if we follow the minimum wages and his/ her basic is over/ same as minimum wages?
2. LTA is mandatory to keep as a part of salary for workers?
Waiting for your response on the same please.
Regards,
Amit
From India, New Delhi
1Wanted to know on the below points:
1. In Maharashtra, Dearness Allowance is mandatory to keep in salary structure for a worker who is working in factory production even if we follow the minimum wages and his/ her basic is over/ same as minimum wages?
2. LTA is mandatory to keep as a part of salary for workers?
Waiting for your response on the same please.
Regards,
Amit
From India, New Delhi
Dear Amitpaul,
1) Normally, determination of wages and its structure are matters of collective bargaining. But, whenever the component of variable D.A is added to the statutory minimum wages structure, the minimum wages is bound to increase periodically with the periodical increase in the Cost of Living Index. So, the absence of dearness allowance in the industry wage structure as a distinct component can cause mismatch between the two over a period of time as the industry wages are fixed on long term basis.
As per the definition of the term wages u/s 2(y) of the Code on Wages,2019 which would be effective from April 1, 2021, only the components of basic pay, dearness allowance and retaining allowance (if any) in the wage structure would be considered as " wages" subject to the condition of the minimum proportion of their sum total being 50% of the gross monthly wages payable including any other allowances. Any short fall in this regard would be made good by proportionate adjustment of other allowances in the wage structure for the purposes of wages under the Code. The same method should be adopted in determining the parity between the industry wages and the statutory minimum wages.
2) L.T.A being a fringe benefit cannot form part of wages.
From India, Salem
1) Normally, determination of wages and its structure are matters of collective bargaining. But, whenever the component of variable D.A is added to the statutory minimum wages structure, the minimum wages is bound to increase periodically with the periodical increase in the Cost of Living Index. So, the absence of dearness allowance in the industry wage structure as a distinct component can cause mismatch between the two over a period of time as the industry wages are fixed on long term basis.
As per the definition of the term wages u/s 2(y) of the Code on Wages,2019 which would be effective from April 1, 2021, only the components of basic pay, dearness allowance and retaining allowance (if any) in the wage structure would be considered as " wages" subject to the condition of the minimum proportion of their sum total being 50% of the gross monthly wages payable including any other allowances. Any short fall in this regard would be made good by proportionate adjustment of other allowances in the wage structure for the purposes of wages under the Code. The same method should be adopted in determining the parity between the industry wages and the statutory minimum wages.
2) L.T.A being a fringe benefit cannot form part of wages.
From India, Salem
Dear Umakanthan, Thanks for the clarity. Just wanted to know if worker union are demanding to keep it as a part of salary, is any obligation we do have on it? Kindly suggest..
From India, New Delhi
From India, New Delhi
It is better you ask for the justification behind such a demand. When an item of a fringe benefit cannot be statutorily included in the wage structure, it cannot be demanded to be included so by the trade union for the mere sake of popularity. In the first place, such a demand would be totally untenable. Even if included and subsequently removed or refused to be paid, the workmen cannot stake their claim to recover it as denial of a component of wages. In my opinion, if the proportion of 50:50 is constantly maintained in respect of the included and excluded components of wages as stipulated u/s 2 (y) of the CoW,2019, there cannot be any disputed claim under the Code.
Moreover, the purpose, conditions of eligibility and the periodicity of payment of the fringe benefit of LTA are different from the monthly payable other allowances.
Under the circumstances, I would like to suggest that you may consider and convince the union to effect a separate bilateral settlement or a separate clause dealing with LTA in the wages settlement under the Code on Industrial Relations, 2020.
From India, Salem
Moreover, the purpose, conditions of eligibility and the periodicity of payment of the fringe benefit of LTA are different from the monthly payable other allowances.
Under the circumstances, I would like to suggest that you may consider and convince the union to effect a separate bilateral settlement or a separate clause dealing with LTA in the wages settlement under the Code on Industrial Relations, 2020.
From India, Salem
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