Hello Seniors, Please let me know that, whether DA is a compulsion for private ltd companies or only government employees . Is it applicable to all employees? thanking you.
From India, Mumbai
From India, Mumbai
Dearness allowances that part of the component of salary which is meant for neutralizing the erosion of basic wages by the cost of inflation.There is no hard and fast rule that salary shall reflect DA separately so far it fulfills this function.Salary can be paid in lump sum even to employees covered by Minimum Wages Act when the total salary is equal to or more than the minimum wages prescribed for that particular category of employee in that particular establishment for which the government notifies the minimum wages.However if the salary is not structured into basic or DA etc, there is likelihood of the whole salary being considered for computing P.F contributions and gratuity.
B.Saikumar
HR & Labour Law advisor
Mumbai
From India, Mumbai
1899B.Saikumar
HR & Labour Law advisor
Mumbai
From India, Mumbai
DA is not existing in Govt service alone .It is there in private sector also. DA based on Consumer index may not be given in new gen industries .The implication of DA has been correctly given by Mr Saikumar.The consolidated pay will increase employers cost not only for EPF,but also in gratuity,esi,bonus. etc.
Varghese Mathew
9961266966
From India, Thiruvananthapuram
Varghese Mathew
9961266966
From India, Thiruvananthapuram
Dear Tasneem,
As other members have explained DA is paid to compensate the rise in inflation. It is not mandatory for private sector employers to show it separately. However there is a recognized practice to structure the pay into Basic Pay, DA/VDA/IDA, HRA, TA etc so that various related liabilites are calculated easily with less financial burden on the employer. The government notifies increase in minimum wages bases on price index which is applicable to private sector employees. However its implementation may be a question of fact.
Regards
Srivastava
From India, New Delhi
As other members have explained DA is paid to compensate the rise in inflation. It is not mandatory for private sector employers to show it separately. However there is a recognized practice to structure the pay into Basic Pay, DA/VDA/IDA, HRA, TA etc so that various related liabilites are calculated easily with less financial burden on the employer. The government notifies increase in minimum wages bases on price index which is applicable to private sector employees. However its implementation may be a question of fact.
Regards
Srivastava
From India, New Delhi
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Dearness Allowance.xls
The Tamil Nadu Minimum Wages Dearness Allowance Notification March 2019.pdf