Dear Seniors, Please help me how to implement DA system in manufacturing industry located in Tamilnadu?At present we have Basic + Allowances system only. Thanks S.Boopathi
From India, Coimbatore
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7From India, Coimbatore
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Dear S. Boopathi,
Greetings for the day,
Why are you bothered about paying DA separately? You merged the same with the basic salary. If you pay the same separately, it attracts EPF liability. It's better to merge the DA with basic. As you are aware, minimum wages also include the component of basic salary + dearness allowance, which is defined by the state government from time to time based on the price index. The liability of EPF, Bonus, and Gratuity also considers basic + DA, i.e., minimum wages. So, it's better to merge DA with basic instead of giving them separately. I am also attaching the judgment copy of Airfreight Ltd. vs State of Karnataka, which will clarify the whole situation.
Thanks & Regards,
Sumit Kumar Saxena
From India, Ghaziabad
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Greetings for the day,
Why are you bothered about paying DA separately? You merged the same with the basic salary. If you pay the same separately, it attracts EPF liability. It's better to merge the DA with basic. As you are aware, minimum wages also include the component of basic salary + dearness allowance, which is defined by the state government from time to time based on the price index. The liability of EPF, Bonus, and Gratuity also considers basic + DA, i.e., minimum wages. So, it's better to merge DA with basic instead of giving them separately. I am also attaching the judgment copy of Airfreight Ltd. vs State of Karnataka, which will clarify the whole situation.
Thanks & Regards,
Sumit Kumar Saxena
From India, Ghaziabad
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Please check with your management first whether they want to introduce the DA system, which is normally linked with the compensation mechanism of employees in government organizations.
My personal suggestion to you would be not to launch any such initiatives on your own which increase the 'Employee Costs' in an organization.
From India, Delhi
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My personal suggestion to you would be not to launch any such initiatives on your own which increase the 'Employee Costs' in an organization.
From India, Delhi
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Dear Bhupathi
D.A has huge, recurring and incremental direct and consequential financial implications. It requires top management’s approval.
D.A is linked with All India Consumer Price Index published by Government Labour Bureau. The objective is to provide allowance to meet the "cost of living". There are various Indices available.
So Before HOW please get the answer for WHY you want to go for it.
Regards
Shailesh Parikh
Vadodara, Gujarat
99 98 97 10 65
From India, Mumbai
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D.A has huge, recurring and incremental direct and consequential financial implications. It requires top management’s approval.
D.A is linked with All India Consumer Price Index published by Government Labour Bureau. The objective is to provide allowance to meet the "cost of living". There are various Indices available.
So Before HOW please get the answer for WHY you want to go for it.
Regards
Shailesh Parikh
Vadodara, Gujarat
99 98 97 10 65
From India, Mumbai
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Dear Boopathi,
Introducing a DA system is not too complex but is cumbersome. As you are aware, the DA system is linked to the Cost of Living. The DA is connected to the rise in the consumer price index published by the Government, and these details are provided in the monthly magazine titled "Uzhaipavar Ulagam" by the Government of Tamilnadu, Labour Department located in Teynampet, Chennai. If you subscribe to the magazine for 20 years, the cost is very nominal, and you will get a sense of the points' increase over the past few months.
Generally, companies offer a fixed DA that aligns with the Minimum Wages prescribed for the industry. Afterward, for each point's increase, they provide a monetary compensation, for example, Rs. 1.50 per point. If there is a rise, the DA increases, and if there is a fall, the DA decreases. However, the points for the current month will only be published next month, making it challenging to backtrack the wages paid. Therefore, companies establish a policy to revise the DA at a frequency (number of months) based on the DA's rise or fall. If there is a union, this may become a contentious negotiation point regarding monetary compensation for each point's increase (Rs. 1.50 per point as mentioned above).
Please carefully consider this, create a sample worksheet for the past 2-3 years, study the wage implications if you had implemented it 2-3 years prior, compare the CTC increases, and then propose it to the management.
M.V. Kannan
From India, Madras
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Introducing a DA system is not too complex but is cumbersome. As you are aware, the DA system is linked to the Cost of Living. The DA is connected to the rise in the consumer price index published by the Government, and these details are provided in the monthly magazine titled "Uzhaipavar Ulagam" by the Government of Tamilnadu, Labour Department located in Teynampet, Chennai. If you subscribe to the magazine for 20 years, the cost is very nominal, and you will get a sense of the points' increase over the past few months.
Generally, companies offer a fixed DA that aligns with the Minimum Wages prescribed for the industry. Afterward, for each point's increase, they provide a monetary compensation, for example, Rs. 1.50 per point. If there is a rise, the DA increases, and if there is a fall, the DA decreases. However, the points for the current month will only be published next month, making it challenging to backtrack the wages paid. Therefore, companies establish a policy to revise the DA at a frequency (number of months) based on the DA's rise or fall. If there is a union, this may become a contentious negotiation point regarding monetary compensation for each point's increase (Rs. 1.50 per point as mentioned above).
Please carefully consider this, create a sample worksheet for the past 2-3 years, study the wage implications if you had implemented it 2-3 years prior, compare the CTC increases, and then propose it to the management.
M.V. Kannan
From India, Madras
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