A company pays minimum wages to its employee after dividing into two heads (i.e. Basic and Special allowance). Kindly clarify whether minimum wages should be only basic or it can be divided into two/three heads.
From India, Kolkata
1From India, Kolkata
Gross wages including all allowances are to be considered for calculation under minimum wages act compliance
Please refer to the definition given given 2(h) of the Minimum Wages Act, 1948 which says that it includes all remuneration,which are capable of being expressed in terms of money Plus house rent allowance. It can be split into more heads but it must be ensured that the workers are not deprived off the recurring benefits prescribed by the Appropriate Govt under the other relevant Acts.
BS Kalsi,
Member since August, 2011
From India, Mumbai
BS Kalsi,
Member since August, 2011
From India, Mumbai
There are many things that you should consider while doing so.
Mostly companies adopt this practice to reduce the burden of remitting the lump sum PF contributions. But it is not a fair practice. There is a circular form EPFO which states "splitting of minimum wages for the purpose of PF contribution is not permissible".
If you split the minimum wages into different sub heads, obviously you are subtracting some amount from Basic and DA part, thus by doing so you are depriving your workers from getting benefits of EPF.
Hence my sincere advise is to don't split minimum wages.
Request professionals to throw some light on this topic
From India, Hyderabad
Mostly companies adopt this practice to reduce the burden of remitting the lump sum PF contributions. But it is not a fair practice. There is a circular form EPFO which states "splitting of minimum wages for the purpose of PF contribution is not permissible".
If you split the minimum wages into different sub heads, obviously you are subtracting some amount from Basic and DA part, thus by doing so you are depriving your workers from getting benefits of EPF.
Hence my sincere advise is to don't split minimum wages.
Request professionals to throw some light on this topic
From India, Hyderabad
Dear All, As per my understanding, Min Wages can not be split into components. Regards, Col.Rathi
From India, Delhi
From India, Delhi
Friends,
Punjab & Haryana High Court vide order dated 20.7.2011 (coppy attached) has permitted splitting of minimum wages for PF. Similarly, EPFA Tribunal vide order dated 30.11.2015 (copy attached) has permitted splitting. However, it is understood that the matter is pending before Supreme Court for final decision.
Thanks
From India, Malappuram
Punjab & Haryana High Court vide order dated 20.7.2011 (coppy attached) has permitted splitting of minimum wages for PF. Similarly, EPFA Tribunal vide order dated 30.11.2015 (copy attached) has permitted splitting. However, it is understood that the matter is pending before Supreme Court for final decision.
Thanks
From India, Malappuram
Dear sir, Warm Greetings, If we split the minimum wages as different components..then there is short fall on PF contribution.... So my opinion is don’t split the MW Regards Siva.
From India, Hyderabad
From India, Hyderabad
Dear sir,
Warm Greetings, Minimum Wages is nothing but (Basic+DA), PF contribution is generally considered on both (Basic+DA). So my opinion is Minimum Wages can not be split into components. Best Regards, Nihar Ranjan Swain.
From India, Kolkata
Warm Greetings, Minimum Wages is nothing but (Basic+DA), PF contribution is generally considered on both (Basic+DA). So my opinion is Minimum Wages can not be split into components. Best Regards, Nihar Ranjan Swain.
From India, Kolkata
Can any one give a clarity whether minimum wages can be slipted into different allowances so that the contractor pay very less contribution to PF remittances.
Ex. Suppose Minimum Wage = Rs.325/Day
Total Wage for 26 days = Rs.8450/Month
Basic(@35% of Gross) =2958, HRA(@30% of basic)= 887, Other Allowanses=4605
So, he pays PF for Rs.2958 which is Rs.253.
From India, Bengaluru
Ex. Suppose Minimum Wage = Rs.325/Day
Total Wage for 26 days = Rs.8450/Month
Basic(@35% of Gross) =2958, HRA(@30% of basic)= 887, Other Allowanses=4605
So, he pays PF for Rs.2958 which is Rs.253.
From India, Bengaluru
splitting of minimum wages should not be used to avoid or manipulate the EPFO,
if the employee is of permanent nature with the establishment then HRA can be allowed as allowance from MW
but in case of casual employments, gross consolidated wages is minimum wages, and can not be split
in gross Basic + HRA = Mimimum Wages, anything paid over it may be taken in other allowances,
but in no case the EPF Wages can be below 50% of gross wages (subject to ceiling of 15000/- if maintained)
if the employee is of permanent nature with the establishment then HRA can be allowed as allowance from MW
but in case of casual employments, gross consolidated wages is minimum wages, and can not be split
in gross Basic + HRA = Mimimum Wages, anything paid over it may be taken in other allowances,
but in no case the EPF Wages can be below 50% of gross wages (subject to ceiling of 15000/- if maintained)
Community Support and Knowledge-base on business, career and organisational prospects and issues - Register and Log In to CiteHR and post your query, download formats and be part of a fostered community of professionals.
Delhi - Minimum Wages w.e.f. 01.10.2012 (1).pdf
Minimum Wages in Maharashtra for the period January 2018 to June 2018.xls