Dear All, Please help me know the New-Wage Code 2020 bill with the revised salary structure/components and the percentage allocated with each component. Thanks in advance...
From India, Kolkata
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From India, Kolkata
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Dear Radha,
I have made several posts explaining the definition of wages as per the new wage code and other codes (same definition in all codes). You may find out those posts. However, for your ready reference, I am once again explaining the subject.
Prior to framing the new definition of wages, as of the current date (as the labor codes are not yet implemented), in all existing labor laws, the definition of wages is restricted to monthly components only - Basic and DA or monthly gross. There is also no guideline on how to fix the percentage regarding Basic and DA versus other allowances except for some guidelines provided by the latest verdict of the Apex court regarding PF-related issues.
This is the first time after the independence of India that the definition of wages has been illuminated differently. It is now not restricted to only monthly components, but it has to be considered in totality, i.e., total remuneration paid to any employee whether monthly, bi-monthly, quarterly, half-yearly, or yearly. The definition is nothing but a few English words and sentences to explain one mathematical equation.
The definition of wages has three parts:
Part I: It includes all components of remuneration and payable to a person - includes Basic, DA, and retaining allowance.
Part II: The exclusion list (a) to (k), but one exception - the value of house accommodation, light, water, etc., though not payable, should be considered as payable components and should be included in the calculation. Moreover, yearly items like Bonus, LTC/LTA, etc., are in the exclusion list.
Part III: Proviso 1 explains that if the total amount paid from the exclusion list (a) to (i) when (j) is Gratuity, though payable but excluded for calculation, is more than 50% of wages (Basic and DA) - the extra amount will be added back to wages (Basic and DA).
Now, under the above circumstances, how to calculate Wages (Basic and DA) and also total remuneration is a big question. In India, every organization has its own remuneration structure. Please follow the following steps:
(i) Identify the payable (cash) items throughout the year in any remuneration structure.
(ii) 50% of that value will be wages (Basic and DA).
(iii) Subtract 50% and distribute to Employer PF contribution, any monthly allowances, any yearly components (Bonus, LTA, etc.), and so on.
Due to the complexity in remuneration structure in Indian organizations and random variables, it will be required by all organizations across India to restructure the existing remuneration after the implementation of the definition of new wages.
S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions
From India, New Delhi
Acknowledge(0)Amend(0)
409I have made several posts explaining the definition of wages as per the new wage code and other codes (same definition in all codes). You may find out those posts. However, for your ready reference, I am once again explaining the subject.
Prior to framing the new definition of wages, as of the current date (as the labor codes are not yet implemented), in all existing labor laws, the definition of wages is restricted to monthly components only - Basic and DA or monthly gross. There is also no guideline on how to fix the percentage regarding Basic and DA versus other allowances except for some guidelines provided by the latest verdict of the Apex court regarding PF-related issues.
This is the first time after the independence of India that the definition of wages has been illuminated differently. It is now not restricted to only monthly components, but it has to be considered in totality, i.e., total remuneration paid to any employee whether monthly, bi-monthly, quarterly, half-yearly, or yearly. The definition is nothing but a few English words and sentences to explain one mathematical equation.
The definition of wages has three parts:
Part I: It includes all components of remuneration and payable to a person - includes Basic, DA, and retaining allowance.
Part II: The exclusion list (a) to (k), but one exception - the value of house accommodation, light, water, etc., though not payable, should be considered as payable components and should be included in the calculation. Moreover, yearly items like Bonus, LTC/LTA, etc., are in the exclusion list.
Part III: Proviso 1 explains that if the total amount paid from the exclusion list (a) to (i) when (j) is Gratuity, though payable but excluded for calculation, is more than 50% of wages (Basic and DA) - the extra amount will be added back to wages (Basic and DA).
Now, under the above circumstances, how to calculate Wages (Basic and DA) and also total remuneration is a big question. In India, every organization has its own remuneration structure. Please follow the following steps:
(i) Identify the payable (cash) items throughout the year in any remuneration structure.
(ii) 50% of that value will be wages (Basic and DA).
(iii) Subtract 50% and distribute to Employer PF contribution, any monthly allowances, any yearly components (Bonus, LTA, etc.), and so on.
Due to the complexity in remuneration structure in Indian organizations and random variables, it will be required by all organizations across India to restructure the existing remuneration after the implementation of the definition of new wages.
S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions
From India, New Delhi
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Wage Code Bill - Summary.docx
Kannada Wage Code 2019.pdf