When can Variable Dearness Allowance (VDA) be removed from the worker’s salary? Please tell me any rule of the Supreme Court ruling.
From India, Greater+Noida
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From India, Greater+Noida
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The Minimum Wages payable to workers comprise of two components, viz, a basic wage and a dearness allowance variable according to changes in the consumer price index (CPI). The purpose of paying VDA, which will change with changes in the cost of living, is to ensure that the workers do not suffer due to an increase in the cost of living. So long as your total salary is above the minimum wages, and the same is subject to increase with the rise in the cost of living, there is no need to pay VDA as a separate component of salary. This was confirmed by the Apex Court in AirFreight India Vs State of Karnataka.
But what is to be ensured is that at any point in time, the salary that you pay should not be less than the basic wages and DA fixed by the government. In states like Tamil Nadu, CPI-based DA is revised once a year, but there are states where it is revised every six months or even every month. In such an eventuality, it is good if you follow a system of basic wages and DA for those workers whose wages are almost equal to the statutory minimum wages. At the same time, if there is a margin of, say, Rs 500, you can drop the DA component from the salary structure.
From India, Kannur
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4761But what is to be ensured is that at any point in time, the salary that you pay should not be less than the basic wages and DA fixed by the government. In states like Tamil Nadu, CPI-based DA is revised once a year, but there are states where it is revised every six months or even every month. In such an eventuality, it is good if you follow a system of basic wages and DA for those workers whose wages are almost equal to the statutory minimum wages. At the same time, if there is a margin of, say, Rs 500, you can drop the DA component from the salary structure.
From India, Kannur
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Hi,
What Mr. Madhu said is absolutely true. As long as you are paying more than the minimum wage of the respective state and ensuring that every year you are taking care of changes in the consumer price index, you need not show the DA component. However, you need to ensure that the basic salary is more than the minimum wage. For example, if your minimum wage is Basic 13500 + DA 3000 PM, then your basic salary should be more than Rs. 16500. Minimum wage cannot be distributed to other components like HRA, conveyance, washing allowance, etc.
From India, Bengaluru
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What Mr. Madhu said is absolutely true. As long as you are paying more than the minimum wage of the respective state and ensuring that every year you are taking care of changes in the consumer price index, you need not show the DA component. However, you need to ensure that the basic salary is more than the minimum wage. For example, if your minimum wage is Basic 13500 + DA 3000 PM, then your basic salary should be more than Rs. 16500. Minimum wage cannot be distributed to other components like HRA, conveyance, washing allowance, etc.
From India, Bengaluru
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In my opinion, minimum wages are dependent on the Consumer Price Index released by the respective state governments from time to time.
The subgroup considered in arriving at the Consumer Price Index includes food items of respective regions, clothing, housing, transport, health, education, etc.
Hence, as long as your wage is above the minimum wage prescribed by the government, there is nothing wrong with splitting the minimum wages into HRA, conveyance, etc. However, you need to ensure that the basic pay indicated in the minimum wage is maintained, and the DA component can be split into HRA, conveyance, etc.
In case the new labor code is enacted, you need to ensure that the basic pay is 50% of the total pay package.
Regards,
MVK
From India, Madras
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The subgroup considered in arriving at the Consumer Price Index includes food items of respective regions, clothing, housing, transport, health, education, etc.
Hence, as long as your wage is above the minimum wage prescribed by the government, there is nothing wrong with splitting the minimum wages into HRA, conveyance, etc. However, you need to ensure that the basic pay indicated in the minimum wage is maintained, and the DA component can be split into HRA, conveyance, etc.
In case the new labor code is enacted, you need to ensure that the basic pay is 50% of the total pay package.
Regards,
MVK
From India, Madras
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Mr. Kannan,
Minimum wage means it is Basic and DA. At any point in time, the DA component cannot be converted to other allowances; it needs to be added to the Basic only. When you are paying more than the minimum wage, the excess amount can be distributed to other allowances like HRA, Conveyance, etc.
From India, Bengaluru
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Minimum wage means it is Basic and DA. At any point in time, the DA component cannot be converted to other allowances; it needs to be added to the Basic only. When you are paying more than the minimum wage, the excess amount can be distributed to other allowances like HRA, Conveyance, etc.
From India, Bengaluru
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The minimum wages published by various state governments and central Labour departments contain the basic components and FDA/VDA both separately and total stated as minimum wages. These components are revised periodically by notifications, category-wise. All these periodical notifications are available for download from the website of simpliance.com.
However, there is no mention of other allowances. It's left to the employers to have their own policies. However, the Code on Wages, when implemented, will clarify a few things.
From India, Bangalore
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However, there is no mention of other allowances. It's left to the employers to have their own policies. However, the Code on Wages, when implemented, will clarify a few things.
From India, Bangalore
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VARIABLE PAY.doc
Variable DA on Minimum Wages as on 01-10-2017.pdf
Dearness Allowance.xls