Dear All, I am seeking to understand the interpretation of the wage definition in the new wage code. Is there a possibility to divide the minimum wage into various components?
From India, Navsari
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1From India, Navsari
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The new wage code in India has brought about significant changes in the way wages are defined and structured. It is indeed possible to divide the minimum wage into different components, but there are certain regulations and restrictions to consider.
Firstly, the new wage code has consolidated numerous labor laws into four codes, one of which is the Code on Wages, 2019. This code defines 'wages' to include basic pay, dearness allowance, and retaining allowance. However, it excludes components such as bonuses, house rent allowance, overtime allowance, commission, and others from the definition of wages.
The Code on Wages, 2019, also introduces the concept of a 'floor wage', which is the minimum wage that employers across the country must pay their employees. This floor wage can be divided into different components, but the sum of these components (excluding exclusions mentioned above) should not be less than the prescribed minimum wage.
Here's a step-by-step action plan:
1. Review the wage structure of your employees and identify the different components.
2. Ensure that the sum of basic pay, dearness allowance, and retaining allowance is not less than the prescribed minimum wage.
3. Adjust the other components of the wage (like bonuses, house rent allowance, etc.) accordingly.
However, it's important to note that the Code on Wages, 2019, also states that the sum of the excluded components (like bonuses, house rent allowance, etc.) should not exceed 50% of the total remuneration. If it does, the excess amount will be considered as part of the wages.
In conclusion, while the new wage code allows for flexibility in dividing the minimum wage into various components, it also imposes certain restrictions to ensure that the basic pay and allowances form a significant part of the employee's total remuneration. It's recommended to consult with a labor law expert or an HR professional to ensure compliance with the new wage code.
From India, Gurugram
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Firstly, the new wage code has consolidated numerous labor laws into four codes, one of which is the Code on Wages, 2019. This code defines 'wages' to include basic pay, dearness allowance, and retaining allowance. However, it excludes components such as bonuses, house rent allowance, overtime allowance, commission, and others from the definition of wages.
The Code on Wages, 2019, also introduces the concept of a 'floor wage', which is the minimum wage that employers across the country must pay their employees. This floor wage can be divided into different components, but the sum of these components (excluding exclusions mentioned above) should not be less than the prescribed minimum wage.
Here's a step-by-step action plan:
1. Review the wage structure of your employees and identify the different components.
2. Ensure that the sum of basic pay, dearness allowance, and retaining allowance is not less than the prescribed minimum wage.
3. Adjust the other components of the wage (like bonuses, house rent allowance, etc.) accordingly.
However, it's important to note that the Code on Wages, 2019, also states that the sum of the excluded components (like bonuses, house rent allowance, etc.) should not exceed 50% of the total remuneration. If it does, the excess amount will be considered as part of the wages.
In conclusion, while the new wage code allows for flexibility in dividing the minimum wage into various components, it also imposes certain restrictions to ensure that the basic pay and allowances form a significant part of the employee's total remuneration. It's recommended to consult with a labor law expert or an HR professional to ensure compliance with the new wage code.
From India, Gurugram
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No
Basic & DA shall not be lesser than the Minimum wages which is anticipated shortly
From India, Bangalore
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Basic & DA shall not be lesser than the Minimum wages which is anticipated shortly
From India, Bangalore
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Dear Ankita,
The answer to your query is,No.
Legally you can not split minimum wages into components like Basic + DA + HRA+ Other Allowances.
The Minimum wages is considered as single, composite and non-divisible sum.
The denial of splitting has aimed to prevent the exploitation by the employer contribution for the EPFO and other payable decides on Basic+DA+ VDA.
Thus splitting further in minimum wages amounts to illegal.
From India, Mumbai
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The answer to your query is,No.
Legally you can not split minimum wages into components like Basic + DA + HRA+ Other Allowances.
The Minimum wages is considered as single, composite and non-divisible sum.
The denial of splitting has aimed to prevent the exploitation by the employer contribution for the EPFO and other payable decides on Basic+DA+ VDA.
Thus splitting further in minimum wages amounts to illegal.
From India, Mumbai
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(Fact Checked)-Your understanding is correct. The new wage code prevents splitting of minimum wages into components to avoid exploitation. Keep up the good work! (1 Acknowledge point)
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Minimum Wage of UP & UK.pdf
CiteHR.AI
(Fact Checked)-Your response is correct. As per the new wage code in India, Basic & DA should not be less than the minimum wage. Keep sharing your knowledge! (1 Acknowledge point)