Dear Friends,

It has been noted that some of our HR personnel/Management following wrong practices.

I had conducted audits at more than 1100 exports houses/multinational companies all over India,Bangladesh,Nepal,China....and found that approx 5% factories using the wrong practice of bifucation/splitted of minumum wages into basic+HRA or Basic+HRA+Conveyence or other segmants.

This is absolutely unacceptable,
The reason behind it to save employer money in terms of PF deduction,leave encashment,bonus calculation,gratuity calculation ect...

I had been to one of the garment exports house situated at Okhla phase-1,New Delhi and found that they splitted minimum wages into basic+HRA rather than bifucated into Basic+DA(as per Delhi govt notification).
Example: One of the employee was getting 4000/monthly and his salary splitted into basic(Rs. 2400)+HRA(Rs.1600) and the PF deducted from employee Rs. 288 & employer given Rs.288 however actual amount of PF was 480 from employee & from employer side 480.

The employer has saved Rs. 192 by using illigal way.The company employing 1500 employees in its group and saving big amount by this way.
The same effects on bonus,gratuity etc....

One thing keep in mind that minimum wages should not be less than the minimum wages,we have notification received from PF office stating that bifurcation of PF is not allowed ,it should deducts atleast on minimum wages.

Join hand to remove illigal practice in your area,your contribution towards employee benefits will be appreciable.

Best Regards
Sajid Ansari

From India, Delhi
Soical Compliance Auditing
Gm (hr)

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dear sajid
i too agree with you but there is lacuna in our law that is the reason people are taking benefit .in some state like UP ,companies can not take this benefit as they have defined this will be basic and this will be DA and this will be total.but now most of the companies has stopped this practice.
j s malik

From India, Delhi
Dear Mr. Sajid,
As you have mentioned in the last para of the article, named wrong practice by HR bifurcation of minimum wage, that you have got a notification from PF office to this effect. You are requested to please do me a favour to forward copy of the same and oblige.
Thanking you,
S.N. Mishra

From India, Delhi

But What the minimum wages act says. Wage= basic+da+and hra is also included in minimum wages.So that we can bifurcate this in to three parts. i feel nothing is wrong in this. am i correct.
From India, Hyderabad
Akshay Legal
Dear Sajid,
Thanks for such a useful information. I would request you to kindly forward me the copy of the the notification stating that the PF contribution cannot be less then minimum wages.
I shall be glad if you can mail me a copy of the same on priority basis on my mail id .
This shall help me lot and would enable me to prove the fact that i am complying to all statutory requirements.
I look forward for your kind cooperation

From India, Mumbai

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