Madhu.T.K
Industrial Relations And Labour Laws
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Respected all, Please help me out in how can we breakup our minimum wage because the letter we got from labour department is only showing daily wages & monthly wages for unskilled, semiskilled & skilled persons but they are silent in breakup of wages. i heard that (minimum wages = basic + DA) but i m not sure about it. kindly guide me.
9th January 2011 From India, Delhi
The minimum rates of wages will include a basic wage each for different categories of workers and a dearness allowance which will keep on changing according to changes in consumer price index. The notification will state the basic wage only and the dearness allowance will have to be calculated by us taking in to account the type of industry and the place of working. That means, the variable dearness allowance applicable to one kind of industry, say establishment engaged in plywood manufacturing may be different from that engaged in cotton textile or hotels.

For each industry a base index would have been fixed and the DA would be an amount for each point above this base index point fixed. Accordingly, if it is notified that " Dearness allowance will have to be paid at the rate of Rs 8 for every increase in consumer price index/ cost of living index above 400 points", and the month's CPI is 750 points then the DA will be equal to Rs 2800. That is 750 minus 400 multiplied by Rs 8.

Similarly, the price index of one city will be different from another city. Therefore, CPI of city A may be 780, city B it may be 756 and so on and therefore, the DA will also differ.

Regards,

Madhu.T.K
9th January 2011 From India, Kannur
To add.. it will be basic + DA + HRA.. then add other allowances if any. Can you pls tell me for which city it is ?? I have the break up of Kolkata. Thanks
10th January 2011 From India
It is advised to break minimum wages at 60% (basic + DA) & 40% (Allowances). By this way no labour office will challenge you. Regards, Vipul Parmar
10th January 2011 From India, Valsad
hi,
sir u cannt bifurcate to minimum wages bcoz minimum wages = basic +DA
becoz if u will bifucate the Minimum wages then PF ammt will be less which will be wrong as far as the labour Dept and Employye will gett less deduction
thnks
ashish
7838606486
10th January 2011 From India, New Delhi
Dear Sir,
Minimum Wages attract the liability of PF so you can not bifucate it except (Basic +DA), if you are bfurcating it you are boud to pay PF on all component otherwise you will be a defaulter a sper the provision of EPFO & MP Act 1952.
Thanks
Dheeraj
10th January 2011 From India, Delhi
Normally the labour department showing daily wages & monthly wages for unskilled, semiskilled & skilled persons, which include the Basic and DA. These rates are notified every month, quarterly or half yearly as per Gazette Notification. You need not bifurcate these minimum wages.
10th January 2011 From India, Chandigarh
i want to know about shop act because i have applied for shop act but i don't know what is the proceser compliance of shop act so kindly tell me about shop act compliance if you can send me notification about all compliance i will be humbel
Thank's
Dharamveer
10th January 2011 From India, Delhi
Dear Rao,
For employment not included in the schedule, the lowest of the minimum wages applicable to the scheduled employment would apply.
With regard to bifurcation of wages, there is no such rule that if you put 60% as basic and DA and the rest, ie, 40% in other allowances, no Labour Officer could question. Yes, they can question if the sum total of the amount paid as wages is less than the sum of basic + DA as fixed by the government. If you go through the verdict by the Apex Court in Air Freight Courier and Cargo' case you will find that if the employer is paying not less than the minimum wages in total he is said to comply with the provisions of Minimum Wages Act even if the basic wage is short of what is stated as payable or if he is not paying DA but is paying it under a different head like HRA or other.
Regarding PF contribution payable on minimum wages, there is a confusion that EPF Organisation can not enforce minimum wages.

Regards,
Madhu.T.K
10th January 2011 From India, Kannur
Dear Rao ji,
Now all the State Governments in India are given a notification that unscheduled employees minimum wages are fixed, for this you may approach to your local Labour Department and obtained the copy of G.O.
Regards,
PBS KUMAR

11th January 2011 From India, Kakinada
The minimum wages notified by the respective goverments are having only Basic and DA compenents only which shoul not be maneouvered in any case. Other allownaces could only be the add ons. The basic is revised once in five years and DA portion is only getting revised depending upon consumer price variance in every six months or one year state to state.
As regards the unschedule categories, one of the following options may be exercised:-
1) Same and similar nature of jobs performed in the industry
2) A wages not less than the wages earened by the bottom most regular worker in respect of contractual workers
3) Wages arrived through settlement with the Union
4) Wages notified by the District Administration, if any.
Josephraj
11th January 2011 From India, Durgapur
Dear Mr. Ramneet,
Minimum wages Rates: (Delhi)
Unskilled Rs. 5278.00 inclusive DA
Semiskilled Rs. 5850.00 inclusive DA
Skilled Rs. 6448.00 inclusive DA
Now minimum wages and DA are inclusive effective Feb, 2010
Regards,
Kushal P.S. Mahur
Executive- Human Resources
Mobile: 9717482231
11th January 2011 From India, Delhi
Dear Madhu PF will be calculated on Minimum Wages or Basic Pay or Take home or Gross Salary. regards Girish N Chaturvedi +919847977724
11th January 2011
Dear Mr.Madhu,
You have shared a great amount of knowledge which commonly lacks between hr professional.
Sincere thanks to you,But still the subject is not cleared.Please bifurgate the amount.
3650/-
Mangesh Wakodkar
11th January 2011 From India, Pune
HR-Professionals Kindly clarify the Left employees Bonus If a employee resigned after worked 6 months how will calculate the bonus if his Basic+DA is 12000/-PM S.Mohan HR-Manager Coimbatore
11th January 2011 From India, Coimbatore
Thats not applicable for West Bengal (Kolkata).
I faced a real challenge to show the letter of which states that 'you can break the minimum wages'... PF inspector was really harsh on us..
What we do now is we ensure that the minimum wages is more than the wages received by the staff.
Thanks
12th January 2011 From India
Minimum wages are declared by the government on the basis of the Basic and the price index and is a complete package. There is no breakup of the amount so declared. It is illegal to bifurcate it. It is a lumpsum figure and it muct be presented as it is.
If you want to break up, pay a little more than the minimum wages and show the break up as you wish (Basic+DA in your mwage breakup must be more that the minimum wages).
12th January 2011 From India, Chandigarh
hi mr rao
ur last sentence of apex court is not clear.
kindly make it clear that if all amount given to emp is more or equal to the min wage fixed by govt but basic portion is less than the min wage fixed , then is that crime or acceptable.
regards
samsheen
12th January 2011 From India, Ludhiana
I have one confusion regarding the minimum wage revision .
Actually security also come under revision as they are also skilled but they are already getting Rs. 7000 per month wherein basic is 3300 but now minimum wage is 3600 . Should we need to revise the basic to 3600 or not ?
My opinion is no as they are over all getting around 7,000 which is above minimum wage as min wage is the overall remuneration that company has to pay .
PLz guide me and add your input ........ should be revise or not ?
12th January 2011 From India, Delhi
THANKS... I agree with you !!! However, some employers keep on thinking of inventing ways to cheat their poorest employees of their rightful dues. Warm regards,
12th January 2011 From India, Delhi
Thanks for your correct opinion.
Instead of giving additional salary by way of other allowances; typical Indian employers would try to cheat the poorest of workers of their rightful dues; by bifurcating the MINIMUM WAGES into fictitious salary heads such as HRA etc.
Serious punitive action should be taken against such employers including imprisonment, apart from fines and compensation to workers; else such blatant violation of labour welfare shall continue.
Action should be taken against not only the employer (including Occupier and factory manager), but also against the HR persons responsible for compliance and Labour Welfare Officers.
Unless some harsh action is taken; some HRs will keep on asking and seeking solutions for such illegal request as "bifurcating the minimum wages". No one is willing to think, "why Minimum Wages shoul be bifurcated further, when the competent government has FIXED it" ??
Warm regards.

12th January 2011 From India, Delhi
Nothing has been emerged as far as the basic salary is concern in the above discussion. How the basic salary can be determind in any orgnisation ? Is there is any rulling of the Apex court that the basic should not be less than----- percentage?
I have been told by an Official of the EPF department that the bacic salary should not be less than 95% of the Minimum Wage pervailing in the state. As far as the EPF Act is concern probably it is silent on the subject.
Any body who may give their authority etc. on the matter?
Thanks
L M Sharma
14th January 2011 From India, Vijayawada
Has Official of your EPF department told you how and on what basis, it should 95%? Any tom, dick or harry tells you any thing and will you accept that?

The term Minimum Wages is a legal term in the Minimum Wages Act, 1948 and it is complete within itself. No bifurcation or break up of this amount is permissible.

It is the prerogative of the Government to fix the minimum rate of wages, as defined under Section 4 of the Minimum Wages Act, 1948; and once the Government fix such rates these cannot be bifurcated. These rate must be called and known as Minimum Wages for all purposes.

Section 4 of Minimum Wages is reproduced below:

Section 4: Minimum rate of wages.

(1) Any minimum rate of wages fixed or revised by the appropriate Government in respect of scheduled employments under section 3 may consist of*-
(i) a basic rate of wages and a special allowance at a rate to be adjusted, at such intervals and in such manner as the appropriate Government may direct, to accord as nearly as practicable with the variation in the cost of living index number applicable to such workers (hereinafter referred to as the "cost of living allowance"); or
(ii) a basic rate of wages with or without the cost of living allowance, and the cash value of the concessions in respect of supplies of essential commodities at concessional rates, where so authorized; or
(iii) an all-inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of the concessions, if any.
(2) The cost of living allowance and the cash value of the concessions in respect of supplies of essential commodities at concessional rates shall be computed by the competent authority at such intervals and in accordance with such directions as may be specified or given by the appropriate Government.
14th January 2011 From India, Chandigarh
Dear Surendera

I agree with you in totality on this;
" The term Minimum Wages is a legal term in the Minimum Wages Act, 1948 and it is complete within itself. No bifurcation or break up of this amount is permissible. "

What one fails to understand is the obsession that certain companies and their HR have with; bifurcating even this minimum wages further.

It is saddening to read about these companies and one feels sorry for the plight of poor workers.

Can such companies be called "progressive and good" or "exploiters of labour and penny-pinchers" ??

If they are so obsessed with a "salary strucuture" (?); why can't they have their Basic Pay STARTING MUCH HIGHER than the absolute) MINIMUM prescribed by the Govt. ??

The standing and the standard of a company can be known immediately from the MINIMUM BASIC PAY that they pay to their LOWEST-LEVEL of workers.

What to say, if it is even LOWER THAN THE MINIMUM WAGES !!

I think it is either an insult or compulsion to work in such a company. I hope HR professionals will keep this fact in mind, when talking or boasting of their companies.

When I joined a giant manufacturing company as Management Trainee, at the beginning of my career; during our Training in HRM, we were told to omit studying the Minimum Wages Act 1948 - because its not applicable !! The company pays much MUCH HIGHER SALARY AND BENEFITS to its lowest level of worker than what is prescribed as the Minimum Wages in the Act.

It is simply outrageous and disgusting to note that in Companies and the "Organised sectors" the workers get less BASIC PAY than the Minimum Wages prescribed - thanks to our own "creative" HR Professionals (or HR non-Professionals) who instead of guiding the Management with their professional advice, do things expected from people with no dignity and professional pride !!

Warm regards.


15th January 2011 From India, Delhi
Hello,
Minimum wages i.e Basic + D.A. are fixed by the respective State Govt. D.A. is veriable and change every six month. On the total of Basic + D.A. , 5% HRA needs to be paid. So Basic+DA+ HRA these are main direct components of MW . Apart from this indirecte components are PF, ESI, Bonus, Leave. etc. Employer has to pay this much MW.
Regards,
Hemant Nadgauda
16th January 2011 From India, Pune
The minimum wages fixed by the concerned state Government are inclusive of DA and there is no statutory law that you are supposed to pay DA. However, you should not pay less then what minimum wages has been fixed by the State Government. AS I had myself come with the same problem in the past.
17th January 2011 From India, Jaipur
I agree with Madhu, law is not clear as to how much you would want to keep the DA and basic component. Most places i have seen around has a typical break up of Basic*DA*HRA however as a best practice its advisable to keep the minimum wages intact (BASIC & DA) and well you could provide PF benefits on them. By the way there is one whole set of litigation (the group 4 security vs dept of pf) in process pertaining to the bifurcation inititated by the PF department which is suggesting that the PF amount be paid on the minimum wages.
20th January 2011 From United States, San Francisco
Law is very clear as long as the minimum rate of wages is concerned. The Rate of Minimum Wages is a lumpsum amount and cannot be bifurcated.
20th January 2011 From India, Chandigarh
Dear Mr. Bhanot, please refer to the definition of wages under the minimum wages act 1948 which mentions HRA that also could be a part of Minimum wages. Nowhere its written that minimum wages can be bifurcated or not bifurcated. You are also requested to refer the supreme court ruling in Bridge & Roofs co. ltd vs union of india holding that the basic wage for PF contribution comprise of basic + DA and not house rent allowance. Your comments are welcome in this regard if you have any new information in this regard. The above information was intended to provide an idea as to how confusing the whole scenario is. Though I still maintain the PF benefits need to be given on minimum wages (The group 4 securitas case has been reverted back to the PF tribunal). A judgement is awaited.
Meanwhile notices have been issued by some of the DLCs to ensure that the minimum wages are not to be split.
25th May 2011 From United States, San Francisco
Dear Senior
as per epfo encforcement office basic should be 60% including (basic +Da) but he din't give me any notification so if there is any notification please send me.
Thank's
Dharamveer
kashyap.0001|@gmail.com
8th August 2011 From India, Delhi
Dear all,

a nice information on PF and bifurcation of min wages. since this bifurcation notice has come into existence, I m still trying to find out an answer to my query. would request you all to look in to it and please reply if you can.

we all are aware that

1. min wages is basic+DA. ( as per the above comment, you can also add HRA to it, if you don't add, no issues)

2. as per the notification you cannot bifurcate min wages as it leads to less PF contribution. so PF should be paid on min wages only.

please note that there is one more fact that PF ceiling is Rs. 6500/ to contribute. if your salary is more that Rs. 6500, you need not to contribute in PF. now Delhi govt has again revised min wages effective from April 2011 wherein only unskilled category will earn less then 6500 which is Rs. 6422. it means you can calculate PF on 6422.

1) other categories will earn more then 7000 Rs. as min wages (for semi skilled it is 7098). so what we should do here. should we pay PF on only 6500 (ceiling) or 7098 (min wages) ?

2) if you pay PF on min wages which is now higher then the ceiling then where is the exemption from PF. Then you cannot exempt employees who are getting more then 6500 as basic salary. Please clear

Also please correct:

what if you put whole amount of min wages under one head (basic) only. does it make the difference if PF has to be calculated on whole amount....what is the need to divide it into basic and DA and calculate PF on two heads. as its only HR people who know that PF is calculate on Basic+DA. a common man only knows that it is calculated is on basic salary.

looking forward for responses from seniors in forum...please help.

regards,

Saunee
8th August 2011 From India, New Delhi
Hi, pls tell me how to break up in (Basic + DA + HRA + Conv & other allounces) of Delhi & Noida
8th August 2011 From India, Delhi
Dear Pallavidas07 and others
Why do you (read, your company) want to break up even the prescribed MINIMUM WAGES into such components as "HRA + Conv & other allowances" ??
Is your company not in a position (financially) to ADD these components from their own resources ??
What is the intention ??
If you are not able to give these; then why DEPRIVE the workers from THEIR RIGHTFUL CLAIM ON PF CONTRIBUTION (by reducing their Basic Pay ???
Such exploitative attitude is shameful, to say the least.
As conscientious HR professionals, and to gain professional respect, we should not endorse/recommend such un-ethical acts (even though it may not strictly be illegal).
Kindly think over these issues.
Regards.

9th August 2011 From India, Delhi
Dear All,
My query is that
1.Would it be fair to not include DA in minimum wages, (as our org does not include DA in the basic)?
2.if we pay an employee more than the daily wage rate, would it be fair to deduct PF only on basic excluding DA?
7th November 2011 From India, Mumbai
Dear madhu t.k sir
Govt. Declares The Minimum Wages For The Workers( For Unskilled, Skilled, Office Staff Etc.) .Can We Make The Breakup Of That Minimum Wages And Deduct The PF, At A Lower Rate.
for maharashtra state : minimum Wages? please tell me in details
5th August 2016 From India, Miraj
I think we have been discussing the same only through these posts which was started sometime in 2011. Please go through the posts.
Why do you want to fix minimum PF? PF is payable on basic wages and dearness allowances whereas the basic wage as per EPF Act is the total wages. Therefore, there is no meaning in doing a bifurcation you like. If HRA is excluded, that does not mean that you can pay say 5% basic salary and 95% for house rent allowance. It is just like saying that food and clothing will account for 5 percent of cost of living and the rest, 95% is for shelter!!
Madhu.T.K
6th August 2016 From India, Kannur
If i have Gross salary of Rs 11,000 , in which i bifurcate salary structure as below:-
Basic (50% ofGross)= Rs 5,500
HRA(50% of basic)= Rs 2750
Conveyance(20% of basic) = Rs 1,100
Other Alloweyance = Rs 1650
My ques is that my basic is less than minimum wage fixed by govt.
1) If i do pf calculation as per my salary structure basic , is there will be any problem since it is less than minimum wage ????
2) Is it compulsory to fix basic as per minimum wage , and than bifurcate rest gross amount in salary structure?????
12th August 2018 From India, Bhopal
As far as minimum wages compliance part is concerned there is no issue if you bifurcate the total amount. What is important is the fixed part of salary should be equal to or more than the basic + DA fixed by the government as minimum wages.
Many companies (even companies who can bear a higher contribution of PF) contribute PF only on basic salary. It is true that PF is payable on basic wage only. But what is basic wages is very clearly defined in the EPF & Misc. Act as the whole amounts received by an employee as per contract of employment excluding HRA. If you have agreed to give your employee Rs 11000 as salary, this is the salary as per contract of employment. If you have shown the salary by bifurcating the total amounts into basic, HRA, etc, then also what will not qualify for PF contribution is the HRA part and for the remaining amounts,like conveyance and other allowance you are bound to pay PF. As already said many companies follow the practice of paying it on the basic pay fixed by the respective companies. The dispute regarding basic wages or PF qualifying wages is still under the perusal o the Apex Court and in a recent ruling by the Madras High Court, till the verdict from the Supreme Court comes, it is said that till the verdict of the Supreme Court comes the PF authorities are required not to interfere in this matter. therefore, for the time being you can contribute PF on your basic pay, Rs 5500.
13th August 2018 From India, Kannur
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