Dear Seniors, Please help me how to implement DA system in manufacturing industry located in Tamilnadu?At present we have Basic + Allowances system only. Thanks S.Boopathi
From India, Coimbatore
Director Of Company
Manager - Hr


Dear S.Boopathi,
Greetings for the day,
Why you bothered about to pay da separately, you merged the same with the basic salary, as if you pay the same separately it attract EPF liability its better to merged the same with basic, as you also aware of the fact that minimum wages also the component of basic salary+dearness allowance which was defined by state govt time to time as per price index and the liablity of EPF, Bonus,Gratuity also consider basic + da, i.e minimum wages so better to merged da with basic instead of giving them separately. I am also quoting the judgement copy of airfreight ltd. vs state of Karnataka, which will clerify whole situation.
thanks & regards,
Sumit Kumar Saxena

From India, Ghaziabad

Attached Files (Download Requires Membership)
File Type: doc AIRFREIGHT vs state of karnataka.DOC (75.0 KB, 45 views)


Please check with your management first whether they want to introduce the DA system, which is normally linked with the compensation mechanism of employees in the Govt. organizations.
My personal suggestion to you would be not to launch any such initiatives on your own which increase the 'Employee Costs' in an organization.

From India, Delhi
Shailesh Parikh_HR Pro

Dear Bhupathi
D.A has huge, recurring and incremental direct and consequential financial implications. It requires top management’s approval.
D.A is linked with All India Consumer Price Index published by Government Labour Bureau. The objective is to provide allowance to meet the "cost of living". There are various Indices available.
So Before HOW please get the answer for WHY you want to go for it.
Shailesh Parikh
Vadodara, Gujarat
99 98 97 10 65

From India, Mumbai

Dear Boopathi,

Introducing a DA system is not too complex but is cumbersome. As you are aware that the DA system is linked to the Cost of Living. The DA is linked to the rise in consumer price index published by the Government and these details are furnished in the monthly magazine titled "Uzhaipavar Ulagam" by the Government of Tamilnadu, Labour Department located in Teynampet, Chennai. If you subscribe to the magazine for 20 years the cost is very nominal you will get a feel of the raise of points over the past few months.

Generally companies offer a fixed DA which is in line with the Minimum Wages prescribed for the industry and thereafter for the raise of every point they offer a monetary compensation say Rs.1.50/ point. If there is a raise the DA increases if there is a fall the DA decreases. But the points for the current month will be published only next month and it will become difficult for you to back work the wages paid. Hence, companies frame a policy that the company will revise the DA at a frequency (number of months) considering the raise or fall in DA. If you have an union then this will become a sore point of negotiation in terms of monetary compensation for every raise of point (Rs.1.50/ point mentioned above).

Have a careful thought, make a sample worksheet for the past 2 - 3 years study the wage implication if you had implemented it 2 - 3 years before, compare the CTC increases and then propose it to the management.


From India, Madras

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