Labour Law & Hr Consultant
Sr. Executive Hr
Asst. Manager Compliance
Manager - Payroll
Every employer has to pay to every workman employed by him a HRA minimum of 5% of Wages (Basic + DA). It is applicable to the factory / establishment employing 50 or more persons and it includes the contract labours. If housing accommodation is provided then HRA is not required to pay. For further reading please refer HRA act 1988.
25th June 2014 From India, Mumbai
Really your question, though appears to be very simple, requires an elaborate answer encompassing all the principles of wage and salary administration. No hard and fast rule for the determination of any allowance much less HRA in addition to basic wages. By the by, Can you please tell me the basis for fixing the individual's basic as Rs.6000/= and d.a as Rs.2000/=? ( If the fixation is based on the rates of minimum wages if any, fixed by the Govt for the particular employment under the Minimum Wages ACT,1948,my answer would be very simple.) If the determination is based on factors like job analysis, supply and demand of labour, organization's ability to pay, prevailing market rate, cost of living, managerial attitude etc., the answer has to be a little bit more elaborate consuming more of your time and focus on the concepts of cost of living and HRA with reference to the specificity of your query. Cost of living is computed on the basis of prevailing market prices of primary consumer goods of food grains and the like. That's why Dearness Allowance is linked to the fluctuations in the Consumer Price Index and thus emerges the concept of variable D.A. Prior to the emergence of D.A as a concept, the practice of spliting up of gross wages into basic and other allowances was necessitated by Industrial Revolution which resulted in large-scale production, emergence of industrial centres, migration of labour and its raising bargaining power through unionisation. It turned out to be an arrangement of mutual satisfaction in that the employer gaining by way of lesser indirect financial commitment and the labour getting more money wages in due course. So, my answer is that HRA is not dependent upon D.A; on the other hand, its grant and quantum depend upon factors like the location of the industry, the nature of its manufactory or business and the over-all earnings of the workmen.
25th June 2014 From India, Salem