Labour Law & Hr Consultant
Sr. Hr Generalist

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Greetings to all seniors, Please guide me, for PF calculation purpose, whether Basic+DA can be below minimum wages or not? Regards: Devendra Gaur
From India, Faridabad
Dear Devendra Gaur,

Payment of wages by the employer at the minimum rates fixed by the Government may, on the face of it, seem to be a mere statutory compliance to escape penal consequences. But a dispassionate introspection by every one, particularly an employer trying to reduce the value of its essential components by way of apportioning the same under other heads just for the sake of reduction in his indirect financial commitments, would prove it to be not only an insufficient compliance in a wider legal perspective but also an unethical act prompted by vested interest and exploitative tendency as well.

It is important to note that the above observation does not run counter to the judicial dicta laid down so far regarding the equability of the sum total of the minimum wages fixed by the Govt and the sum total of the industry wages actually paid by the employer and the right of the employer to devide the gross wages into different components based on the economic philosophy of demand and supply and the industrial relations principle of collective bargaining. The dicta laid down by the higher judiciary in this regard so far are limited only to the afore-said questions.

Directly coming to your question, the consequence of breaking of the gross wages into different components such as basic, dearness allowance and other allowances should have uniform application in respect of all employment benefits. When the triple terminal benefits of PF, Pension and Gratuity as well as the periodical benefit of statutory bonus are computable only on the basis of basic and D.A , will not the purposive attempt of keeping those particular components below the actual minimum wages for the sake of a particular enactment defeat the very object of social security and bridging the gap between minimum wages and fair wages? In my personal opinion it is illegal and as such questionable before a Court of Law by the affected workmen/employees.

It is unfortunate that while more of lip-service is paid to "Corporate Social Responsibility", the proverbial phrase " Charity begins at home " is conveniently forgotten by the concerned for the sake of economy of expenses.

From India, Salem
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