Sr. Hr Executive
Labour Consultant
Hr Executive
Human Resources
Hr/admin Officer
+1 Other

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Hi All,
As per Notification of labour office (DA) the minimum wages (Maharashtra) amount for unskill labour ie
basic(3600) + DA(3927) = 7527 + 5%HRA (376) = 7903
My question is if we are paying gross salary more that minimum wages ie. Rs. 10000 but to save PF cost we are showing
basic + DA = 7000 HRA (2800) Team Allowance (200)
So need your advice whether is it ok as per minimum wages Act to follow the above salary structure.If no please suggest some alternative..

From India, Pen
Dear Roysonbanet,
We are not supposed to deviate from any statutory practices as prescribed by the law for any reason. Basic in salary should be always same or more than Basic + DA as prescribed in the minimum wages notification. Not following the right practice may attract statutory problems while inspection to you.

Dear Manoj Sir,
I have question regarding the same.I have gone through a judgement of Karnataka High court in which they have mentioned that "Minimum Wages-Basis-One Package of fixed amount comprising various components based on cost of living- not to be split in components-Cost of Living includes also Variable Dearness allowance-Employer paying more than the minimum wages- Not liable to pay any further amount on the basis of variable dearness allowance-Minimum Wages Act,1948 SS.2(h),3,4,5."
Need your advice on the above statement

From India, Pen
As long as you are paying salary more than the Minimum Wages by splitting salary into various components, you are not violating the law. Therefore many organisations are taking advantage of it by showing lower Basic Pay to reduce the PF and Gratuity liabilities.
As far as Bonus is concerned, you are required to pay minimum Bonus of Rs.7,000/- if the employee has worked for full year without any deduction in salary. Here you are not allowed to take advantage of lower Basic pay. i.e. even an employee is getting Basic pay of Rs.4,000/- p.m. he will get annual Bonus of Rs.7,000/- or as per the earned Minimum Wages, whichever is higher.
PFA Courts Judgement of Delhi & P&H High Courts on the subject for your reference.

From India, Thane

Attached Files
File Type: pdf Courts Judgements on Minimum_wages_Vs._Basic_wages,_Mumbai.pdf (115.8 KB, 326 views)

Dear Roysonbanet, Additionally please find attached herewith clarification by EPFO over Basic and CTC amount for contribution. Hopefully this will be more helpful for the understanding.

Attached Files
File Type: pdf NO Contribution on CTC-1.pdf (530.2 KB, 380 views)

PF can be paid on minimum wages(Basic+ VDA) not on gross salary. But one can not bifurcate minimum wages for calculation of PF. Regards Jitendra Das
From India, Bhubaneswar
Hii Manoj Kamble
As you wrote "Basic in salary should be always same or more than Basic + DA as prescribed in the minimum wages notification". Could you share any such notification, I need it.

From India, Bangalore
Dear Sir, I would like to request you please provide the latest CTC calculator as per minimum wages act. Regards, Pravin Rajurkar
From India, Nagpur
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