Umakanthan53
Labour Law & Hr Consultant
Saswatabanerjee
Partner - Risk Management
Uday.singh@hdbfs.com
Human Resources

Dear All
I am working with a NBFC. Recently, we got instructions from labour commissioner regarding wages break up. According to them the basic wages should be equal to minimum wages.
Is it necessary that basic wages should be equal to minimum wages?
Regards
Uday
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Dear Udaysingh,
Can you pl. upload the copy of the instructions?
Dear Uday,
Has he given this instructions in written . If yes please upload it. Yet there is not clear instructions from any govt. body that Minimum Wages should be Basic wage.
Sir
Thanks for your response. But they have not given instructions in written. In last meeting ALC told us that minimum wages can be bifurcated only in Basic+HRA in 70:30 ratio.
Regards
Uday
The minimum wages act provides the state government to notify minimum wages, which it does every 6 months.
The minimum wages notification says that basic and special allowance (DA) should be above a certain amount. So the minimum wages is equal to basic, not gross.
So yes, looking at the provisions of both acts, the basic (assuming you do not have DA or special allowance) needs to be equal or above minimum wages.
There have been some judgements by a particular high court saying the intention of the legislature was not this but to ensure totoal payment is above minimum wages. However, that judegement is not ratio decidenti for Karnataka. And in any case, do you really have the time and money to fight it out in court ?
Dear Uday,
The minimum wage fixed under the Minimum Wages Act,1948 has to be taken as one package for the purpose of comparison with actually paid industry wages despite the components in the structures of both scales. However, the excluded components from the term " wages " u/s 2(h) of the MW Act,1948 finding place in the industry wage structure should not be taken into consideration for determining the parity between both the rates. This is the ratio decidendi of the judgment of the Supreme Court in Airfreight Ltd., vs State of Karnataka and Others ( 1999 LLR 1008 ). In short, the sum total of the minimum wages should be equivalent to the sum total of the industry wages sans the excluded items.
Regarding the suggestion of the ALC the bifurcation of the minimum wages, it may be his personal opinion. If I remember correct, the higher judiciary has recently held that the executive should not embark upon rewriting of the Law passed by the Legislature in a case relating to the executive instructions of the EPFO regarding computation of EPF contribution strictly as per the minimum wages fixed. Wages is determined by the demand and supply of Labour in the employment market as a consequence of collective bargaining. The definition of the term "wages" differ from Act to Act depending upon its purpose. That's why the Supreme Court has come to the conclusion that minimum wages is in essence a single package irrespective of its components.
Dear Saswata Banerjee Sir
Thanks for your kind consideration. As you wrote "The minimum wages notification says that basic and special allowance (DA) should be above a certain amount. So the minimum wages is equal to basic, not gross." Could you share any such notification in which it has been declared. it will be really helpful for me.
Regards
Uday
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