Labour Law & Hr Consultant
Senior Manager/freelance Consultant
Manager - Hr & Ir
12th November 2017 From India, New Delhi
What the " Act " you referred to is the Minimum Wages Act,1948 which alone fixes the quantum of wages payable to industrial employees that too selectively as a first step towards the realization of the ideal of securing " Living Wage " to the working class as per Article 43 of the Constitution of India. Though the terms ' wage', 'salary' and 'remuneration' have similarities in their colloquial meanings in terms of nature and outflow, they have certain subtle dissimilarities or differences in their literary and legal definitions in terms of the periodicity of payment, method of computation, the nature of services in consideration of which the payment is made and the addition of certain components resulting in a structural pattern. Apart from the MW Act,1948 is the only Act fixing the minimum rate of wages payable in respect of certain scheduled employments like I said earlier, there are other legislations relating to wages exclusively too viz., the Payment of Wages Act,1936 dealing with the mode and periodicity of payment of wages and the legal deductions therefrom and the Equal Remuneration Act,1976 mandating equal wages for equal work irrespective of sex and some other legislations like the Industrial Disputes Act,1947, the ESI Act,1948, the EPF Act,1952, the Payment of Bonus Act,1965, the Payment of Gratuity Act,1972 having their own modified definitions of wages depending upon their respective purposes. Therefore, when you intend to break the gross or total wages of a given wage period e.g., monthly wages in to different components such as basic and allowances, you have to ensure compliance with all these Labor Laws which have different definitions of the same term.
Basic and Dearness Allowance being the major components invariably finding place for consideration in almost all the Legislations mentioned above, you may consider the break up of Basic and D.A together 70%+ Other Allowances 30%. Such a practice would ensure unquestionable compliance with all enactments and avert the heart burns of employees regarding their indirect/fringe benefits.
Any way, do not start the calculation with CTC.
12th November 2017 From India, Salem
There is no law described the quantum/Percentage of Basic Salary in the Labour enactments. It is prerogative/discretion of the Management variates from industry to industry and organisation to organisation. You cannot mingle with the concept of Minimum Wages as defined in scheduled category of employees under Minimum Wages Act differs from State to State. In a common practice 50 % of the total wage/salary of an employee as bifurcated as Basic and remaining part of 50% as allowances.
V R RAO PULIPAKA
13th November 2017 From India, Chennai
#AnonymousThe minimum wage (BASIC+DA) applicable to a industry as mentioned in the Minimum Wages Act (Gazette Copy) as applicable to different states shall be the BASIC to be fixed irrespective of the gross salary. Say in Tamil Nadu Minimum Wages is Rs.9107/- (basic+da). So the BASIC+DA or BASIC shall be equal to Rs.9107/- or greater than that. Rest of the part shall be allowance.
General norms followed by tradition is 50% basic and 50% other allowances.
In Tamil Nadu PF authorities insist that at least 60% of the gross shall be BASIC or BASIC+DA.
Many companies and contractors now have only two titles for salary payment.
(i) BASIC - 60%
(ii) HRA - 40%
According to PF Act, the definition of BASIC shall cover all the allowances except OT & HRA.
14th November 2017 From India, Chennai
Refer to your query, CTC means cost to the company. There is no criteria for calculation of CTC under Minimum Wages as quoted by you. Normally Minimum Wages consists in Schedule category of employment differs from to state to state i.e. Basic Wages + DA + VDA . VDA will be changed for every six months based upon CPI numbers. If you calculate CTC, you will take Basic, DA, VDA, Allowances if any such as HRA, Conveyance etc., and also add employer part of contribution towards PF, ESI & Bonus if any falls the employee under the ceiling of the act, GPA & Mediclaim part of the employer provided if any.
Thanks & Regards,
V R RAO PULIPAKA
15th November 2017 From India, Chennai
Members have amply clarified various facets of break down of salary.
The issue generally arises when an employee is in tax bracket and wants to pay min tax.
Yes , generally the basic is kept ,in such cases, upto 50%and balance is distributed.
The % of basic has an impact on gratuity hence in certain cases, it is kept as 40%.
However ,there is no hard and fast rule and no Act.
24th November 2017 From India, Delhi