Umakanthan53
Labour Law & Hr Consultant
Nagarkar Vinayak L
Hr-consultant
Pan Singh Dangwal
Joint Manager
Dheerajshakur
Hr Intern

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Dear all,
I have a confusion about Basic salary and Minimum wage, is Minimum Wage is Basic Salary? Please Explain.
Thanks.
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Dear Dheeraj,
No. Minimum wages is the sum total of all the components fixed under the Minimum Wages Act,1948 by the Govt. Any componential wage or salary structure would comprise of fixed and variable components. For example Basic salary would be a fixed component of the structure while other allowances in general may be variable in relation to the basic salary i.e., as a percentage to the basic salary. Among other allowances, dearness allowance or "D.A" is a special type of allowance introduced into the wage structure to compensate the periodical hike in the price level or cost of living as reflected by the Cost of Living Indices. Thus, the change in the general price level is reflected by the raise or fall in the points of any cost of living index ( C.S.I). When the D.A of the employees is linked to any Cost of Living Index, it is called " Variable Dearness Allowance " or "V.D.A" for short. Though for Central and State Govt employees the hike linked to the CLI is computed as a percentage to their basic pay, for the employees of the scheduled employments under the Minimum Wages Act,1948 whose minimum wages normally comprises of two components viz., Basic and D.A only, the D.A is linked to the CSI and the calculation is made only with reference to the raise or fall in the CSI. Therefore, all employees covered by the minimum wages would get the same amount of D.A irrespective of their category. Thus minimum wages under the MW Act,1948 is the sum total of basic and D.A and the D.A being variable according to the variation in the CSI to which it is linked, you have to be vigilant and ensure that the sum total of your industry wages do not fall below the sum total of the minimum wages at any point of time.
Dear Dhiraj,
The concept of basic wage and wages under the Minimum wages is not the same.
Originally, the basic wage was regarded as the market value for the job and with the passage of time other allowances like D.A., HRA, Convyence , LTA etc came to be added largely as percentage of basic wage to the salary structure due to union agreements, labour laws/Tax laws.
The wages under Min Wages Act, provides for two components, Basic wage and variable D.A. for the scheduled employments as rightly pointed out by our learned colleague Mr Umakanthan. If any establishment is covered by the Min Wages Act, you are obliged to give at least the applicable wages. Anything over and above, it is your sweet will.
Regards
Vinayak Nagarkar
HR-Consultant
In addition to the comment of Mr. Vinayak Nagarkar on the definition of basic wages, I would also like to emphasize that the allowances excluded by the definition of "wages" u/s 2(h)(i) of the Minimum Wages Act,1948 should not be taken into account for the purpose of ascertaining the parity between the minimum wages fixed under the Act and the actual industry wages paid when their structural components are different.
Dear Dheeraj,
Umakanthan sir has well explained you the differences as specified in the Act.
I would like to add that in any case the Basic Wages should not be less than the Minimum Wages as defined by the state govt through the official notification (which revised time to time).
The concept the minimum wages generally followed for lower class employment or when we sub-contract any job.
In such cases most companies try to keep the cost under control. They pay the minimum wages and statutory benefits on the same.
However, when we hire any clerical or other official/technical position in such cases the concept of of CTC is followed in which other components (HRA, Conveyance, Special Allowance etc) also included. Even in such cases also companies try to keep minimum Basic salary (around 40-50% of CTC). But it should not be less than the minimum wages of the state.
For your information I would like to tell you that in Delhi DA is not compulsory past of Minimum Wages (DA is merged with the basic salary after every six months, Apr. & Oct).
Hope I am cleared to you. Fellow members can put more light on the matter.
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