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1 Is it mandatory to give the revised minimum wages as per Karnataka Shops and Establishment Act Notification in Basic only?
2. What if an employee is already drawing more gross salary than the revised Minimum Wages?
3. Is there any guideline on this?
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It is not mandatory to pay basic salary and dearness exactly as per Minimum Wages notifications. You can follow your own pattern of salary provided the total of fixed part of salary is not less than the sum of basic wages and VDA as per minimum wages notification. Therefore, if you do not give VDA, you can follow that system. Only thing to be noted is that the total salary should never be less than the minimum wages.
The notification will contain a provision that in respect of any employee who is getting salary more than what is prescribed under the notification, the higher wages will prevail. That means you should not reduce the salary of any person in order to make it equal to minimum wages.
Hi Praful,
In Karnataka Basic and DA are fixed by govt of Karnataka and that needs to be paid as minimum wages (Basic + DA). Over & above wages/ Salary can be divided in to HRA or Conveyance etc.
Please refer to the Supreme Court judgement in Air Freight Ltd Vs State of Karnataka (1999 LLR 1008) in which the Apex Court has said that if you are paying salary equal to or above minimum wages fixed by he government, you are said to comply with the minimum wages requirements and there is no need to take each component of the salary. hence under your system of payment, if there is no DA, no problem, if the total of the basic plus other allowances is over minimum wages. I think this has been discussed in this forum many times and you may go through various discussions.
Hi Madhu Sir,
Thanks for your inputs. I have searched in the tool bar for the same, but not got the link. If wages are more than the notified than DA can't be considered, but if employer is paying same as minimum wages, then it should not be divided into other heads. Since employer will purposeful divide his salary to avoid PF.
Your input will be highly appreciated.
Paying PF on (reduced) Basic wage any is a practice that the new generation employers started without going in deep about the definition of basic wage as per EPF&MP Act. Though PF is payable only on basic wages and DA, if any, basic wage as per the Act is nothing but the whole salary including all allowances expect HRA. We have misinterpreted the same as basic pay as fixed by us and not the basic salary as per the Act. We will have a low basic wage but that is not the wage as per contract of employment. Basic wage means the wage that we have agreed to pay to an employee. Even the PF authorities have been negligent in enforcing this till they understood that the employers have been misinterpreting the term basic wage to mean only the basic wage as per their salary structure. Any way this is not the matter of discussion here. I would say that if your total salary does not contain an element called VDA or DA, but at the same time you are paying wages equal to or more than minimum rates fixed by the govt. you are said to comply with the statutory requirement and you need not restructure the salary with DA or pay DA in addition to what you pay.
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