Umakanthan53
Labour Law & Hr Consultant
KK!HR
Management Consultancy
Nathrao
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My question is, As per the minimum wages act, is it true that Basic+DA should be is equal to minimum wages, i am confused that payable amount should be equal to minimum wages, all other allowances are included minimum wages or not?
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Actually, I've consulted regarding this with many consultants and seniors HR Professionals, but it seems that nobody is clear with this act as nothing concrete is mentioned in the payment of wages act. Many of the companies are making minimum wage as basic salary and many are considering that as gross salary and then bifurcate that in different salary heads. As per the PF act, minimum wages can't be bifurcate in different salary heads but that's not mentioned in minimum wages act.
Manish
Thanx Manish, but i've review many of Salary slips, in which, most of Organisations are not keeping Basic + DA equally to minimum wages, still i am confused on the same, is it legal or not if Basic + DA is less than minimum wages?
Also my question is nobody wants less Net take, if we keep minimum wages as Basic + DA than PF deduction of low salaried people will be higher, and they will get less net take home, on other side Law also says we have to keep 40 % to 50% basic of gross, if Gross salary is 10,000/PM, than how is it possible to match with Minimum wages.
Either we can follow the rule of % or minimum wages, what actually laws says, please suggest me.
As per minimum wages act (Reference ILO)
" Wages means all remuneration capable of being expressed in terms of money, which would be, if the terms of the contract of employment, express or implied were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment."
There is not even mentioned in the law that it should be " Basic + DA = Minimum wages"
It is urgent for me to short out this query.
If the employer bifurcates salary of employees covered by the Minimum Wages Act into only basic + DA, then it should be equal to or more than the minimum wages applicable to the class of employee concerned. If the employer bifurcates the salary into basic + other allowances( like DA, HRA or conveyance allowance etc.) then the total of such emoluments shall be equal to or more than the minimum wages applicable to the class of employee concerned.
B.Sakumar
Navi Mumbai
Read Sec 4 of the Act
Minimum rate of wages.
4. Minimum rate of wages.-(1) Any minimum rate of wages fixed or
revised by the appropriate Government in respect of scheduled
employments under section 3 may consist of--
(i) a basic rate of wages and a special allowance at a rate
to be adjusted, at such intervals and in such manner as
the appropriate Government may direct, to accord as
nearly as practicable with the variation in the cost of
living index number applicable to such workers
(hereinafter referred to as the "cost of living
allowance"); or
(ii) a basic rate of wages with or without the cost of
living allowance, and the cash value of the concessions
in respect of supplies of essential commodities at
concession rates, where so authorized; or
(iii) an all-inclusive rate allowing for the basic rate, the
cost of living allowance and the cash value of the
Minimum rate of wages.
4. Minimum rate of wages.-(1) Any minimum rate of wages fixed or
revised by the appropriate Government in respect of scheduled
employments under section 3 may consist of--
(i) a basic rate of wages and a special allowance at a rate
to be adjusted, at such intervals and in such manner as
the appropriate Government may direct, to accord as
nearly as practicable with the variation in the cost of
living index number applicable to such workers
(hereinafter referred to as the "cost of living
allowance"); or
(ii) a basic rate of wages with or without the cost of
living allowance, and the cash value of the concessions
in respect of supplies of essential commodities at
concession rates, where so authorized; or
(iii) an all-inclusive rate allowing for the basic rate, the
cost of living allowance and the cash value of the concessions, if any
This should answer the query.
Minimum Wages notified by the respective governments have two components Basic Pay and DA. Neither in the Act nor in the notifications in this regard, makes it compulsory to fix the salary in the same amount so long as the total amount is paid. Many organisations resorted to keeping Basic Pay and DA at ridiculously low level and fixing allowing like conveyance or telephone or HRA etc at abnormally high levels to avoid primarily PF liability. So EPFO has clarified that splitting of wages for the purpose of PF contribution is not permissible. (Ref. No. Coord./4(6) 2003/Clarification Vol-II/7394 dated 23.05.2011.
Dear Hrcritivon.Trexgen,
I think that the question of what industrial salary structure comprising of more components than the statutory structure of minimum wages fulfills compliance has already been well settled by the Supreme Court in Airfrieght Ltd., vs State of Karnataka and Others [ AIR 1999 SC 2459 ] and [1999 LLJ(2) 705 SC ]. Better, you pl go through the entire judgment. The ratio decidendi of the judgment is that if the sum total of the industry wages minus the excluded items of the definition of the term "wages" defined u/s 2(h) of the Minimum Wages Act,1948 is equal to the sum total of the minimum wages fixed under the Act, it is perfect compliance.
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