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We have changed Basic+VDA as per the mandate from Karnataka Minimum wages Act. If an employee drawing gross salary Rs.90000/- we have have given him appoint letter saying Basic+Da Rs.30000/- other allowance Rs.60000/-. is there any mandate/rule to fix minimum percentage on basic.?. since the above case it is almost 33.33% and it is differs from employee to employee.
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Hi Mohammed Asif,
Minimum wages is fixed for different category of employees. you need to pay Basic+DA as per minimum wages schedule. There is no rule what percentage of Basic and DA need to be paid. Basic + DA should be more than minimum wages.
Janaab Mohd Asif,
In addition to the above, generally the companies follow 40% or around, of the total CTC as Basic Pay.
There is no specific rule for this. However, 33.33% is reasonable and there should not be any issue. But Basic+DA should not be less than the minimum wage declared by the State Government.
Dear Masifhe,
You have not specified to which category these kind of employees belong to. Normally the State/Central Governments do not fix minimum wages for such kind of highly paid employments.
To quote the specific directions, Govt of Punjab has already notified this clause in its minimum wage notification stating that "The minimum wages fixed/revised shall be the basic rates of wages."
This point has also been clarified by the Hon'ble Supreme Court of India in Airfreight Ltd Vs. State of Karnataka in the year 1999.
Regards
Jacob Pratap
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