Payment of FDA and VDA is currently being made to confirmed (union) staff.
We are about to enter into a fresh round of union negotiations and I need clarification on whether it is compulsory to pay FDA if VDA is being revised every quarter and paid monthly.
Settlement is an agreement arrived between two parties after due discussions, negotiations and deliberations. However no settlement can override any statute , agreement or decree.
Neither VDA nor FDA is mandatory- it all depends on union’s’ demand- and your agreement on it. As you know the process involves several give and takes . So the answer is with you –there will not be any universal, readymade solution to this query.
Your management needs to decide best in interest of your company. Generally the agreement arrives on the amount (total benefit in cash) and later it is being distributed in different heads (components).
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As you know various patterns of emoluments are being followed in countries. They are time-scale, consolidated, variable, govt.scales/emoluments, CTC etc.
This type of FDA & VDA are resultants of pay scale/time scale type of pay structure by which the basic pays are fixed on time scales slabs coupled with addl. item in the form of DA. This BP & DA are periodically revised upwards or otherwise as the wages & other benefits are negotiated with involved unions (if any) or on following certain guidelines like govt.scales/structure etc. Basic pay always connotes to time scale pattern by which an employee, fresher is appointed fixing minimum of the time scale, say for the first year which gets increased by way of periodical annual or bi-annual increments. In addition, certain amount of FDA/VDA also paid plus other allowances like HRA/CCA, conveyance, medical,uniform, daily allw, project allow, OT allw. etc.
Now coming to FDA/VDA where time scales for BP are followed DA normally paid. This in such establishments are linked to the fluctuations in Whole Sale or Consumer Price Indexes, formula which are published by the Ministry of Labour, GoI. By this method, BP remaining same for atleast one year, FDA/VDA getting revised, normally upwards periodically, say once in a quarter or half yearly as the case may be. This is happening due to rise in prices of certain select commodities. Ofcourse, when prices are falling, the DA components could see downward revision as well, don't worry such things are rare of rarest instances only.
Now coming to FDA, when you follow indexes for declaring revision in DA the same is segregated between FDA & VDA as directed. Thus FDA is expected to remain constant for few years and it's merged with BP when revision of BP is negotiated, either fully or partly, leaving FDA restart with '0' and go on sharing on some formula for VDA. This will be totally depend on publication of indices by MoL from time time. If you don't follow this basis then don't try to attempt as there is no compulsion to have FDA/VDA pattern.
Moreover this pattern will work only on -
i. Time scale/slabs
ii.Depending on publication on GoI/MoL notifications
iii.When governed by wage settlement agreements applicable to diff.types of categories.
And whatever pattern you might follow, everything is culminating to a sum of Gross salary. But, if you are following this pattern over many years, it would be difficult to switch over to a new pattern. If need be you should introduce new pattern from the freshers onwards. This is because there is an element of periodical revision of VDA atleast once in 3 months which serves as automatic partial revision of salary which no one would spare/sacrofoce. Therefore study the formula/mechanism of FDA/VDA from the websites of MoL. I remember this subject was discussed in this forum also about 5-6 yrs. ago. Use 'Search' box to locate.
Pl.see the recent notification of DA issued by the Delhi Govt./Central govt. applicable to units all over the country following FDA/VDA (however SC stayed the notification vide it's order dt.31.10.18). This will help you to understand the concept little more.