If you do have the time and patience to peruse the similar threds already available on the same issue, you will certainly understand that there is no hard and fast rule nor any straight jacket formula to divide the gross salary of an employee into different components.
But care must be exercised to see whether the particular post/job is covered by the Minimum Wages Act, 1948 and minimum rates of wages have been fixed and the componential structure is similar to your industry wage structure. Besides, you have to take into account the periodical cost of employer's contributions to such statutory social security components like EPF, ESI, Gratuity etc., and other indirect commitment like statutory bonus.
Similarly, it is also important to compare the prevailing wage structures of the same or similar post in the same or similar type of industries in the region.
Therefore, you may devise the structure in such a manner that the sum of basic and dearness allowance constitutes not less than 70% of the total salary package.
23rd February 2019 From India, Salem
sumit kumar saxena
24th February 2019 From India, Ghaziabad
The basic wages of the concerned employee would be as per the skill category and refer the rate of minimum wages of your state to calculate. Show the balance amount against daily allownce. The EPF shall be made under the basic wages earned. Whereas the ESI to be calculated on gross of 15000. The gratuity also calculate under the basic.
26th February 2019 From India, Mumbai
#AnonymousPlease give me the clarity on New PF SC Judgement. Wat is the effective date for iplementing.
19th March 2019 From India, Vijayawada
Comments of Seniors will be appreciated.
c.n.khan, h.r.consultant, Hospet. 27.3.19.
27th March 2019 From India, Mumbai
#AnonymousRespected All, Greetings of the Day !
I have one query that please tell me how to calculate Basic and HRA for Gross salary according to government rule. plz help me.
Your cooperation will be highly thank full.
27th March 2019 From India, Faridabad
Please follow the link
29th March 2019 From India, Kannur
1st April 2019 From India, Kannur
The discussion started by Ms Renuka for Basic Rate pf 15 k salary. It was well described by Umakanth sir. By referring MW Act point, it is clear that his/her category (skilled, semi-skilled, unskilled etc.) must be taken care.
I have some query / clarification on the matter:-
One member (Mownica Selestna A) stated “Yes... Absolutely... Basic payment 15k is attractive for fresh candidates... So keep it up...”.
I would like to clear 15 k may be attractive but if the applicable MW rate (under the appropriate govt) for his/her category is more than 15 k than you must pay the rate. It is immaterial whether he/she is fresher or experienced. Law stand equal for all.
I am telling this point because Ms Renuka posted from “Delhi” where the rate of Semi Skilled, Skilled and Graduate employee are more than 15 k (15,400, 16,962 & 18,462 respectively). There is another revision due wef 01st Apr’19 (for which formal notification yet not issued). However, under Central Rule revised rates have been notified (which are Industry specific and in most cases more than 15k).
Ms Renuka, I would like to consider those points as well.
My next point is related to Madhu sir.
The EPFO has issued letter to the RPFCs and APFCs for the enforcement. But whether concerned PF Office will also issue further intimation to the employers or the SC Judgement itself is enough for all. If this is the case, pls tell me whether only SC Judgement is final, or we can/should treat any HC Judgement as final decision (if not challenged in SC).
My main concern is related to Gratuity Act. In a case the Hon’ble Madras Court has allowed 4 years and 240 days should be eligible for Gratuity. But there is no notification issued under the Act. Hence many experts still refer “Continuous 5 year Service” is eligible for Gratuity payment.
So the HC Judgement itself is not a final rules but related to a specific case.
Please give your valued expert advice on the same.
2nd April 2019 From India, Delhi
If the Madras High Court has ruled that 4 years and 240 days days should make 5 years continuous service, then the appropriate authority shall quote the same when a complaint for non payment of gratuity arises. As far as an employer is concerned since there is no amendment given in the basic Act, how can he pay it? In the PF case, the PF Act clearly says what is basic wages and it is nothing but the whole amount as agreed with the employee. There is no amendment required nor a direction required. The employer can read the Act and start paying the contribution on the whole salary.In the case of gratuity a reading of the Act says that his liability comes only when an employee leaves after serving for 5 years. Therefore, he can say No if the employee has only stayed for 4 years and some 241 days in the fifth year. Certainly, the Authority under the Payment of Gratuity Act can cite a case of Madras High Court( Mettoor Beardsel...) or Kerala High Court (Sreeja Vs RJLC) and direct the employer to pay it.
If such things come to me, I will pay it saying that a few High Courts have directed to pay it in the similar cases. In order to avoid hearings and intervention of Labour department officials, you can also pay it right when an employee leaves even if he is short of a month or two.
2nd April 2019 From India, Kannur
Your observation as a whole deserves appreciation except its second part for which our learned friend Madhu has already given the right answer.
When the Court, particularly the Supreme Court, interprets a particular definition clause of a Statute in a liberal and inclusive manner, it requires no amendment nor any special notification in this regard by the Legislature; just instructions from the Executive in tune with the ratio decidendi are sufficient as clarified by Madhu.
Regarding the application of the hon'ble Madras High Court judgment in Mettur Bearsell case on the interpretation of the term "continuous service" occurring u/s 2-A and section 4 of the PG Act,1972, as far as I am given to understand, no other High Court has taken a decision contrary to the Madras HC judgment. Even if one peruses the judgments of the Supreme Court on the interpretation of the term " continuous service" u/s 25-B of the ID Act,1947 ( sorry for my inability to quote the case due to my out-of-country stay), no deviation of interpretation could be found in the Mettur Beradsell judgment.
2nd April 2019 From India, Salem
Section 6 of EPF Rules restricts to the limit of basic wages, dearness allowance
and retaining allowance only.
Hence we can clearly derive that:
1. Allowance not being paid to all can be excluded from contribution.
2. Payment made in terms of which reimbursement voucher is seek will be exclude.
3. Payment made on performance like overtime or extra work will be excluded.
4. House rent has already been excluded.
Hence we can bifurcate the salary in these parameters, keeping the basic wage must not be less than minimum-wage of the state.
18th April 2019 From India, Gurgaon