Is payment of time to time revised DA is mandatory if employee's gross salary is higher than minimum wages (Basic + DA)
Our salary structure is Basic + DA + Other Allowance
8th August 2019 From India, Thane
Dear Bhaskar,
As per the ratio decidendi of the judgment of the Supreme Court in Air Freight Corporation's case, whatever the wages be whether statutory minimum wages or the industry gross wages, it has to be taken as a single package for comparison purpose by leaving out the excluded components in the definition of the term wages u/s 2(h) of the MW Act,1948. Thus, if the industry wages so computed remains at par with or above the statutory minimum wages, the compliance is complete and no problem. At the same time the employer has to take into account that the D.A fixed under the Act is subject to periodical revision and hence ensure the parity then and there.
8th August 2019 From India, Salem
Thanks for your valuable reply.
My query is, although Gross Wages of employee is higher than minimum wages, is it mandatory to give periodic hike of DA?
8th August 2019 From India, Thane
Dear Bhaskar,
I've already answered your question and therefore request you to read it once again.
For comparison purpose, the respective sum totals of both the industry wages and the statutory minimum wages have to be taken. Here, what is important is that the gross industry wages minus the excluded components should only be compared against the sum total of the minimum wages. The difference between the individual components doesn't matter as long as the sum totals are equal or the industry wages are more than the minimum wages.
Hence, it is not mandatory to give any periodic hike in the industry wages in tune with the hike in the D.A of the minimum wages as long as the sum total of the industry wages remains equal to or more than the minimum wages.
9th August 2019 From India, Salem
Dear Bhaskar,
I may add, as you are aware, many employers in organised sector generally follow gross monthly salary broken into various components such as basic, other allowances like FDA+VDA, HRA, conveyance allowance, medical allowance, LTA etc. plus other fringe benefits. There are also some employers who doesn't break but keep a consolidated pattern which used to be more than the minimum wages fixed by the respective state govts under the Minimum Wages Act. In this case hike in Gr.salary is given which may not be in a uniform pattern across the board. Whereas those who follow a HR Remuneration policy which provides a set pattern comprising Basic pay plus other allowances can grant periodical increases both in basic as well as in DA and other allowances. Such employers who links their DA components with all India Whole sale/consumer price indices, mostly in organised sector, normally implement increases/decreases in DA commensurate with movement in indices published by GoI from time to time, may be either quarterly or half yearly basis. Therefore if your remuneration policy especially w.r.t. to DA thus linked to price indices you have to follow the same. If you have none, general increase in whole some salary will suffice.
9th August 2019 From India, Bangalore
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