If not including Dearness Allowance in Salary as a component breaches any aspect of any law? - CiteHR
Umakanthan53
Labour Law & Hr Consultant
Ssushr
Pune

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Dear All, I work in a mid-sized firm wherein the strength of employees is a little above 200. I found it very amusing that here the salary component does not include DA as a part of it and when enquired the same they answered there is no need for DA. I would also like to tell you that here the Salary component include Basic (40% of Gross), HRA (Half of Basic), Conveyance Allowance (Fixed/1600) and Special allowance (Gross - Basic + HRA + Conveyance). I am new to the corporate life but as per my academic knowledge, DA is compulsorily a part of Salary component and must be included.
Please enlighten upon the same and if not including DA in Salary as a component breaches any aspect of any law then kindly mention the platform where i can file a complaint about the same.

Dear friend,
Salary of the employees may be of any structure i.e., consolidated or broken into different components, but it has to be treated as a single package only. There is no legal compulsion in any law in this regard or any such a type of exclusive law in India other than the Maharashtra workmen's Minimum House Rent Allowance Act,1983.
When you have a salary structure comprising of different components such as basic, dearness allowance, HRA, conveyance allowance etc., the employer stands to get lesser indirect financial commitments towards fringe benefits like bonus, gratuity etc.
However, when the employees are coming under the purview of the Minimum Wages Act,1948, in the absence of D.A , the employer has to ensure parity of his industry wages with that of the statutory minimum wages which has got the variable D.A component linked with the Cost of Living Index.

If Basic Pay paid by your company is above Basic pay and DA fixed by the appropriate govt then there is no problem but your company has ignored DA to save on PF ESI contribution, and payment of Gratuity then it will boomerang on your company.
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