Minimum Wages Increase Can we decrease other salary components - CiteHR
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Surj.singh2011
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Dear All,
Minimum Wages increase can we decrease other salary components to increase minimum wages or not?
Need you valuable advise.
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Dear Surjeet Singh,
Generally, wages should be taken as a single package. However, when your industry wages comprises of some more components than the statutory minimum wages, for the purpose of comparison to determine the parity between the two, you have to take into account only those components falling within the ambit of the definition of the term 'wages' u/s 2(h) of the Minimum Wages Act,1948 and leave out the excluded items of payment mentioned therein. After this exercise, if both the sum totals are equal or the industry wages sum total is more than the sum total of the minimum wages, it is 100% compliance. If not, you should bring out parity by raising any of the components. Since the D.A component fixed under the MW Act,1948 is linked to some Cost of Living Index, it has to be revised periodically as prescribed in the G.O. Therefore, it is imperative that constant parity should be ensured.
Manadatory wages components and compulsary entitlements as applicable to the type of employments can not be decreased.Even the standard established rate of components can not be altered.
There for to keep the parity any other added component if exists can however be altered but then also care must be taken towards employee unrest due to change brought in salary structure.
You can not do so because it is illegal
Once salary or wages are agreed, fixed and paid, can not be reduced just to adjust future increase in minimum wages.
It will be in violation of Sec.9A of Industrial disputes Act, which says that 21 days notice be given to all affected employees before effecting any adverse change in service conditions. The schedule attached to the section explains one of the subjects is about wages.
Reducing the wages component would be industrial dispute and in all probabilities, court will struck down the wages component reduction.
So, you should be careful before doing such exercise.
regds
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