Hi all, I heard D.A is not applicable for private employees. Is this right?
From India, undefined
Dearness Allowance which varies according to changes in the consumer price index is a component of minimum wages notification which applies to private establishments. Though you can club the basic wages and D A together,implicitly, it is part of salary structure of private establishments.
From India, Kannur
rkn61
462

Dearness Allowannce (DA) is applicable to private companies also. DA which includes FDA & VDA
(that is Fixed Dearness Allowance & Variable Dearness Allowance) are the components in Salary. While FDA works out to certain per centage of Basic salary (say, 20% or 30% of basic), Variable DA is linked to comsumer price index numbers (for all states) which are received from Labour Bureau,Shimla- which normally ,is revised once in ever3-4 months.

From India, Aizawl
ok sir, how much percentage DA is prescribed by law or which section defined this. i would like to frame 20% of Basic salary as DA. can i do that.?
From India, undefined
As per Minimum Wages Act only Variable Dearness Allowance is to be given, and the VDA is not percentage of basic salary but it is linked to Consumer Price Index. It will be a certain amount which is to be given per CPI or increase in CPI over a certain CPI. Please read the minimum wages notification concerning your industry.
From India, Kannur
rkn61
462

You can fix 20% of basic salary as FDA.
From India, Aizawl
Dear Colleague,
DA as a component of salary structure whether fixed or variable is not mandatory in private companies. If it exists, it is only because of wage settlement with the union or voluntarily extended by the companies.
However, under the Minimum Wages Act which applies to certain establishments/ scheduled employments in private sector , State Govts' Labour department notifies the base amount of DA and periodically variable DA, which is mandatory to pay to the' Workman ' category. For other categories of employee , it is usually consolidated (inclusive basic and DA) salary.
In a nutshell, if your establishment in the private sector is not covered under the Minimum Wages Act, you need not have DA as salary component as well as for the non- workman categories of employees. Yes, you can always choose to pay it voluntarily and there is no bar on it.
Regards,
Vinayak Nagarkar
HR and Employee Relations Consultant

From India, Mumbai

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