Dear All, Please help me know the New Wage Code 2020 bill with revised salary structure/components and the percentage allocated with each component. Thanks in advance...
From India, Kolkata
Dear Radha,

I have made several posts explaining the definition of wages as per new wage code & other codes ( same definition in all codes ) . You may find out those posts. However, for your ready reference , I am once again explaining the subject.

Prior to framing the new definition of wages, as on date ( as the labor codes are not yet implemented ) , in all existing labor laws the definition of wages restricted to monthly components only- Basic & DA or monthly gross. There is also no guide line how to fix % regarding Basic & DA vs other allowances except some guide line by the latest verdict of Apex court regarding PF related issue.

This is first time after independence of India, the definition of wages has shown different light. It is now not restricted to only monthly components, but it has to be considered in totality i.e total remuneration paid to any employee whether monthly, bi-monthly, quarterly, half yearly or yearly. The definition is nothing but few English words and sentences to explain one mathematical equation.

The definition of wages has three parts.

Part-I It is all components of remuneration & payable to a person - includes Basic, DA & retaining allowance.

Part-II The exclusion list (a) to (k) but one exception - value of house accommodation, light, water etc though not payable but to be considered as payable components and should be considered at the time of calculation. Moreover, yearly items like Bonus, LTC/LTA etc are in the exclusion list.

Part -III Proviso 1 explained if the total amount paid from exclusion list (a) to (i) when (j) is Gratuity though payable but excluded for calculation, is more than 50% of wages ( Basic & DA ) - the extra amount will be add back to wages ( Basic & DA).

Now, under above circumstances how to calculate Wages ( Basic & DA) and also total remuneration is a big question. In India every Organization has its own remuneration structure. Please follow the following steps:-

(i) Identify the payable (cash) items through out the year in any remuneration structure.

(ii) 50% of that value will be wages ( Basic & DA ).

(iii) Less 50% distribute to Employer PF contribution, any monthly allowances, any yearly components ( Bonus, LTA etc.) and so on.

Because of the complexity in remuneration structure in Indian organizations and random variables, it will be required by all organizations across India to re-structure the existing remuneration after implementation of definition of new wages.

S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
USD HR Solutions – To Strive towards excellence with effort and integrity

From India, New Delhi
Dear Mr. Bandyopadhyay, Thank you for your valuable input on the Wage Code bill. This has surely given me an overview of the wage code. Regards Radha B.
From India, Kolkata

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