Dear Folks, Can I split minimum wages in BASIC, HRA & BONUS? Minimum wages as total gross, and 40% of gross should be basic. is it right guys?

I am asking this for security guards, and if we provide quarters to them, can I put HRA in components?

From India, Kolkata
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Statutorily you have to follow the minimum wages notified for the industry concerned and as per the skill level. The minimum wages notified have Basic pay & DA components and the sum of the two has to be paid as gross wages. Statutory Bonus cannot be paid monthly as has been repeatedly clarified in this forum. Deduction for house accommodation is a permissible.
From India, Mumbai

Further to KK's post, to the best of my knowledge, you will have to pay basic+Da as minimum wages. Therefore if you break up the salary, the Basic + Da should still be equal to or higher than minimum wages.

However, I was told by someone that one high court has declared that legislative intent is to have the workman get the minimum wages, so the break up is allowed. I have not been able to find the judgement, so I go by what is written in the notification, Basica + DA needs to be at least equal to min wages

From India, Mumbai

Dear Colleague,
On Splitting of Minimum Wages you may go through the article for better understanding.

In case of Bonus you as rightly guided by our Colleagues, it can not be Monthly basis but it has to be paid Annually if you want to have compliance under the Provisions of Payment of Bonus Act 1965.

Even if you split the minimum wages and you may be compliant under the Minimum Wages Act. But you can not comply PF/ ESI / Gratuity Contributions below the Minimum Wages as far as Basic and DA are concerned on your own.

As per press note: A 2008 EPFO circular had said that PF contributions on at least minimum wages have to be remitted by employers, but some field offices appeared to be confused about whether basic wages can be lower than minimum wages or whether organizations can be allowed to split up wages into various allowances, an EPFO circular issued recently said.

"The basic wage can in no case be lesser than the minimum wage as the same is not only contrary to law of land but is also beyond logic and rational ..

Read more at:

In short you need to comply PF/ESI/ Gratuity and Bonus etc for not less than Minimum Wages.

There are lot of posts in CiteHR on this and you can further browse for more understanding.

From India, Chennai

The answer to this question can differ from company to company.

That being said, here are some common factors that are applicable to every organization:

As per laws, companies are required to follow the minimum wages according to an employee’s skills/experience and industry standards
The minimum wage includes Basic pay as well as dearness allowance components. The sum of these two factors is supposed to be paid as gross wages.
Talking about bonuses, they cannot be paid every month as per laws.
Deductions for house rent allowance are permitted by laws.

Hope it helps.

From India, Noida

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