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Madhu.T.KThe minimum wages shall contain a basic salary and a dearness allowance variable according to changes in the Cost of living index. The basic pay will vary depending upon the skill required. It is a pre fixed amount. Rs 3700 given in the example is the basic salary of certain category of employees. Apart from this basic wages, all are required to be paid VDA (variable dearness allowance) based on CPI (Consumer price Index or Cost of Living Index) . The VDA fixed is Rs 6848. It will change whenever there is a change in the CPI. Some states keep it fixed for a year, some other states make it applicable for 6 months and some other states change the CPI in every quarter. The sum of the basic pay and VDA is the minimum gross salary payable. In the given case, it is Rs 10548. This is the amount on which you are expected to pay your contributions to PF, Bonus, gratuity etc.
Fixing the gross salary first and then bifurcating the same in basic, HRA, etc as percentages of gross salary is a wrong practice followed by the new generation HR professionals. It has no legal backing. Like any structure, salary structure is also 'constructive' and not 'destructive'. You can add any other allowance to Basic salary and then form a gross salary.
You can go through the minimum wages notification itself which says that for each particular category of employment, the basic salary should be this much and in addition to this there should be a dearness allowance.
From India, Kannur