The components in our salary structure is
Basic (50%)
Conveyance allowance (1600/-)
HRA (which is basic - convey)
Need to know the whether
a) only basic is covered in the minimum wages calculation
b) an additional 5% HRA to be considered
Kindly advice on an urgent basis
best Regards
Ferozi
From India, Mumbai





From India, Madras
From India, Kannur
If the organization is interested to pay more than Minimum Wages, it is always welcome.
S K Bandyopadhyay ( WB, Howrah)
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From India, New Delhi
Statutory minimum wages fixed by the Central Government and all State Governments under the Minimum Wages Act,1948 generally comprise of two components viz., basic wages and variable dearness allowance. But the actual industry practice may be different like consolidated wages or with a componential structure such as basic and other allowances with or without the component of dearness allowance. So far as I know there is no rule for any percentage-wise apportionment of these components forming the salary structure for any given wage period as of now. [ The position would be certainly different when the Code on Wages,2019 comes into force as the definition clause of wages under the Code requires a constant proportionality at the ratio of 50:50 between the sum of basic, dearness allowance and/or retaining allowance and the sum of all other allowances specifically excluded in the definition u/s 2(y) ]. Therefore, the absence of dearness allowance as a separate component in the industry wage structure does not constitute non-compliance so long as the sum total of basic and other allowances which fall within the inclusive part of the definition of the term 'wages; u/s 2 (h) of the MW Act,1948 always remains equal to the sum total of the statutory minimum wages. This is the ratio decidendi of the judgment of the hon'ble Supreme Court of India in Airfrieght Corporation case [ 1999 LLR 1008 ].I would like to add that this would be a right principle only for the purpose of determination of the parity between the gross minimum wages and gross industry wages.
However, in view of Mr.Madhu's apt observation in the foregoing reply, I would also hasten to add whether a contention based on this principle by an employer who has not included dearness allowance as a distinct component in his employees' salary structure will hold good in a dispute relating to gratuity.
Yes, such a contention by the employer can be possibly upheld provided the last drawn basic pay is equal to the sum of last drawable basic and D.A under the statutory minimum wages rate. In such a situation, the employee cannot rightfully claim higher gratuity based on the component of D.A actually not included in the salary structure under the contract of employment.
Otherwise, the non-inclusion of D,A as a distinct component can reduce the factor for calculation of statutory gratuity and would result in lesser sum of statutory gratuity.
Therefore, it is advisable to keep the components of basic and dearness allowance always on par with the statutory minimum rates of wages and adjustments can be made against other allowances so as to reduce the employer's indirect financial commitments.
From India, Salem
Please let me know whether this bifurcation is okay or we need to adjust this
With this arrangement with respect to P F there is no issue keeping in view of latest supreme court verdict but THIS EFFECT GRATUITY HENCE THIS QUESTION
Regards
Ranjan Kumar Dixit
From India, New Delhi
NOTE: One thing I would say that it is not merely the basic salary or the basic plus DA which will qualify to gratuity, but it should be the total salary as per contract of service that should qualify to gratuity. This is my perception about calculation of gratuity.
From India, Kannur