Hi, I'm working in an interior designing firm. We recently had a salary revision for our employees. I have the following doubts to be clarified before proceeding with the revision letter.
1. Do I need to consider the basic salary as per the new wage code (i.e., 50% of the gross salary is considered for the basic)?
2. Is DA mandatory to be given as a separate component in the salary slip?
3. Is there any written rule for the above?
From India, Thiruvananthapuram
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1. Do I need to consider the basic salary as per the new wage code (i.e., 50% of the gross salary is considered for the basic)?
2. Is DA mandatory to be given as a separate component in the salary slip?
3. Is there any written rule for the above?
From India, Thiruvananthapuram
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There is no need to give DA as long as the total salary is equal to or more than the minimum wages fixed by the government, which would include a basic salary and a variable dearness allowance. There is no rule that the basic should be 50% of the total salary. There is a mention about the treatment of basic wages in the new labor codes, which is lying in the freezers, but the objective of that definition is different and would change even when an employee gets overtime wages.
There are companies who believe that the basic salary should be 50% of the total salary. But I would say that if you are not paying dearness allowance as a component of salary, your basic salary should be the sum of basic and DA fixed by the government. And there should be an increase in the salary every year, and that should be reflected in this basic salary also.
Remember that an employee is given a salary increase for two reasons: one, to compensate for the increase in the cost of living, and the other is to reward the performance of the employee. It is easy to evidence these if you have both these components in your salary.
From India, Kannur
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4519There are companies who believe that the basic salary should be 50% of the total salary. But I would say that if you are not paying dearness allowance as a component of salary, your basic salary should be the sum of basic and DA fixed by the government. And there should be an increase in the salary every year, and that should be reflected in this basic salary also.
Remember that an employee is given a salary increase for two reasons: one, to compensate for the increase in the cost of living, and the other is to reward the performance of the employee. It is easy to evidence these if you have both these components in your salary.
From India, Kannur
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Salary & Wage .xls
Revision in Basic wage wef Mar 2014 Gazette.pdf