Hi all,
Minimum Wages pertains top scheduled employment. The appropriate govt (Central/State) issues Govt. Oreder (G.O) for particular industrial activity consisting of Basic wages and modalities of calculating DA. In most states there is also a residual category which takes care of industrial activity which is not covered by industry specific GO. IT/BPO is normally classified as Shops & commercial Establishments in the absernce of any specific G.O . Acording to a Supreme Court ruling in Airfreight industries case, if the sum total of gross emoluments is more than the minimum wages, then the employees/union can not claim DA over above this amount citing the Minimum Wages G.O. Many establishments have misused this judgment to keep the Basic at very low levels, without giving DA. This is inherently risky most of the statutes like the Payment of Bonus act, The EPF & MP Act, The Payment of Gratuity Act, etc prescribe benefits based on Basic & DA. So the employees can always move the competent forum to get benefits on par with basic notwithstanding the SC ruling. Though there is no statutory guideline, the EPF Organisation follows the thumb rule that 60% of Gross salary should be reckoned for PF compliance subject to the wage ceiling which is at present Rs6500/- (Also Note that Food allownace or cash value of any fiood concession is also wages for the purpose of PF Compliance)
So it is better to adopt a sliding scale, at the lower rungs of the salary ladder keep the Basic and DA strictly on par with minimum Wages GO and as you go up the ladder the Percentage of Basic & DA can proprtionately go down as per the HR Policy in the industry cum region.
Regards
Dr. Patrick Ryan
Advocate
21 B MIG Flats
P.T Rajan Road,
K.K Nagar, Chennai 78
Minimum Wages pertains top scheduled employment. The appropriate govt (Central/State) issues Govt. Oreder (G.O) for particular industrial activity consisting of Basic wages and modalities of calculating DA. In most states there is also a residual category which takes care of industrial activity which is not covered by industry specific GO. IT/BPO is normally classified as Shops & commercial Establishments in the absernce of any specific G.O . Acording to a Supreme Court ruling in Airfreight industries case, if the sum total of gross emoluments is more than the minimum wages, then the employees/union can not claim DA over above this amount citing the Minimum Wages G.O. Many establishments have misused this judgment to keep the Basic at very low levels, without giving DA. This is inherently risky most of the statutes like the Payment of Bonus act, The EPF & MP Act, The Payment of Gratuity Act, etc prescribe benefits based on Basic & DA. So the employees can always move the competent forum to get benefits on par with basic notwithstanding the SC ruling. Though there is no statutory guideline, the EPF Organisation follows the thumb rule that 60% of Gross salary should be reckoned for PF compliance subject to the wage ceiling which is at present Rs6500/- (Also Note that Food allownace or cash value of any fiood concession is also wages for the purpose of PF Compliance)
So it is better to adopt a sliding scale, at the lower rungs of the salary ladder keep the Basic and DA strictly on par with minimum Wages GO and as you go up the ladder the Percentage of Basic & DA can proprtionately go down as per the HR Policy in the industry cum region.
Regards
Dr. Patrick Ryan
Advocate
21 B MIG Flats
P.T Rajan Road,
K.K Nagar, Chennai 78