Dear All
Section 2(h) of the Minimum Wages Act, 1948 defines "wages" as
follows:
"Wages means all remunerations, capable of being expressed in terms of
money, which would, if the terms of the contract of employment express or
implied, were fulfilled, be payable to a person employed in respect of his
employment or of work done in such employment and includes house rent allowance
but does not include−
(i) the value of−
(a) any house−accommodation, supply of light, water, medical attendance; or
(b) any other amenity or any service excluded by general or special order
of the appropriate Government;
(ii) any contribution paid by the employer to any Pension Fund or Provident
Fund or under any scheme of social insurance;
(iii) any travelling allowances or the value of any travelling concession;
(iv) any sum paid to the person employed to defray special expenses
entailed on him by the nature of his employment; or
(v) any gratuity payable on discharge;"
Also as per the SC judgment as well as HC judgments in various states we can consider that the scheme of the Act is to provide a minimum wage for each employee and so long as that minimum wage is paid, there is compliance with the provisions of the Act. It is not the requirement of the statue that each component part of the minimum wages, such as the basic wage and the dearness allowance/special allowance should be paid at the rate prescribed under the notification. In the cases where an employer is paying a total sum which is higher than the minimum rates of wages fixed under the Act, including the cost of living index ie Variable Dearness Allowance(V.D.A.), he is not required to pay V.D.A. separately.
Therefore it should be understood that it is enough if the total sum paid to the employee is more than the minimum wages prescribed by the government. I am attaching couple of judgments - one by the hon'ble SC of India and the other by the hon'ble Mumbai HC for your reference.
Also, no law states how much percentage of Gross Salary or CTC should be BASIC Pay or Dearness Allowance. But normally it varies around 25-60% across industries.
Regards
Arun