Under the various Minimum Wage notifications, a VDA of Rs. 417.60 per month is payable for the period from 1st April 2020 till 31st March 2021. Employers must pay this deferred VDA to their employees after 31st March 2021. This will be in addition to the VDA applicable from 1st April 2021 onwards.
A notification was issued by the State on July 20 this year.
1)The Department of Labour, Government of Karnataka vide its order No.KaE 72LWA 2020 dated 20.07.2020 has permitted postponement of payment of VDA payable under various Minimum Wages Notifications by employers for the period from 01.04.2020 to 31.03.2021 to mitigate the hardship being faced bythe employers who were directed by the Central Government to pay wages,including VDA to their employees for the lockdown period.
2.The implications of the order to defer VDA are:
a.Employers can avail this facility and defer payment of VDA of Rs. 417.60 permonth which has become payable from 01.04.2020 to 31.03.2021undervarious Minimum Wage notifications.
b.The employers will have to pay the deferred VDA after 31.03.2021 to theirworkmen in addition to the VDA as applicable from 01.04.2021 onwards.
c.If employers choose not to pay VDA, they will not be liable to pay ESI and PF also on the deferred VDA.
d.However, ESI and PF will become payable when the deferred VDA is paid after 31.03.2021
e.When the deferred VDA is paid, the employers will also have to pay difference in bonus and also difference in leave with wages as well as difference in overtime payment.
f.These options are available for VDA payable to Contract Labourers also
The High Court noted that there was no mention by the state government in any of its documents that the notification was issued as per Section 26(2) of the Minimum Wages Act.Karnataka HC stays notification deferring payment of Variable Dearness Allowance to workers from April 1, 2020 to March 31, 2021:
By way of an interim order, the Karnataka High Court on Friday stayed the execution and operation of a state government notification allowing industries to defer payment of Variable Dearness Allowance (VDA) to all classes of workers between April 1, 2020 and March 31, 2021.
A division bench comprising Chief Justice Abhay Shreeniwas Oka and Justice Ashok S Kinagi passed the interim order on 11.9.20 staying the notification dated July 20, 2020 to defer the VDA which forms part of the minimum wages.
The bench passed this interim order after hearing a batch of public interest litigations questioning the legality of the notification issued by the state government.
The government issued the notification after a meeting with representatives of employers who expressed helplessness in paying VDA due to the lockdown amid the COVID-19 pandemic, despite strong opposition from trade unions.
The Court noted that there was no mention by the state government in any of its documents that the notification was issued as per Section 26(2) of the Minimum Wages Act. Earlier the notification was issued by the State on July 20 this year.