Is DA Mandatory in Salary Breakdown for Shops and Establishments? Seeking Advice on Compliance

Dear all,

I am in an outsourcing company. Our employees are working in various shops and establishments. Their salary breakdown consists of Basic, HRA, and CCA. Now the labor inspector is saying that we have to change the breakdown and include the DA along with the basic as a mandatory salary component. The client is now requesting the same change in the breakdown for the employees.

I want to know whether DA is mandatory as a salary component for employees working in various shops and establishments under the Shop and Establishment Act. Please help and suggest as this issue is creating a big problem.

Hi Satyabrata,

Please check the applicable Shops and Establishments Acts of these locations. As per my understanding, DA (Dearness Allowance) is not a mandatory component in one's CTC. It varies from company to company and the compensation structures being followed.

Let me know if you want to know anything else.

Regards,
Govil

Dear Friend,

There are two cases to be followed:-

Case 1: When the basic salary is more than or equal to the minimum wage, then DA is not mandatory.

Case 2: If the basic salary is less than the minimum wage, then DA is mandatory to make it equal to the minimum wage.

Regards,

Pankaj Chandan

Dear all,

I am in an outsourcing company. Our employees are working in various shops and establishments. Their salary breakdown consists of Basic, HRA, and CCA. Now, the labor inspector is saying that we have to change the breakdown and include the DA along with the basic as a mandatory salary component. The client is also requesting the same change in the breakdown for the employees.

I would like to know whether DA is mandatory as a salary component for employees working in various shops and establishments under the Shop and Establishment Act. Please help and suggest as this issue is creating a big problem.

Dear Satyabrata,

Please go through your state minimum wages notification. There may be two components included in this notification, i.e., Basic & DA. If there is an increase in the DA component, you might need to ask the employer to adjust this amount accordingly. You may also discuss the matter with the relevant Inspector for clarification.

Regards,
R.N. Khola
Skylark Associates, Gurgaon (Haryana)
(Labour Law & Legal Consultants)
09810405361

Dear,

I agree with Mr. Khola about the state requirements (in Delhi, the minimum wage is Basic+DA, but in Haryana, it's only Basic, and no DA is mandatory).

If your basic salary is above the minimum wage, as in your case for workers, and your state also requires DA as a mandatory component, then please adjust the structure of your salary by separating the DA part from the Basic.

If your basic salary is less than the minimum wage, and your state also requires DA in minimum wages, then restructure the salary by reducing the allowances until your Basic+DA meets the state minimum wage requirements.

If your basic salary is more than the minimum wage and no DA is required for your state, please let me know the name of the labor inspector. I will talk to him personally.

Please call me if you have more questions regarding your case.

Best Regards,
Sajid Ansari - Delhi

Thank you for the information. Our headquarters is based in Noida, while our branch office is located in Bangalore. The employees are working at various shops in Bangalore only.