Can a Basic Salary Really Be Lower Than Minimum Wage? Let's Discuss!

Is it possible that the basic salary is less than minimum wage?

What sort of question is it? Please clarify. Wages generally mean something you pay to the workers. Whose basics are you talking about?

Your question is slightly confusing.

Regards,

The recent judgment on Airfreight states that for the definition of wages, it should refer to Section 2 (h).

As per the Minimum Wages Act 1942, wages are defined as follows under Section 2 (h):

"wages" means all remuneration, 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:

- the value of any house accommodation, supply of light, water, medical attendance, or any other amenity or any service excluded by general or special order of the appropriate Government;
- any contribution paid by the employer to any Pension Fund or Provident Fund or under any scheme of social insurance;
- any traveling allowance or the value of any traveling concession;
- any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or
- any gratuity payable on discharge.

This means that HRA will very well form a part of wages as per the Minimum Wages Act.

Please comment.

Hope all of you will help me. Below is the scenario I have posted the same long back, but no one helped me.

We are using around 700 contractual workers for our manufacturing process every month. Before May 2009, everyone is getting paid the same rate. But from May 09 onwards, we separate them into skilled and unskilled categories and also revised their wages, allowances, and added some schemes to attract them.

Now, after the revision in D.A. Aug 09, below is the structure:

Unskilled worker - Gross 4206.75, Daily wages 161.80

Skilled worker - Gross 5106, Daily wages 196.41

Both have Basic 1200.00 and DA 1106.75.

Now, the problem is that when we pay overtime on =(basic + DA)/26/8*2, both will receive 22.18 Rs for one hour.

1. If an unskilled worker does overtime for 8 hours, he will get 8*22.18 = 177.44, which is higher than his daily wage of 161.80. He will get 15.64 Rs extra. In a month, this category is having more than 3000 hours of overtime.

2. If a skilled worker does overtime for 8 hours, he will get 8*22.18 = 177.44, which is less than his daily wage of 196.41. He will get 18.77 Rs less. In a month, this category is having more than 3000 hours of overtime.

Now the problem is that I want to adjust basic, DA, and other allowances so that he will get paid for overtime as per his gross salary.

My questions are:

1. Can I make basic less than DA? If yes, what is the legal point (DA will increase after a certain period)?

2. Should I combine basic and DA amounts?

3. Can I pay overtime on gross (but it will be one time only)?

4. Or is there any way out?

I hope you understand my problem; if you need more information, please reply. I want to give this to our management within two days. I tried to put as much as possible; please help me out.

Best Regards,

Sachin Gaikwad

Dear friends,

The basic salary can be below the minimum wage, but the total wages - basic + HRA + conveyance, etc. - should together meet the minimum wages as per the Minimum Wages Act with appropriate rules.

Dear Sir,

Can you send me any information regarding this? I have heard that Minimum Wage (MW) is composed of Basic + DA.

Ajay Shukla
09839066035

Whatever the case may be, the monthly gross should always be the same or higher for skilled or unskilled workers according to the Minimum Wages Act and state rules.

Regards, Purabi Nayak
Manager-HR
09937000525

If someone's gross salary is Rs. 5000 per month, can his basic salary be Rs. 2000? Is this in compliance with the Minimum Wage Act?

Please review the corrected text below:

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Please go through the below-mentioned definition:

Wages mean all remuneration 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. It includes house rent allowance but does not include the value of any house accommodation, supply of light, water, medical attendance, or other amenity or service excluded by general or special order of the appropriate government; contribution paid by the employer to Pension/Provident Fund or under a scheme of social insurance; traveling allowance or value of traveling concession; sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or any gratuity payable on discharge.

Hence, the basic salary may be Rs. 2000/- to fulfill the minimum wages act.

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Dear All,

Basic pay plus VDA cannot be lower than the minimum wages based on the nature of the worker's job, and you cannot separate the minimum wages.

Shekhar Singh
HR Manager

HRA is a part of wages (Basic + DA) as per the Minimum Wages Act. In Maharashtra, there is a separate Act for the payment of HRA. Query: whether HRA should be paid apart from Basic + DA as notified by the state of Maharashtra or not. Any case law in this regard, please.

Regards,
Laxman

Minimum wage laws are applicable to staff salaries. My basic salary is not even 50% of the minimum wage.

Does it mean that we keep changing the basic every 6 months even if someone's total salary (Basic + HRA + TA + other fixed allowances + variable performance allowance) is greater than the minimum wage?