Understanding Minimum Wages: Do They Cover Employee PF and ESI Contributions?

Dear all,

I am a little bit confused about the concept of minimum wages. Kindly help.

I want to confirm whether minimum wages include the employee's share of PF and ESI or not.

Please answer.

Thanks in anticipation.

Thank you, Kapil. To clear my doubt, I have gone through the Minimum Wages Act of 1948. It states:

Definition of Wages

(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:

(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 traveling allowance or the value of any traveling 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.

This means it includes Employee contributions of PF and ESIC, permissible deductions.

Thank you again.

Wages refer to all salary components or attributes except the employee's share of PF and ESIC, if applicable.

Kindly go through the comments of Section 1 of the Minimum Wages Act and the definition as well. It will help you in understanding the purpose of the Minimum Wages Act.

Dear all,

I want to know the most recent minimum wage rates for skilled, unskilled, and semi-skilled workers for the year 2009-10 in Maharashtra.

Don't be confused with minimum wages and PF, ESI. As per the Minimum Wages Act, the basic rate has to be revised based on categories. So, when the basic rate changes in the revision, PF and ESI will be deducted from the new basic rate.

Dear Sir,

As per the Karnataka Labour Minimum Wages Act, the ESI and PF are not included in minimum wages. Only Basic and VDA or DA are included in Minimum Wages.

M. Surendra

Dear all,

I want to have the recent minimum wages notification of Himachal Pradesh, Uttarakhand, and Punjab states for skilled, unskilled, and semi-skilled workers.

Understanding Minimum Wages and Employee Contributions

Minimum wages include ESI (1.75%) and PF (12%) contributions of the employee. For example, for an unskilled laborer employed in central government projects in Delhi, the minimum wage he should be paid is 203 Rs. If he works 10 days, his total earnings will be 2030 Rs, from which the employer can deduct the above-mentioned employee share of ESI and PF. That is, 2030 - (36 + 243) = 1751, net pay. I hope it is clear now.

Thank you,

Sivan A

As far as concerns with the Minimum Wages, it's a part of the earnings only, not deductions of employees, and that's very crystal clear. Don't mix up and confuse.

Minimum Wages = Basic + DA declared by the respective authority from time to time for the specified categories.

Regards,
Santosh

Minimum wage does not include the employer's share of PF and ESIC, and it has been checked before deduction of the employee's share of PF.

Understanding Minimum Wages and Contributions

Minimum wages do not include PF and ESIC.

PF and ESIC provisions require contributions from both the employer and the employee. Employers are required to contribute to the employee's account and are authorized to deduct the employee's contributions from their earnings, which should not fall below the minimum wages.

Employer contributions are in addition to the minimum wages paid to the employee. Employers cannot deduct their share of contributions from the employee's earnings (minimum wages).

For example, if the minimum wage in a region/state is Rs. 140 per day and the Special Allowance/DA is Rs. 15 per day (total Rs. 155 per day), an employee working for 25 days will earn Rs. 3875 in a month.

The employee's PF contribution will be Rs. 465, deducted from their earnings. The employer must also contribute an equal amount of Rs. 465. This total of Rs. 930 will be deposited in the employee's PF account, making it Rs. 4340 in total, equivalent to Rs. 173.5 per day for that month.

However, the employee will take home Rs. 3410 for that month, i.e., Rs. 136.4 per day, which may be mistaken for the minimum wage.

A similar contribution method applies to ESIC as well.

I hope I have clarified the question. Please correct me where necessary.

Regards

Dear All,

Minimum wages include only Basic & DA. Every year, the respective state government will release the notification of rates of minimum wages. They will calculate the points based on the cost of living. Based on these points, they will fix the rates of wages. It differs from one industry to another industry.

Dear Nishu,

It seems you are not clear about what you want to know. Please be informed that ESI/EPF contributions shall be deducted from your Monthly Wages as applicable in your state.

Surendra Verma

Hi all,

Can someone please provide me with information on how to quote the price for minimum wages in Telangana state, including ESI, EPF, and bonus? Additionally, could you direct me to the category where I can find details on housekeeping wage rates?

Regards,
Uma Rani