Re: Is DA A Statutory Obligation For Private Companies?

Kindly clarify if DA is Statutory for a private company to pay?
Hope to get some decent answers soon.
Thanks,
Faizan

Good Afternoon Faizan,
Our comany specializes in Saffing & Payroll management. If you want me to drop list checkpoints to be noted while handling a payroll, please drop a mail with your specific queries on my mai-id [Login to view]. or you may contact me on my cell for any clarification in the same. My number is 09028951253.
Regards
Nikhil Umberkar
www.vinsys.in

DA is part of minimum wages prescribed by State Governments.
The basic pay + DA is the minimum wage.
The basic pay can be fixed as a single entity adding the DA.
Alternatively, the minimum wages can be of two components i.e., Basic Pay and DA.
S. Krishnamoorthy

It is true that Minimum Wages take care of cost of living index, price index or whatever. So, giving DA is not statutory. But my question is little bit different. Suppose, a private company show Basic and D.A. separately on Payroll/Payslip, is it necessary that all regulations governing DA including periodical revision in DA are binding to it ? Second, what is the logic when some companies keep D.A. separate on Payroll? Is there any harm or possible problem on account of it?
Expert advice solicited. What should be the ideally worked out Pay Structure for indian companies ?
Thanks

Dear Faizan Plz check the thread name given below posted here in cite hr by a memeber,hopefully it will be helpful to you,however plz do cross check its authenticity:
Is it Necessary to show DA seperately in salary design?

There is no law making payment of dearness allowance compulsory.
However, most minimum wage notifications of State Governments have a DA component linked to some Consumer Price Index Number. In case, you are paying as per these minimum wage notifications, then it is a statutory obligation as and when the State government raises the minimum wage by increasing the DA component to pay the same.
Also, if you have signed a long - term settlement with your union which includes a formula for payment of DA, then it becomes a contractual obligation to do so and any violation will be taken up by the union under Section 33C of the Industrial Disputes Act.

very term DA implies, its a variable and value is determined by pegging it against an index ie Consumer price index for industrial workers in case of factories.
under normal circumstances would be relevant only for minimum wages wherein there is a possibility of underpayment.
in any other vocation, cos dont factor this and compensation is pegged against market factors eg external equity.

Is city conveyance allowance is Dearness allowance ?

Hi, I am working in an software organisation. We have introduced Basic and DA since the Labour Inspector insisted it few years back.
1. As a HR, I see many software organisations have not implemented the "DA" concept. 2.In the meanwhile there is GO.(2D) No.14, dated 5-Mar-19 giving the minimum rates of basic wages per month Zone wise. It does not mention the minimum amount for "DA" or how to calculate it.
Would like to know the following:
a) Is it necessary to adopt the concept of "DA".
b)In the following link https://www.simpliance.in/minimum-wage/tamil-nadu
they have mentioned the VDA per month as Rs.3499/-. But the DA is changed by the Govt. from time to time. Hence, how do we in software organisation implement the change.
Kindly advice.
Regards,
Mythili

Dear Friend,
DA is not compulsory for private company.
However you wish you can bifurcate basic in two parts, one is Basic and other is DA.
Thanks & Rgds