Can We Split Minimum Wage into Basic and HRA to Reduce PF Contributions? Seeking Legal Insights

Hello friends,

We are running a facility management company and are primarily into housekeeping and maintenance. Presently, many of our staff are employed on minimum wages. Now, my question is as follows: Can the minimum wage be broken down further into basic + HRA? Since PF is not applicable on HRA, can an exemption be sought? Is there any court ruling that would support this claim?

Illustration: The current minimum wage is Rs. 150/-. Is it legal to have basic Rs. 115/- + HRA Rs. 35/-?

Please advise.

Please check out with the minimum basic wages to be paid to workers (DA/Special Allowance will vary according to Government Notification).

So whatever BASIC + DA prescribed by authority not to bifurcate the same further.

Because someone may come up with an idea of bifurcating 150 Rs as 1 (Basic + DA) + 149 HRA.

Request you to not exploit the workers.

During my PF inspection, it has been observed that the bifurcation of minimum wages cannot be done. PF has to be deposited based on minimum wages.

Regards,

Thanks for the response. However, Mr. Prashant, let us not make it a moral stand. If you can shed some light on the basic questions, with facts (if any), whether the minimum wage can be broken up into Basic + HRA.

I want the chart of the minimum wages of the contract labor supplied establishments from 2006 onwards, year-wise, to check the muster register properly.

As per the guidance of the Honorable Supreme Court, minimum wages cannot be split into any part. PF must be deposited based on minimum wages only.

Regards,
Narender Singh Nehra
Assistant Manager HR
Goshi India Auto Parts Pvt Limited

Dear Vijay,

PF contribution shall be deducted from the total minimum wages; it cannot be split, as you mentioned.

Regards.

Dear Friends,

Please provide a complete picture regarding the Minimum Wage and P.F. I am explaining below; please correct me if I am wrong.

1. Minimum Wage is prescribed as per the Government Notification issued (varies state by state). The Basic and the points are given, and the per-day wage rate is specified.
For those who are earning daily, we can contribute to EPF as per the daily wage, but what about the monthly salaried individuals?
For example, if the daily wage is Rs. 183, then the monthly basic wage should be Rs. 4,758 (183*26) for monthly salary.

Also, please provide me the link where it is mentioned that P.F. should be paid on Minimum Wages.

Regards,
SIDMAN05

Dear,

In some states, they insist that DA should be separate. It is better that you check with the Labour Authorities of the concerned Department.

With Regards

Mobile: 9025702684

I have six years of experience in facility management companies. As per my knowledge, you can bifurcate it as per the given example. You have to consider it as stated in the government notification every six months. Currently, the minimum wages are as follows: unskilled basic - 3130 DA - 1394 total = 4524 HRA is 5% of basic & DA. This is the minimum salary you have to pay, regardless.

Dear Prashant,

Thanks for giving a perfect reply.

Dear Vijay,

Please let the members take a moral stand; unless you are interested in an "immoral" stand or advice. Could you please disclose what your intention is in bifurcating the minimum wages? Is it not to deprive the workers, who are getting the minimum possible wages, of their rightful due of PF contribution by the company? Do you think that the CiteHR members are so naive not to understand the intention behind this? If you had taken care to search CiteHR.com, you would have found that there have been many such discussions in the past, and such issues had been discussed threadbare. I wonder why some employers and HR are bent on bifurcating Minimum Wages instead of giving HRA over and above it. Hope you'll give an honest answer.

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