Can We Split Minimum Wages into Basic and HR Components? Seeking Your Insights

Can we bifurcate the minimum wages into basic, HR, etc.? Please update.

Regards,
Harmit Singh Arora

No, we cannot do that. As per the Minimum Wages Act of 1948, the Basic will be fixed for a period of approximately five years by the government, and only the Dearness Allowance (DA) will vary from April of every year as they consider the average of DA points for the previous calendar year and set it for the upcoming April to March financial year.

If you split the minimum wages by House Rent Allowance (HRA) etc., then the Provident Fund (PF) contribution from the management side will be reduced, which the government will not accept.

So, ultimately, minimum wages should not be split into Basic and DA for HRA, Conveyance allowance, etc.

Good day. How are you? Yes, you can bifurcate the minimum wages into HRA/CONV/Washing Allowances, etc. However, the gross salaries/wages should not be less than the minimum wages. In this connection, please refer to the recent judgment of the Punjab & Haryana High Court in CWP NO. 15443/2009(O&M), dated 01-02-2011, in a case titled "Asstt. Provident Fund Commissioner, Gurgaon vs. M/s G 4 S Security Services (India) Ltd. and Another," reported in 2011 LLR 316.

Regards,
RL Dhingra, Advocate, Labour Law Consultant
[Phone Number Removed For Privacy Reasons]
Email: [Email Removed For Privacy Reasons]

We first need to understand that "Minimum Wages" are laid down by the state government. These are normally reviewed and revised twice a year. All other allowances such as EPF, ESI, Gratuity, Bonus, HRA, Uniform Allowance, Travelling Allowance, etc., are over and above this amount and are calculated as a laid-down percentage of the 'Minimum Wage'.

Hence, you cannot split minimum wages. Should you have further doubts, I shall be glad to answer your queries.

Warm regards and good luck with your business.

Regards,
Colonel Gahlot
Proprietor, TRURECRUIT
[Phone Number Removed For Privacy Reasons]

Clarification on Minimum Wages Bifurcation

Mr. Dhingra is absolutely right. The Minimum Wages Act does not define the bifurcation into various allowances. PF considers only basic + DA for computation, and they have no jurisdiction under the Minimum Wages Act.

However, HR practitioners must refer to the local state labor office for clarification on this matter. For instance, in HP, the Labor Commissioner has allowed only 5% HRA from the minimum wages, and this information has been communicated to the PF office.

Regards,
Manish Gupta

OT has never been on basic and DA. It is always to be paid on the ordinary rate of wages, which means all components of the salary.

Regards,
Anil Kaushik

Mr. Anil is absolutely right in calculating the overtime. Also, minimum wages can be bifurcated, but the component will be limited (please go through the judgment copy). Minimum wage can be bifurcated into basic, DA, and HRA.