Union Settlement vs. Revised Minimum Wages: Can Basic Salary and DA Be Renegotiated?

If the union has reached a settlement with management, and the basic salary plus dearness allowance (DA) agreed upon by both parties exceeds the minimum wages at the time of the settlement, along with other allowances per month (the settlement being for a duration of 3 years), what happens if the minimum wages are revised after the first year?

If the revised minimum wages exceed the settled basic salary plus DA, but with all allowances included, the total monthly wages remain higher than the new minimum wages, can the union still request a revision of the basic salary and DA, even though the total wages per month are above the minimum wages set by the government?

Union Settlement and Minimum Wage Compliance

If the Union made a settlement with Management, and the Basic + DA determined by both parties are more than the minimum wages at the time of settlement, plus other allowances per month (settlement is for 3 years), but if after the 1st year the minimum wages have been revised (Basic + DA) and the settlement wages are less than the minimum wages (Basic + DA), but including all allowances, the wages per month are more than minimum wages, can the union ask for a revision of Basic + DA even though the wages per month are higher than the minimum wages prescribed by the Government?

Compliance with Government Regulations

It is always ideal to match your Basic and DA with government regulations, and you can restrict the allowances in total wages. As you may be fully aware, retiral and compensation benefits are based on different labor acts in connection with Basic and DA, and not on other allowances. This means statutory enforcement is based on Basic and Dearness Allowances (except ESI).

If you have a settlement that is less than the minimum wages as prescribed by the statute, whereas in total it may be more than the minimum wages, it always looks like unfair labor practice, and statutory authorities will view this subterfuge wage settlement.

Any agreement or settlement made that is less in favor of statutory provisions as specified will be deemed null and void. Negotiate with the union members and change the structure as per statutory requirements.

Regards,
Prashant B Ingawale

Please read the judgment of the Honourable Supreme Court of India in CASE NO.: Appeal (civil) 4259 of 1999 PETITIONER: AIRFREIGHT LTD. RESPONDENT: STATE OF KARNATAKA AND ORS. DATE OF JUDGMENT: 04/08/1999. The answer to the query of Mr. Ingwale would be found in this judgment. This judgment is available on the website of the Honourable Supreme Court of India.

With regards,