Understanding Minimum Wages in UP: Can We Split Basic and Allowances for PF?

Minimum Wages and Allowances in UP

Need your help on minimum wages. In UP, minimum wages from April 12 are Rs. 100 Basic + Rs. 74.14 DA = Rs. 174.14 per day. This amounts to Rs. 4528 per month. Based on my understanding, the monthly breakdown is Rs. 2600 as Basic and Rs. 1928 as DA.

Now, if I set Rs. 4550 per month for an unskilled worker and divide it as Rs. 2900 Basic + Rs. 1650 for other allowances (i.e., HRA & Conveyance), and consider Rs. 2900 for PF calculation, will it be effective? Can we separate Minimum Wages into Basic and Other Allowances? If we divide it, only the basic amount will be considered for PF calculation. Please advise on priority.

Regards,
Ashok

Basic wages can be less than minimum wages. Don't split minimum wages into HRA and conveyance. Show them as other allowances and deduct the PF on basic.

Regards,
E. T. Rao

Dear Ashok,

Greetings for the day. As Mr. Rao stated, minimum wages can't be bifurcated, and this is true. As far as EPF deduction is concerned, the components should be (basic + DA + food conc. if any), and minimum wages consist of basic + DA, so it can't be split or bifurcated.

Thanks & Regards,

Sumit Kumar Saxena [Phone Number Removed For Privacy Reasons]

If you go through the definition of minimum wages, it clearly states that minimum wages include HRA as well. Therefore, you can split the minimum wages only into the following components: Basic, DA, and HRA.

Regards,
Raju

Minimum wages can't be bifurcated. As per the law, Basic + DA should be equal to minimum wages on which PF needs to be deducted from the employee's salary.

Understanding Minimum Wage Components in UP

In the case of UP, the Minimum Wage (MW) is equal to Basic + Dearness Allowance (DA). Both components are clearly stated under the MW notification. So, if you take only Basic for the contribution of Provident Fund (PF), you will face problems as it will result in non-compliance. PF contribution should be based on Basic + DA or any food concession.

Where there is no separate DA provided by the notification under MW, in that case, you can bifurcate.

Regards,
Sanjay