Understanding Basic Salary: Is There a Legal Minimum Percentage Beyond the Minimum Wages Act?

Clarification on Minimum Percentage of Basic Salary

Is there any provision in the statute that provides clarity on the minimum percentage of basic salary other than the Minimum Wages Act? For example, we practice basic as 35% of the CTC. I would appreciate your valuable suggestions on the same.

Warm Regards,
Jack

As per our statutory regulations, they do not follow a CTC structure. It is a practice in the corporate world. According to industry standards, the basic salary ranges from 30% to 50% of CTC. Therefore, what you are practicing is absolutely fine. Just ensure that the basic salary is never less than the minimum wages.

Regards

I fully agree with Prasenjit. Generally, most companies are implementing 40% as the basic wage. However, you can choose a range from 30% to 50%. It should not be less than the minimum wage.

Legal Position:

If the notified Minimum Rate of Wages consists of basic + dearness allowance and if any employer does not pay dearness allowance and also the basic is less than the prescribed MW rates but the gross wages are equal to or more than the minimum wages prescribed, then it will be deemed to comply with the Minimum Wages Act. This is considered lawful based on the judgment pronounced by the Supreme Court in the Airfreight case.

Regards

Dear Abhijit, as far as my knowledge goes, minimum wages cannot be broken into components. They basically represent the basic pay. Could you provide any notification, judgment copy, or any government document showing this?

There are no specific guidelines to fix the basic wage, but generally, industries maintain the basic minimum wage at 40% to 50% of gross or CTC, whichever is higher.

Regards,
Satish

Respected Seniors, if we choose a candidate and give him a salary of Rs. 50,000 per month, how can we bifurcate the amount into Basic, HRA, Conveyance, and others?

Regards,
Rahul