Understanding Minimum Wage and Levies in India: How Do They Affect Contractor Pay?

Minimum Wage and Levies in India

What is the minimum wage applicable across India? What other levies (e.g., PF, Gratuity, ESIC, etc.) should be considered when calculating the total wages for a contractor/security guard across India?

Thanks & Regards,

Every act has a different definition for wages/salary for the relevant purpose. It is not uniform across the country as well. The law does not discriminate between contract labor or direct labor. There is certainly controversy regarding Security Guards after the decision in the G4S case. It is pending in the Supreme Court for a final outcome. However, the Minimum Wages and basic wages for the purpose of EPF are not similar. Nor does the design of the EPF guarantee any minimum contribution. Therefore, one should not think of a single thumb rule for the term of wages when dealing with different laws.

Each state notifies minimum wages establishment-wise for various classes of employees working in the said establishment. Thus, minimum wages cannot be uniform across India except for establishments falling under the control of the Central Government. The other statutory deductions include the labor welfare fund and professional tax.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai

There is no concept of uniform minimum wages across the entire country. Instead, each state decides on minimum wages, which are generally notified every 6 months. The notification is industry-wise and for each skill level.

However, since you are in Maharashtra, the salary of security guards will also be governed by the wage rates specified by the Guard Board Act. You cannot pay less than the rates specified by the Guard Board even if the minimum wage is lower.

Further, all statutory dues (PF, ESIC, cess to Guard Board) must be paid. You also need to provide for gratuity that would be payable after 5 years of work.

When deciding security guard charges paid to security contractors, generally amounts are added for uniform and shoes, which are to be provided free of cost to the security guards. Further, ensure you have factored in a reliever cost.

Please note that no security guard can be given a shift of more than 8 hours as per the law (12-hour shifts, though common, are illegal). One weekly off is required to be given for each security guard. If he works on the weekly off, then a compensatory off in addition to double-rate overtime is payable.