Is Your Basic Salary Supposed to Match Minimum Wages? Seeking Clarity on PF Deductions Too

Hi Seniors, this is my first discussion. Kindly let me know whether the minimum wages are linked with the basic salary or not. I am working in a manufacturing company.

For example, the minimum wage in Haryana is ₹5,342, and a worker's salary is ₹5,350. Is it compulsory to take the basic salary as ₹5,342? Also, can we deduct PF on the same basic salary or not?

Waiting for your reply.

Regards, Sonam

Thank you, Amit, for your valuable response. Also, please clarify: when we deduct PF and ESI from 5342/-, the take-home salary will decrease to 4607/-. Are there any issues that may arise from any departments, such as labor or PF, as this amount is less than the minimum wage?

Minimum wages comprise Basic plus VDA. Accordingly, you have to take into account the total amount and make the statutory deductions. For statutory purposes, it is better to implement the minimum wages (if not done so far) to avoid complications at a later stage. I suggest purchasing the Haryana Minimum Wages Act and following the fixation of pay (Basic and VDA) based on the categories of workmen working in your organization. Our site friends will also help you in providing more information.

Best wishes,

Eswararao Ivaturi

Please go through the latest Haryana Government notification on minimum wages. The notified wages include both the basic pay and dearness allowance components. Please note that PF is applicable on both.

Regards, KK

As per the Minimum Wages Act, basic pay and dearness allowance are clearly specified. Therefore, you have to contribute to EPF for that amount only. You cannot split the basic pay and other allowances.

Regards,
V. Subbarao

PF and ESI statutes are central acts, and hence there is no variation from state to state. PF is payable on basic & DA. The definition of wages under the ESI Act is broader and includes all monthly emoluments.

Hope this clarifies.

Regards,
KK

Minimum Wages and Basic Salary

The basic salary of employees must align with the minimum wages notification prescribed by the State/Central Government on a half-yearly basis (Basic + DA). The basic salary can be more than the minimum wages but cannot be less than the minimum wages.

It is compulsory to set the basic salary at Rs. 5342, and statutory deductions for PF will be based on this basic salary, while ESIC deductions will be calculated on the gross salary.

Regards,
Prashant Vishwakarma
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