Understanding PF Contribution: What's the Minimum Basic Pay Under the Wages Act?

Dear members,

It is known that PF contribution is 12% of Basic + DA. My query is, what is the minimum basic pay to be offered to an employee keeping the minimum Wages Act 1948 into consideration? How is variable DA calculated? Or do we have to obtain it from the labor commissioner's office?

For example, a person drawing a gross salary of 4000/- with Basic + DA @ 40% - 1600. So employer contribution is 13.61% of 1600 = 218/-. Is this justified, or should Basic + DA be a minimum of 2300?

Throw some light... anybody.

Regards,
Harikeyel

Dear Member,

Variable DA is fixed according to the cost of living index, which we can get from the labor department, employer's association, etc. According to the Minimum Wages Act, it insists on only the total gross salary, not basic and DA. It doesn't mean that we have to give a fixed basic and DA not less than the amount mentioned in the Minimum Wages. It only indicates that the total salary should not be less than that.

With Regards,

Bharanithilak

Dear member,

The minimum wage will depend on the rate fixed by the state government for the different schedules of employment. You have to check the schedule in which your industry falls and accordingly fix the minimum wage. You can get the figure from the state labor department.

Regards,
Amit

PF officials are of the opinion that in case an employee is drawing only minimum wages as his salary, then his entire salary should be treated as PF Salary, and PF should be calculated on the whole salary.

Regards,
Sunjay