Understanding D.A Requirements: Do We Need to Pay It Under Tamil Nadu Minimum Wages Act?

Is D.A Compulsory Under the Tamil Nadu Minimum Wages Act and Rules?

The labor inspector advised us that we have to pay D.A to our employees. We are giving more than 15K in salary to all our employees. We are providing only Basic + HRA.

It is not compulsory. Minimum wage inspectors should consider whether the gross wages are higher than the minimum wage or not. He might be asking these questions to confuse you. Stay firm. You can split the current basic wage into basic + DA to prevent future issues.

Please find attached a copy of the Supreme Court judgment in Airfreight Ltd v State of Karnataka & ors. It has been clearly and categorically mentioned that when the employer pays gross wages exceeding the minimum wages, there is no need to pay DA separately. However, the Supreme Court in the judgment stated that such wages should be in accordance with Section 2(h) of the Minimum Wages Act 1948. Since Section 2(h) of the MW Act defines "wages" to include HRA (copy enclosed), we may pay MW - comprising of Basic, DA, and HRA, with the remaining as other allowances. If you require any further details, documents, or assistance, please contact us.

Regards,
N. Nataraajhan
Sakthi Management Services
HP: [Phone Number Removed For Privacy Reasons]
Email: [Email Removed For Privacy Reasons]

If you are paying a Basic Wage to your employees that exceeds the minimum wages prescribed (basic + DA), then you are complying with the Minimum Wages Act. Even if you are paying all components of wages together and it exceeds the minimum wages, you are still complying with minimum wage regulations. Ensure that the basic wage is more than 60% of the total wages.

Regards,
Mahesh