How Should Minimum Wages Be Divided Across Salary Components Legally? Seeking Advice

I would like to know if the minimum wages should go in the basic head or can we divide them into basic + HRA + conveyance. In my previous company, we kept minimum wages in the basic head, but in the new company, they divide the minimum wages into three categories (i.e., 60% minimum wages in basic, 30% in HRA, and 10% in conveyance), which is not correct as per the law.

Also, the PF ceiling is 15,000 now. So, if we divide a salary of 20,000 in the above ratio, the basic would be 12,000. Hence, the employee will be mandatory in PF. If we increase the basic to 15,000, then PF would be optional. So, please advise on how to divide the salary into different heads.

Thanks,
Swati

Thank you for your valuable reply. Please confirm one thing for me - is it mandatory to keep the minimum wages amount in the basic head, or can it be divided into basic + HRA + conveyance? Please reply to me on this.

Dear Swati,

We should not bifurcate Min. Wages into Basic + HRA + Conveyance. It can only be Basic + DA or only Basic. Bifurcating into other components leads to non-compliance of statutory regulations, as it is a common practice followed by companies to reduce costs.

Thanks & Regards,
Prathap
Senior Executive-HR
Narayana Health.