Which Amount We Should Calculate Gratuity As Minimum Wages Is 285.33/only

Dear Members,

Greetings.

Please advise on the following: We have contract employees under a contractor. One employee is resigning. His wage is $500/day. We have not shown the break-up as Basic, DA in the muster roll. We have shown it as $500 only. Now, on which amount should we calculate gratuity, as the minimum wage is $285.33 (Basic + DA)? Should we calculate it on $500 or $285.33? Expecting valuable advice.

Regards, Nishant

Hi Nishant,

Greetings of the day!

Please share on which amount you are deducting PF and calculated bonus amount? Also, kindly provide information on where you derived Rs 285.33.

Thank you.

Hello,

First, you need to finalize the breakup for his daily wages (Rs. 500/-). If the Basic + DA (which you have finalized) is more than the minimum wages, then gratuity is payable as per the finalized Basic + DA; else, as per the minimum wages.

Best wishes.

Mr. Nishant,

You have clearly mentioned that you retained a contract employee on a daily rate of Rs. 500/- per day without any bifurcations like basic/DA or any other components. As such, compliance, if any, under EPF must have been made on the gross wage of Rs. 500/- per day, and you are liable to pay gratuity on the gross amount, i.e., Rs. 500/- per day and not on the minimum wages of Rs. 285.33.

P K Sharma

I could not understand your query properly. Please elaborate so as to provide an appropriate view. You have mentioned that you have contract employees under a contractor. For any statutory obligations, the contractor is liable, and if there is a default, then only the principal employers come into the picture. Secondly, whether the employees of the contractor have completed 5 years of continuous service, and that too at your site.

Dear Nishanth,

Admittedly, what you are paying is consolidated wages, and incidentally, it is more than the minimum wages comprising of the components of Basic and D.A. Therefore, you have to calculate his gratuity on the basis of consolidated wages only.