Understanding the Rs. 18,000 Ceiling in the Payment of Wages Act: Is It Basic, Gross, or Net Salary?

Dear Seniors,

As per Section 1(6) of the Payment of Wages Act, the ceiling limit is Rs. 18,000. If the salary/wages exceed Rs. 18,000, the act will not be applicable to that employee/workers. Please clarify whether this ceiling limit is for salary (Basic plus DA), gross salary, or net salary.

Regards,
Ashish

Under Section 2(vi), wages have been given a very broad meaning. It means it will include all remuneration due to any worker or employee if the terms of the contract are fulfilled. It will include any remuneration under an award or settlement, remuneration in respect of overtime, and any other sum the employee is entitled to receive as wages. However, this will not include HRA and perquisites.

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Understanding Wages in Different Acts

Every act has its own definition of wages. For instance, under the Salary Act, wages refer to your gross salary. Similarly, under the Bonus and Provident Fund (PF) Acts, wages consist of Basic + Dearness Allowance (DA). Therefore, for PF calculations, you need to consider the Basic + DA. If the employee's wage (Basic + DA) exceeds Rs. 18,000, then it depends on the employee whether they want PF liability or seek exemption from PF. In such cases, the employee needs to write a request letter to the HR department for PF exemption and fill out the PF exemption form (Form 11) in accordance with social compliance.

Regards,
Vipin Singh
H.R. Officer & Recruiter
[Phone Number Removed For Privacy Reasons]

Basic + DA is typically the definition of wages unless otherwise specified. In this case, it is Basic + DA.

Wages defined in the Payment of Wages Act include all wages, not just basic and DA.