Understanding Dearness Allowance: How Is It Calculated for Hospital Staff in Kerala?

Dear All,

Please update me on Dearance Allowance amount to be paid to employees (Staff Nurses and other staff of a Private Hospital in Kerala). What is its ratio or percentage? Will the DA vary monthly? How is the DA calculated based on the varying Consumer Price Index?

Please advise.

Thanks,
Naveena

Dear All,

Please advise whether DA is compulsory or not.

Thanks,
Naveena

In general, DA is given to employees of the government company. Private companies prefer to have a fixed salary while DA changes each month. If you decide to give DA, then the DA rate is declared by the government periodically. You need to apply that.

Another option is to give basic and DA in the ratio of basic and special allowance declared by the state government in the minimum wages notification.

As per my knowledge, in Kerala, DA is not a compulsory part of the Minimum Wages Structure. So, I would suggest not showing DA in your wages structure. If you include DA, it will attract additional PF contributions for both Employee & Employer.

According to the law, wages should be paid as per the guidelines issued by the State Government under the Minimum Wages Act. Since the wages are revised considering inflation and the Consumer Price Index, you need not consider it separately.

I hope the matter is clear now. Fellow members can shed more light on the matter.

To the best of my knowledge, it is the total salary paid that really matters. If your organization is paying a total salary more than the minimum wages specified for the category, it would be considered acceptable by any authority having jurisdiction. Dearness Allowance (DA) in this case could be integrated/merged with the basic salary. However, if in your organization "Basic" follows a typical sliding scale and there are other allowances paid to employees as part of their salary, please note that the total salary would be considered for the deduction of Provident Fund (PF), except for some allowances like House Rent Allowance (HRA) or Conveyance Allowance to and from the office.

Furthermore, the "Total PF Salary" should be equal to Basic + DA specified by the government.

Regards,