Understanding Minimum Wage Calculations: What Should Be Included Beyond Basic and DA?

What components are included when calculating minimum wages? As per my understanding and the Minimum Wages Act, we need to consider cash components given to an employee, which include Basic + DA + Allowances excluding Travel Allowance and HRA. However, in the private sector, most of us use Basic + DA. I would appreciate further clarity on this topic through discussions with knowledgeable board members.

Yardsticks for Minimum Wage Revisions

Section 4 of the Act mentions that minimum wages are based on basic wages and the cost of living index. The yardsticks on which minimum wage is revised are:

(a) Three consumption units per earner,
(b) Minimum food requirement of 2700 calories per average Indian adult,
(c) Cloth requirement of 72 yards per annum per family,
(d) Rent corresponding to the minimum area provided under the Government’s Industrial Housing Scheme,
(e) Fuel, lighting, and other miscellaneous items of expenditure to constitute 20% of the total minimum wages,
(f) Children's education, medical requirements, minimum recreation including festivals/ceremonies, and provision for old age, marriage, etc., should further constitute 25% of the total minimum wage.

Wages, as defined in minimum wages, are all remuneration capable of being expressed in terms of money, which would, if the terms of the contract of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or work done in such employment. This includes house rent allowance but does not include the value of any house accommodation, supply of light, water, medical attendance, or any other amenity or service excluded by general or special order of the appropriate Government; any contribution paid by the employer to any Pension Fund or Provident Fund or under any scheme of social insurance; any traveling allowance or the value of any traveling concession; any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or any gratuity payable on discharge. Keeping in view the above, Basic, DA, and HRA are components that fall within the definition.

Regards, Swapnil