Can Employers Adjust Allowances to Meet New Minimum Wage Requirements? Seeking Advice

Dear Sir/Madam, Greetings for the day, Presently, I am working in the Manpower Services Industry, and one of my clients is saying that salary can be adjusted from other allowances to minimum wages. For example, Person X is getting 15,000/- PM, including Basic and DA (Minimum wages). However, this year, the minimum wages have been increased from 7,500 to 12,000 (Basic + DA). Therefore, our client is saying that it can be adjusted from allowances, and the gross salary should remain the same.

I have checked with our seniors, and they have mentioned that labor contract wages cannot be changed. Whatever salary is paid should remain the same, and any increase in minimum wages is governed by the state government, and accordingly, the revised minimum wages should be paid.

Kindly provide your valuable inputs, and if there have been any rulings in court, please share the details at the following email address: [Email Removed For Privacy Reasons].

Your client's view is correct. As per the ratio decidendi of the judgment of the Supreme Court in AirFreight's case, the sum total of the industry wages should be equivalent to the sum total of the statutory minimum wages. However, the components of the industry wages should not include the excluded ones mentioned in the definition of the term "wages" under section 2(h) of the Minimum Wages Act, 1948.

Thank you!