Salary structure - auditor asks us to keep the salary above 6000

Dear Team,

We have launched a new startup software private limited company, where we have hired 5 software engineers. Out of these 5, we have hired 4 of them for a salary of 5000/- per month, but my auditor asks us to keep the salary above 6000/- as per labor law in Karnataka. Now, as we have already hired them for 5000/-, we do not want to increase their salaries to 6000/- until the next six months. At the same time, we cannot remove the hired resources.

In this situation, please suggest how we can overcome the issue by not increasing the salary of the 4 employees and also not removing them while ensuring compliance with labor laws.

Please suggest.

Thank you.

Paying wages at a rate lower than the minimum wage for the skill is a serious offense and will be dealt with severely. Just check Karnataka shops' minimum wages for skilled workers: for Zone I, it is 8010.8, for Zone II, it is 7750.8, and for Zone III, it is 7516.8. You have no choice but to pay wages based on the zone in which they are employed. Paying Rs. 6000 is significantly lower.

Hi,

Add $1000 as an attendance bonus to the salary structure for being present at the right time according to office timings. If a person arrives at the right time, they will receive the bonus; otherwise, it will result in savings for the company.

Thank you.

Dear MSKYINFOCOM,

Please let me know how many employees you are having today. If you have 10 or more, then you have to go for ESI/EPF voluntarily. In this case, ME payment is mandatory. As pointed out by Mr. Shrikant, you have to follow the MW Act of Karnataka State. There is no other way to avoid legal issues. Do not consider the suggestion given by Mr. Manjunath, as the amount is higher for that particular component, and it will be questioned. MW does not talk about any other allowances other than Basic and DA or VDA aspects. Hence, it is suggested to enhance the salary to Rs. 6,000/- if it is MW and keep employees with you. Your auditor is correct in his/her views.

Regards,
V. Murali

We currently have 8 staff members, out of which 4 are receiving a salary of 5000/-. Are we able to designate them as trainees or in another capacity and provide 5000/- as an allowance or in a different form? Since this amount is being transferred from our private limited company account, we must ensure accountability in how we disburse payments. Please provide me with a solution for this.

Hi,

Yes, you can be considered as a trainee, but there are conditions:

1) The trainee should be gaining knowledge of the latest technology or methods.
2) The training provided should align with market opportunities for future growth.
3) Training on outdated technology is not permitted; it will be questioned.

In that case, are you maintaining an attendance register or an electronic system in your office? If so, it is difficult to manipulate. Also, Manjunath's points are valid. If you feel you can manage any situation, treat their salary portion as incidental expenses and conveyance expenses. But my honest suggestion is, why not be a fair employer towards the four staff members.

V. Murali

Hi VHR, thank you for your kind input.

What is the minimum salary that should be paid so that we can reconsider the salary for the 4 staff members? If not, can I pay them a salary of 5000/- as conveyance expenses or is there anything else that can be provided such as a stay fund or other benefits? Please suggest.

MSKYINFOCOM

Please find (MW) from your local labor office pertaining to your category of organization. As I am in Chennai, I do not know what is in BGL/Karnataka. (Excuse me) If you need an HR Manager to streamline yours, including your private firm's HR systems, I can do so on a regular employment basis as I am looking for an opening.

V. Murali
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