Understanding Minimum Wages: Should Basic Salary Align with Them and How to Bifurcate?

1. I request you all to please suggest whether the Basic Salary should be as per the minimum wages or not?

2. Can we bifurcate Minimum wages?

3. How to bifurcate Gross salary?

4. What are the minimum wages applicable in Delhi?

Regards,
Narender

Hi Narender,

1. The basic salary must be equal to or more than the minimum wage because we calculate PF, EL, and gratuity based on the basic salary.

2. The minimum wage is bifurcated into only Basic + VDA. If we bifurcate the minimum wage, then all deductions and calculations are done based on the minimum wage.

3. Search on citehr, and we may find the information there.

Regards,
Manish

Base salary or gross salary should be equal to or more than minimum wages. Minimum wages are declared by the government (state and central as required). Hence, the same cannot be bifurcated.

Basic salary is apportioned as a percentage of gross salary. It is the gross salary that is bifurcated. Bifurcation of gross salary is done as a percentage as per each company's policies.

For the minimum wages in Delhi, please contact the local Labour Department.

Definition of Wages Under Different Acts

As per the Minimum Wages Act, the definition of wages includes all remuneration capable of being expressed in terms of money as per the terms of employment and includes HRA (House Rent Allowance).

However, as per the definition of wages in the Employees Provident Fund & Miscellaneous Act, the definition of wages excludes HRA, Washing Allowance, and Conveyance Allowance.

Bifurcation of Minimum Wages for Provident Fund

Therefore, for the purposes of Provident Fund, some employers are bifurcating minimum wages into Basic, HRA, Washing Allowance, and Conveyance Allowance. The Punjab & Haryana High Court has upheld this decision (Group 4 Securities vs. Asst Provident Fund Commissioner, Gurgaon).

The matter is pending before the Supreme Court regarding whether minimum wages should be considered as basic wage and whether any bifurcation should be allowed. Pending the decision, many employers are bifurcating minimum wages as stated in paragraph 3.

Minimum Wages in Delhi

The minimum wage for unskilled labor in Delhi is Rs 13,584/-. For other categories, please refer to the latest Delhi Government notification.

Regards,
Anil Raina
[Phone Number Removed For Privacy-Reasons]