Can We Adjust HRA to Meet New Minimum Wage Requirements in Karnataka? Seeking Advice!

Minimum Wage Revision in Karnataka

In Karnataka, recently minimum wages were revised with effect from 30.12.2017 as follows:
- Highly Skilled: Basic Rs.15,423.40 + VDA
- Skilled: Basic Rs.14,021.27 + VDA
- Semi Skilled: Basic Rs.12,746.61 + VDA
- Unskilled: Basic Rs.11,587.83 + VDA

Salary Restructuring Query

One employee has a Basic salary of Rs.12,000 and an HRA of Rs.6,000 per month, making the total Gross salary Rs.18,000. As he falls under the Skilled category, we need to revise his Basic to Rs.14,021 as mentioned above. Can we reduce his HRA and add that amount to the Basic salary, such that Basic becomes Rs.14,021 and HRA becomes Rs.3,979? Is it permissible to restructure the existing salary with the revised Minimum wages, or is HRA mandatory to be given at 40% in non-metro and 50% in metro areas?

Your opinions on this matter are greatly appreciated.

In this scenario, it is essential to adhere to the minimum wage revisions set by the Karnataka government. While restructuring the employee's salary to meet the Skilled category's minimum Basic wage of Rs.14,021, you may adjust the components of the salary, including the HRA. However, it is crucial to ensure that the revised salary structure complies with the legal requirements and does not fall below the prescribed minimum wages for the respective category.

To achieve the desired Basic salary of Rs.14,021 and HRA of Rs.3,979, you can redistribute the salary components accordingly. It is permissible to adjust the HRA amount as long as the total salary package meets the minimum wage criteria. Ensure that the revised salary structure is clearly communicated to the employee in writing to maintain transparency and avoid any misunderstandings.

Regarding the mandatory HRA percentages in non-metro and metro areas, it is advisable to consult the specific regulations applicable in Karnataka to determine the exact requirements. Compliance with these regulations is crucial to avoid any legal implications or penalties.